CCS DRG Assignment & Case Mix 1 — Questions and Answers
Question 1: What does 'case mix index' (CMI) measure in a hospital?
- The total number of patients discharged per month
- The average DRG relative weight for all inpatient discharges, reflecting patient complexity (Correct answer)
- The percentage of Medicare patients versus commercial insurance patients
- The ratio of surgical to medical admissions
Correct answer: The average DRG relative weight for all inpatient discharges, reflecting patient complexity
The case mix index (CMI) is calculated by averaging the MS-DRG relative weights of all discharges in a period. A higher CMI indicates a more complex patient population and generates higher reimbursement.
Case Mix Index (CMI) equals the sum of all DRG relative weights divided by the total number of Medicare discharges in a given period. The CMI directly impacts a hospital's total Medicare revenue because each DRG payment is calculated by multiplying the DRG relative weight by the hospital's base payment rate (adjusted for wage index, teaching status, etc.). A higher CMI generates higher average reimbursements. CMI monitoring is critical for identifying undercoding of CCs/MCCs and ensuring revenue integrity.
Question 2: Which of the following secondary diagnoses would NOT qualify as a CC or MCC for MS-DRG assignment?
- Acute respiratory failure
- Stage 4 pressure ulcer
- Essential hypertension (I10) (Correct answer)
- Septic shock
Correct answer: Essential hypertension (I10)
Essential hypertension (I10) is listed on the CC Exclusion List for many principal diagnoses and is generally not a CC or MCC - it is considered a common chronic condition without increased resource use impact.
Not all secondary diagnoses qualify as CCs or MCCs. CMS maintains a CC/MCC list and a CC Exclusion List. Essential hypertension (I10) is generally not a CC because it does not significantly increase resource use for most hospitalized patients. Acute respiratory failure is an MCC, Stage 4 pressure ulcer is an MCC, and septic shock is an MCC. Additionally, diagnoses that are integral to the principal diagnosis or are CC/MCC exclusions for the specific principal diagnosis will not elevate the DRG. Coders must verify CC/MCC status using current CMS DRG definitions.
Question 3: What is a 'present on admission' (POA) indicator, and why is it required on inpatient Medicare claims?
- It identifies whether the physician was present at admission
- It identifies whether each diagnosis was present when the patient was admitted, distinguishing hospital-acquired conditions from pre-existing ones (Correct answer)
- It indicates the admission was an emergency rather than elective
- It certifies the medical necessity of the inpatient admission
Correct answer: It identifies whether each diagnosis was present when the patient was admitted, distinguishing hospital-acquired conditions from pre-existing ones
POA indicators are required on Medicare inpatient claims to distinguish diagnoses present when the patient was admitted from hospital-acquired conditions (HACs), which may reduce reimbursement.
Present on Admission (POA) reporting is required by CMS for inpatient claims under IPPS. Each diagnosis code reported must have a POA indicator: Y (yes, present on admission), N (no, developed during the stay), U (unknown), W (clinically undetermined), or 1 (exempt from POA reporting). CMS uses POA to identify Hospital-Acquired Conditions (HACs) - serious conditions that were NOT present on admission. HAC diagnoses that qualify as MCCs/CCs may be excluded from DRG payment calculations, preventing hospitals from being rewarded for preventable complications.
Question 4: A patient is admitted with pneumonia (MS-DRG 193, without CC/MCC) and is also found to have acute kidney injury. If the acute kidney injury qualifies as an MCC, the claim will be grouped to:
- MS-DRG 193 - the MCC does not change simple pneumonia DRGs
- MS-DRG 191 - Pneumonia with MCC, higher relative weight (Correct answer)
- MS-DRG 194 - Pneumonia with CC
- MS-DRG 870 - the sepsis DRG, because AKI may indicate organ dysfunction
Correct answer: MS-DRG 191 - Pneumonia with MCC, higher relative weight
Acute kidney injury is an MCC. With an MCC present, simple pneumonia groups to MS-DRG 191 (Respiratory Infections and Inflammations with MCC), which has a higher relative weight than the without CC/MCC variant.
MS-DRGs for many conditions are split into three tiers: with MCC (highest weight/payment), with CC (moderate), and without CC/MCC (lowest). Acute kidney injury (N17.x) is classified as an MCC. When a valid MCC is documented and coded as a secondary diagnosis, the grouper moves the claim to the MCC tier DRG. Accurate documentation and coding of all secondary diagnoses - especially MCCs like respiratory failure, acute kidney injury, and severe sepsis - is a major focus of CDI programs because it directly and legally impacts DRG-based reimbursement.
Question 5: What is the purpose of the Medicare Code Editor (MCE) in the DRG grouping process?
- To assign the final DRG payment amount to each claim
- To identify invalid codes, age conflicts, sex conflicts, and manifestation code errors before DRG assignment (Correct answer)
- To determine whether a diagnosis qualifies as a CC or MCC
- To calculate the hospital's wage index adjustment
Correct answer: To identify invalid codes, age conflicts, sex conflicts, and manifestation code errors before DRG assignment
The Medicare Code Editor (MCE) is a software module that checks ICD-10-CM/PCS codes for validity and logical errors (age, sex conflicts, unacceptable principal diagnoses) before DRGs are assigned.
The Medicare Code Editor (MCE) is applied before the MS-DRG grouper and performs logical edits on submitted codes. MCE edits include: invalid codes, age conflicts (pediatric code on adult), sex conflicts (female code on male patient), unacceptable principal diagnosis codes (e.g., manifestation codes that cannot be principal), non-specific principal diagnosis, and non-covered procedures. Claims that fail MCE edits are returned to the provider for correction. Only claims passing MCE are processed by the DRG grouper.
Question 6: Under IPPS, what is a 'transfer case' and how does it affect DRG payment to the transferring hospital?
- Transfer cases always receive full DRG payment at both facilities
- The transferring hospital receives a per-diem payment, potentially less than the full DRG, unless the LOS meets or exceeds the national geometric mean (Correct answer)
- Transfer cases are excluded from DRG grouping entirely
- The receiving facility's DRG payment is reduced by 50%
Correct answer: The transferring hospital receives a per-diem payment, potentially less than the full DRG, unless the LOS meets or exceeds the national geometric mean
When a patient is transferred to another acute care hospital, the transferring facility receives a per-diem rate rather than the full DRG payment, unless the LOS equals or exceeds the national average LOS for that DRG.
Medicare's transfer policy prevents double payment when a patient moves between acute care hospitals. The transferring (sending) hospital receives a per-diem payment calculated as: Full DRG payment divided by national geometric mean LOS multiplied by actual LOS (with a minimum of two times the per-diem for the first day). The receiving (accepting) hospital receives the full DRG payment for its own claim. If the transferring hospital's actual LOS equals or exceeds the national geometric mean LOS for the DRG, it receives the full DRG payment. Transfers to post-acute settings (SNF, rehab) follow different rules.
CCS DRG Assignment & Case Mix 1
What does 'case mix index' (CMI) measure in a hospital?