# How to Calculate Case Mix Index

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The case mix index for a healthcare facility reflects costs incurred to provide services and treatments that inpatients require. In general, the higher the CMI is, the sicker its patients, and the more resources patients required during treatment. Finance departments consider CMI in determining the annual budget, setting inpatient hospital rates and in calculating Medicare reimbursements.

## Gather Diagnostic Related Group Information

CMI calculations require the diagnosis-related group codes from the billing information for each discharged inpatient. DRGs, which are part of the ICD-9-CM coding system, include more than 700 broad classifications of medical conditions and services that inpatient coders use to assign billing charges. DRGs group patients into different categories based on similarity of conditions. Each DRG within a specific category also includes a numeric weight that reflects the average cost required to take care of the patient. For example, a DRG weight of 2.0 would indicate that a patient’s condition cost twice as much to treat as an average admission.

## Calculate the CMI

CMI is the sum of all DRG-relative weights divided by the number of patients for a specific period. Most health care facilities calculate CMI both monthly and annually. List each DRG billed during the calculation period, as well as its corresponding weight. Total all of the relative weights and divide that number by the total number of individual DRGs. The result is your hospital’s CMI for the calculation period. For example, if your hospital billed 35 DRGs for a one-month period and relative weights totaled 40, the CMI for one month is 0.875, or 35 divided by 40.

## Analyze Results

A CMI calculation can be useful for making comparisons and for spotting trends. For instance, if your CMI is lower than other health care facilities in your area, this could indicate that patients with serious injuries or medical conditions are seeking treatment at competing facilities. In the same way, a dip in your CMI shows a downward trend in surgical and treatment volumes. According to HC Pro, a health care information management firm, a CMI that varies widely within a short period might indicate a need to review billing procedures and work with physicians to make sure they’re providing medical coders with correct information.

## CMI and Medicare

Because Medicare uses DRGs in calculating reimbursements, CMI plays a role in determining the amount that Medicare will reimburse your facility. For example, if your CMI includes DRGs for serious conditions such as heart transplants or conditions with major complications, your CMI will be high as it will reflect higher than average costs to take care of these patients. Your facility will multiply the DRG for each patient by the blended rate, an amount assigned to you by Medicare to calculate the reimbursement amount.

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