Between 1987 and 1988, the Medicare program's case mix index (CMI), which is an average of the diagnosis-related group weights of hospital patients, increased by about 3.3 percent, resulting in a $1.5 billion increase in the amount the Health Care Financing Administration paid to hospitals. This report describes results of a study to determine how much of the 1987-1988 CMI increase was caused by an increase in the real resource needs of Medicare patients and how much was caused by changes in coding and administrative practices. The results indicate that true change was responsible for 50 percent of the total CMI increase. The analysis showed that hospitals changed their coding behavior relative to a consistent coding standard.
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