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February 14, 2024
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Case Mix Index (CMI) Explained: Its Impact In Healthcare

Case Mix Index (CMI) Explained: Its Impact In Healthcare

Case Mix Index (CMI) Explained: Its Impact In Healthcare

The complexity of the healthcare industry makes it challenging to plan for resources and navigate increasing costs. One core metric critical for organizations to understand is Case Mix Index (CMI). This crucial metric provides clarity on patient populations and the resources healthcare facilities need to meet those demands. The type of cases treated within any healthcare facility will fluctuate often. Still, with this metric, it is possible to better understand the number of complex, resource-intensive patients the location treats. CMI medical metrics help with planning and projections in multiple ways.

Understanding the Case Mix Index

What is CMI? The case mix index is a metric that provides clarity on the diversity, complexity, and severity of the care being provided to patients within a healthcare treatment facility. This metric is valuable for all organizations, but it is particularly valuable to any organization expecting resources (including reimbursement for care costs) through the Centers of Medicare and Medicaid Services. 

This case mix index definition is simplistic, but this metric is not. There are numerous components that play a role in creating an accurate, detailed look at CMI. 

Elements Impacting the Case Mix Index

Numerous factors impact the case mix index in healthcare. Some examples of those factors include:

  • How accurate codes are imputed 
  • Patient comorbidities 
  • Types of procedures performed
  • The length of patient stay 
  • Illness severity overall 
  • The patient population itself
  • Documentation specificity 
  • Annual updates to the MS-DRG weights 
  • Penalties associated with hospital-acquired conditions 

Notably, organizations will have their CMI impacted depending on the type of care they offer. Those who perform a high volume of high-weighted MS-DRGs will have a higher figure. This includes complex cases of medical care, including cardiothoracic surgeries, neurosurgeries, and organ transplantation, all of which have a much higher weight than standard care. The more complex the diagnosis and procedure is, the higher this index is.

Importance of CMI in Healthcare

What is case mix index in terms of importance to the healthcare industry itself? When looking at the case mix index meaning, it is critical to consider this metric based on what it means to the organization. The more complex and higher risk diagnosis and care provided by the hospital is, the more essential it is to ensure accuracy. 

When a healthcare facility ensures the correct DRG is applied to the patient, this creates a more accurate CMI, which directly affects the ROI value driver. There are several reasons why this is essential to hospitals and other providers. 


To improve CMI accuracy, organizations need to ensure that all documentation and data are appropriately completed. That is, they must meet all documentation guidelines. They must also collaborate with clinical document specialists. This helps to ensure that the CMI is accurate for highly weighted DRG patients, including those with complicated medical care and surgical patients.

Bundled payments value

The accuracy of CMI is critical since it directly impacts the value of bundled DRG payments sent to facilities. It also provides insight into the estimated length of stay (LOS), which is a very important figure in calculating costs associated with care (and resources needed to support care).

Patient outcomes

Another core reason CMI is such an important factor in healthcare facility management is that it provides insight into the score of patient outcomes. CMI influences the quality scoring of patient outcomes specifically – which directly impacts the reimbursement rates the facility receives. 

CMI helps to take specific note of the patient outcomes and how they align with the complexity of the case. This helps to create a more accurate reimbursement rate across the patients of any location. 

CMI in Healthcare Reimbursement

What is a case mix index in terms of healthcare reimbursement? Ultimately, it is directly related to the amount of hospital reimbursement received for Medicare and Medicaid beneficiaries. It enables healthcare management to allocate resources better by providing more insight into what type of patients are present and what type of complicated care is provided. However, from a reimbursement standpoint, this metric is even more important. It influences reimbursement levels from payers, including insurance companies and Medicare and Medicaid. 

If CMI is not carefully monitored, it leads to financial loss. It is critical for accurate documentation and coding to be completed to allow for accurate CMI to occur. This helps ensure that the provider is receiving the appropriate financial compensation.

How is CMI Calculated?

The case mix index calculation involves adding the relative Medicare Severity Diagnosis Related Group (MS-DRG) weight associated with the care provided. This is done at the patient's discharge from a healthcare treatment center, such as a hospital. This figure is then divided by the number of discharges for Medicare and Medicaid within the specific timeframe. This typically is done for the month but can also be an annual calculation.

Case Mix Index Calculator and Tools

Because of the importance of accuracy as well as the more complex calculations involved, the use of a case mix index calculator and other tools can be critical for most organizations. These tools provide insight into each of the factors that play a role in the calculation of CMI. 

What is a CMI tool like this able to do? In short, it allows for faster, more efficient calculations of this metric. Most importantly, this method enables better accuracy, which ensures that the proper CMI is calculated and the right level of reimbursement is provided. 

Best Practices for Improving CMI

Organizations must constantly work to improve hospital CMI accuracy to ensure proper reimbursement. There are a number of best practices to consider, including: 

  • Training and upskilling employees to ensure accurate documentation and coding within the organization at every level
  • Utilization of resources at an improved level to ensure that accuracy is possible, whether this is investing in tools or using employees 
  • Complete routine CMI data reviews to ensure that the organization understands where it stands on a consistent basis. Typically, this should be done by calculating CMI on a monthly basis. 
  • Implementing improvement strategies for better resource usage and patient care when necessary.

Challenges in Managing CMI

What is CMI in healthcare aside from a basic metric? This lack of recognition of the importance of accuracy in CMI is one of the biggest challenges in managing CMI. Yet, it is not always simplistic for organizations to complete these calculations either.

The complexity of documentation and coding is critical and often the biggest limitation in any accurate reimbursement strategy. Further, to minimize mistakes, organizations need to continuously invest in staff education to ensure that coding is done properly.

More so, there is a challenge for many organizations in adapting to change within healthcare and coding guidelines implemented by insurance companies and government agencies. 

The solution to improving hospital CMI accuracy, then, is to take a collaborative approach. It should involve multiple healthcare professionals who work together to monitor, adjust, and align their patient care and standards in these areas. 

Future Trends in CMI and Its Impact on the Medical Industry

The move to implementing more technology into CMI calculations and monitoring is likely to change the way this metric is managed in the near future. A move towards value-based care is also occurring throughout the industry, with more focus on providing a better quality of care.

These changes will impact the weights and calculations of CMI. It will impact reimbursement rates and quality care incentives that CMI is often used to support. 


  • What is the purpose of the case mix index? The purpose of case mix index is to provide accurate reimbursement from Medicare and Medicaid, along with insurance companies, for the level of care provided to patients.
  • What is the effect of case mix? When there is a higher case mix index value present, that indicates that the healthcare facility is treating a larger number of complex cases, often involving more resources. This means that the organization may qualify for a higher reimbursement for those costs. 
  • What is CMI in long term care? Like in a hospital setting, CMI can be used in long-term care facilities. It can help streamline and increase the reimbursement received in associated care cases.

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