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In SNFs and hospitals, Case Mix Index (CMI) is tracked by employees—especially on the financial side—but it is often misunderstood and its impact unappreciated.

CMI is an important performance indicator for SNFs and hospitals because it tells the story of a hospital’s patients and procedures and determines the reimbursements a hospital receives; hospitals are businesses, and the amount they receive in reimbursements matters to them in the long run.

CMI will also impact the valuation of your organization, and, as reimbursements determine if an SNF is worth acquiring, industry leaders looking to purchase facilities will first look to CMI. One such leader is Jay Moskowitz, CEO of VIVAGE, who recently described his process, saying, “We look at what kind of reimbursements facilities have, for example, if it is a CMI based reimbursement, we look at their CMI.” He recently joined Peter Murphy Lewis LTC Heroes podcast to discuss CMI and its role in Successful LTC Acquisitions.

So what exactly is CMI, how does it impact skilled nursing facilities (SNFs) and hospitals in the long run, and why is it so important? These are some of the questions that we will be answering in this article.

What Is CMI?

Let’s start with the most basic question: what is CMI? According to Definitive Healthcare, Case Mix Index (CMI) is a measure used by the Centres for Medicare and Medicaid Services (CMS) to determine reimbursement rates. CMI is an aggregate value that is assigned to individual patients in a long term care facility. That value, in turn, determines how much resources should be allocated to a resident in a skilled nursing facility.

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Case mix index measures the care needed for patients and residents.

A higher CMI means that a long term care facility or hospital has treated a significant number of resource-intensive patients. This, in turn, results in a higher reimbursement rate for the SNF. Thus, for Moskowitz, when selecting long term care facilities for acquisitions, reimbursements are his starting point. 

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Why Is CMI Healthcare So Important?

According to Health Leaders Media, when an SNF or hospital has a high CMI, it tends to mean that the hospital is treating sicker patients. This results in the facility receiving greater reimbursement on account of the care they are providing. Thus CMI plays a vital role in the finances of an SNF and hospitals. Moskowitz talks about how when screening long term care facilities, “We look at the population of the long term care facility as well as their procedures. We then ask ourselves, ‘Can we improve the Case Mix Index of this facility?’”

Additionally, CMI serves as an indicator of hospital performance and documentation. For example, suppose two hospitals have a similar patient count, and they provide similar services. In that case, one of them having a lower Case Mix Index could mean that the hospital isn’t conducting accurate documentation.

The formula for case mix index is the sum of all DRG-relative weights divided by the number of patients for a specific period. It is calculated as such:

  • 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.

As can be seen above, there is no need for a complex CMI calculator, as staff can easily do the above calculations themselves.

Law Insider defines DRG-relative weights as: the average standardized costs for cases assigned to that DRG (Diagnosis Related Groups) divided by the average standardized costs for cases assigned to all DRGs.

It is considered best practice for SNFs to calculate their Case Mix Index monthly and annually. As mentioned above, CMI healthcare is affected by a facility’s documentation practices. HC Pro notes that, although SNFs and hospitals cannot provide unnecessary services for the sake of improving their CMI, there are other ways to improve their CMI.

4 Factors That Affect Case Mix Index In SNFs And Hospitals

1. Documentation Specificity

In any job, accurate documentation is a requirement for the proper running of a business. But in long term care, documentation is about more than just the company. Documentation deals with the care of patients and residents and affects their lives. From noting the medications a nurse administers to recording the resident’s temperature, documentation helps establish stable routines for nurses while fostering communication amongst staff in a long term care facility.

Physician analyzing the case mix index, of a nursing home resident
What is CMI? It is a number that is produced following accurate documentation of care.

Documentation helps establish the continuity of a resident’s care, safeguards from malpractice, justifies Medicaid/Medicare reimbursements and fosters communication between rotating caregivers. This is why nurses are taught, “If you didn’t document it, you didn’t do it.” By doing this, nurses protect themselves from any claims or lawsuits on medical malpractice or negligence.

In the case of SNFs and hospitals, when they meet the regulatory documentation standards, they can qualify for reimbursements. The higher an SNF or hospital’s Case Mix Index, the more they can claim in reimbursements, and documentation is an essential part of that. A higher CMI for a hospital can occur when a physician accurately portrays the acuity of their patient through documentation. This results in more reimbursement for the hospital.

2. Coding Accuracy

Healthcare Innovation talks about how the correct use of an EHR produces accurate documentation, leading to more accurate coding and, ultimately, more accurate reimbursement claims. According to ICA Notes, Computer-Assisted Coding (CAC) is a tool that has a massive impact on EHRs. CAC works by scanning and analyzing the EHR documents, highlighting key terminology, and recommending appropriate codes for diagnoses and medical procedures.

The benefits of this new technology are that it:

  • Saves time: It reduces the amount of time that it takes to code.
  • Boosts Accuracy: SNFs and hospitals may pressure coders to work as fast as possible, which can result in errors. CAC helps to improve coders’ speeds without sacrificing accuracy.
  • Improves workflow: CAC helps coders work more efficiently, as they no longer waste time searching for codes or gathering documents. Because their workflow is improved, it results in faster submission of insurance claims, better compliance with regulations, and more accurate documentation that results in a higher Case Mix Index

As with any new technology, there are drawbacks. The challenges associated with CACs include:

  • It requires accurate, detailed documentation: CAC works by reading text. If detailed, accurate, and easy to read documentation is not provided, it will not function properly. This means that staff members need to input accurate and well-written notes into EHRs to ensure they get correct responses from a CAC. 
  • Staff may need training: Coders must first understand an EHR before being trained on using CAC. They may also need time and training to learn how to find, create, and read various notes. One such training program is LevelUp. It is a series of courses that teach nurses how to chart medications and treatments, personalize ancillary orders, navigate their point of care system, and manage invoices.

3. High Volumes Of Highly Weighted DRGs

Hospitals that provide organ transplants, neurosurgeries, cardiothoracic surgeries, and other similar medical procedures can have a higher Case Mix Index, as these are considered to be highly weighted DRGs.

4. Annual Updates To Relative MS-DRG Weights

These are set by the Centers for Medicare and Medicaid Services, and they can be found here.

Quick FAQs About Case Mix Index

a)   What Is A Good CMI For A Hospital?

Definitive Healthcare places the average CMI for hospitals at 3.48. CMI ranges from 3.02 to 5.26. CMI does not correlate to the number of annual discharges as some hospitals with high CMIs have discharges ranging from 5,000 to 80 yearly.

b)   What Affects CMI?

Coding accuracy, documentation specificity, the volume of highly weighted DRGs (organ transplant, neurosurgeries, cardiothoracic surgeries), and annual updates to relative MS-DRG weights are some of the most important factors.

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CMI healthcare is affected by coding accuracy.

c)   How Can Hospitals Or Long Term Care Facilities Get a Higher CMI?

Accurate portrayal of a patient’s acuity by physicians equates to a higher CMI and more reimbursement for the hospital. Documentation training and constant, consistent follow-through related to ongoing documentation are the most effective ways to raise CMI in SNFs and hospitals.

d)   What Is Considered A High CMI?

Since the average CMI for hospitals is 3.48, anything higher than this would be considered high for hospitals. Of course, the higher the Case Mix Index the better, according to HC Pro, as this will benefit the financial departments of hospitals, as a high CMI means the hospital receives more money per patient. 

e)   How Is CMI Calculated In Hospitals?

Add the DRG weights for all Medicare discharges and divide by the number of discharges. Note that CMI is calculated using both transfer-adjusted cases and unadjusted cases. Under the new PDPM model, CMI because the source of calculating reimbursement. For more on PDPM case mix index groups, read here. To learn about the PDPM CMS model and the idea of an interrupt stayed, read here. You can find our PDPM cheat sheet here

f)     What Is CMI In Long Term Care?

In long term care, the Case Mix Index acts as a reflection of the relative resources predicted to provide care to a resident. The higher the CMI, the more resources a resident needs for their care. 

g)   What Is CMI Adjusted Length Of Stay?

It is the ratio of the number of days of hospital care used to care for patients adjusted for the documented severity of the illnesses.

h)   What Is The Relationship Between Types Of Patients And CMI?

CMI is a relative value assigned to each Diagnostic Related Group (DRG). It determines the allocation of resources for patient care. An increasing CMI may indicate a hospital is servicing more “complex patients” and is, therefore, likely to receive more reimbursements per patient.


A higher CMI is beneficial for SNFs and hospitals, as it results in higher reimbursements for SNFs and hospitals. The factors that affect a Case Mix Index include documentation, coding accuracy, and highly-weighted DRGs. 

Therefore, SNFs and hospitals should focus on training staff to increase documentation accuracy and specificity, use Computer-Assisted Coding (CAC) to improve coding accuracy and perform annual updates to their Relative MS-DRG Weights as set by the Centers for Medicare and Medicaid Services. All these serve to improve their CMI, resulting in higher reimbursements.

For more on recent trends in long term care, read our blog and subscribe to the LTC Heroes podcast.

Elijah Oling Wanga