Case Mix

According to Center for Medicare and Medicaid Services (CMS), a hospital's case mix index represents the [Page 67]average diagnosis-related group (DRG) relative weight for that hospital. It is calculated by summing the DRG weights and dividing by the number of discharges. The CMS assigns relative weights to each DRG and reviews them every year. States that have their own DRG scheme (such as New York) use different weights from those assigned by CMS. When there is a mix of Medicare and non-Medicare discharges, the case mix is a weighted average of the respective weights.

Basically, the case mix is an attempt to express the acuity of the patient population against costs for the services. The prospective payment rates, based on DRGs, have been established as a basis of the Medicare hospital reimbursement system. This patient classification system (DRG) better identifies the types of patients treated and the costs associated by the hospital. Since 1983 when DRGs and the prospective payment system were introduced, there have been many revisions. Initially, DRGs were meant to include only the elderly but today they include newborn and pediatric populations. Hospitals use this classification system (case mix index) to measure the effectiveness of the care management of care with costs and measurement from year to year, against the hospitals themselves.