The overlooked impact of case mix index on your hospital return

Mar 11, 2021 For Providers

If you’re having trouble maintaining healthy margins in your hospital return, it can be difficult to identify the culprit. It could be anything from too many denials to appeals that just don’t get done, or a host of Utilization Management issues in between.

Do you need help identifying the issues with your hospital return?

We’re investigating six questions that can help you determine if your hospital is leaving revenue on the table. Check out our other articles for more insights:

Are you getting too many denials from health plans?

Four signs peer-to-peer reviews might be a problem in your hospital

The hidden connection between documentation and denials

Are you having trouble completing appeals for payment denials?

Are denials for post-acute care hurting your average length of stay?

Your case mix index is often overlooked as a way to improve your hospital return, but even fractional increases in your case mix index can increase payments for your hospital across the board. 

Why case mix index matters

This small number provides valuable information about your hospital population to health plans,  and it’s used to determine the average cost per patient in your hospital. Because the case mix index is used as a multiplying factor for your DRG payments, your CMI will impact every single payment you receive.

If your case mix index is too low or inaccurately represents the acuity of your patient population, you’re not getting paid for the resources and personnel needed to care for these patients. More complicated cases require more hospital resources, so hospitals with a higher CMI will see higher reimbursement rates. Improving your case mix index even fractionally can have a significant impact on your hospital’s reimbursement.

Documentation and case mix index

Physician documentation directly impacts your case mix index. Two hospitals in the same neighborhood and serving the same patient population should have a very similar case mix index. If there are differences, they’re almost always due to documentation. 

Your documentation needs to capture the true condition of your patients. When the health plan reviews your documentation, the patient’s condition needs to be absolutely clear, every time. Many patients have secondary diagnoses that will require extra care and impact their condition; but if your physicians are in the habit of only documenting their primary diagnosis, they’re missing opportunities for reimbursement and improved patient care. 

For example, a patient admitted with pneumonia almost never just has pneumonia. Community-acquired pneumonia can often lead to sepsis and multi-system organ failure. If your patient is in septic shock and in the ICU requiring a ventilator and dialysis, their case is far more complicated than a patient with community-acquired pneumonia requiring supplemental oxygen. Your physicians need to accurately document every diagnosis, every abnormal test result, and every device required to care for their patients to accurately capture the severity of each individual case. 

The financial impact of case mix index

Since the case mix index is an average of the relative weights of all patients treated in your facility during a particular period of time, individual cases impact this average. Increasing your case mix index by as little as 0.05% can lead to as much as $500 more per DRG payment. When you consider the number of DRG payments your hospital receives in a calendar year, this impact can be tremendous. In fact, this 0.05% can be the difference between profit and loss for your hospital.

Complete, accurate documentation of individual cases will impact your case mix index as well as patient care. Physicians who are in the habit of documenting their cases completely will also be better attuned to their patients’ needs.

Indicators that case mix index might be a problem

Your case mix index is often overlooked as a way to improve reimbursement for patient care, yet it impacts every DRG payment your hospital receives. 

The following questions can help you determine whether you have problems with case mix index in your hospital:

  • Do you understand the impact of CMI on total payment?
    Since case mix index is a multiplying factor, it impacts every single DRG payment you receive. Even fractional improvement will result in increased reimbursement for your hospital. 
  • What is your CMI? How does it compare to other hospitals in your area?
    You should be aware of your current case mix index and how it has changed over time. You can expect that your CMI should be nearly the same as other hospitals in your area serving a similar patient population. If it’s lower than expected, you can likely improve your CMI to increase reimbursement.
  • Are you struggling to get patients categorized as inpatient instead of observation?
    Your CMI will be higher if you are successful at getting patients categorized as inpatient and are being paid the DRG. Flipping more patients from observation to inpatient will also improve your case mix index. 
  • Is your team up-to-date on Medicare rules for codes and documentation?
    The rules for these codes and documentation change frequently. Ensuring that these rules are followed will prevent denials and protect your reimbursement.

How Cadenza helps improve case mix index

Our team of board-certified physician reviewers will audit your charts and examine your documentation to see how accurately your physicians are capturing their patients’ condition. Our review process can help identify physician outliers who need specific support and training in improving their documentation. We can also examine your EMR to determine how well it facilitates charting and documentation. After auditing your current documentation practices, we created a targeted plan that includes education and training for physicians and case managers to improve documentation and affect case mix index.

To see how we can improve your return through strategies to increase your case mix index, request a free consultation with our team.

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Cadenza Health can partner with healthcare organizations of any size.

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