Case mix index (CMI) is calculated by adding up the relative weights of every inpatient discharge, then dividing that total by the number of discharges. The formula is straightforward, but the inputs require understanding how diagnosis-related groups (DRGs) work and where to find the right weight values.
The CMI Formula
The basic calculation has just two components:
CMI = Total of all DRG relative weights รท Total number of discharges
Every time a patient is discharged from an inpatient stay, that visit gets assigned a DRG code based on the diagnosis, procedures performed, complications, and other clinical factors. Each DRG code carries a relative weight, which is a number representing how many resources that type of case typically consumes compared to the average case. A relative weight of 1.0 means the case uses an average amount of resources. A weight of 3.5 means it uses roughly 3.5 times the average.
You sum all those weights across your discharges and divide by the total number of cases. The result is your CMI.
A Worked Example
Say a small hospital has 41 medical discharges in a given month. Each discharge has been assigned an MS-DRG with its own relative weight. When you add up all 41 relative weights, you get 53.91. Dividing 53.91 by 41 gives a CMI of 1.31.
Now imagine that same hospital also tracks a surgical service line with higher-acuity patients. When you combine 44 total discharges (medical and surgical), the sum of relative weights jumps to 96.77. Dividing by 44 produces a CMI of 2.20. The surgical cases pulled the average up because they carry heavier DRG weights, reflecting more intensive resource use.
This is why CMI varies so much depending on which patient population you’re measuring. You can calculate it for an entire hospital, a single department, a specific payer, or any time period you choose. The formula stays the same. Only the pool of discharges changes.
Where to Find DRG Relative Weights
CMS publishes updated MS-DRG relative weights every fiscal year as part of the Inpatient Prospective Payment System (IPPS) final rule. For fiscal year 2025, these weights appear in Table 5 of the IPPS final rule, which lists every MS-DRG alongside its relative weight and average length of stay. The weights are recalculated annually to reflect changes in treatment patterns, technology, and how hospitals actually use resources.
The FY 2025 weights were derived from cost data in the March 2024 update of fiscal year 2022 hospital cost reports. If you’re calculating CMI for a specific period, use the weight table that was in effect during that period, not the most recent release.
Why CMI Matters for Reimbursement
Under Medicare’s IPPS, hospitals receive a base payment rate for each inpatient case. That base rate gets multiplied by the DRG relative weight for the specific case. A higher relative weight means a higher payment for that discharge. When you zoom out to the hospital level, a higher CMI signals that the facility treats a sicker, more resource-intensive patient population on average.
The base rate itself is adjusted for local labor costs through a wage index, and hospitals can receive additional payments if they serve a disproportionate share of low-income patients or operate a teaching program. Unusually expensive cases can also trigger outlier payments. But the DRG weight, and by extension the CMI, is the core multiplier that drives how much Medicare pays per case.
How Documentation Affects CMI
CMI is only as accurate as the clinical documentation behind it. Every inpatient stay gets coded based on what physicians actually record in the chart. If a patient has complications, chronic conditions, or comorbidities that aren’t clearly documented, the coder can’t capture them, and the DRG assignment may understate the true complexity of the case.
This gap is measurable. A study of a physician-led documentation improvement initiative at one medical center found that CMI for a common vascular procedure rose from 1.25 to 1.36 after physicians were trained to document comorbidities and complications more thoroughly. For open inpatient procedures, CMI increased from 2.05 to 2.23. In both cases, the patients weren’t sicker than before. The documentation simply caught up with the clinical reality. The proportion of admissions with a documented major complication or comorbidity jumped from 27% to 43% for one procedure group and from 43% to 61% for another.
These aren’t small differences. A CMI shift of even 0.1 across hundreds or thousands of discharges translates to significant revenue. Clinical documentation integrity programs exist specifically to close this gap by having specialists review charts alongside physicians in real time.
Using CMI for Service Line Analysis
Hospital administrators frequently calculate CMI at the service line level rather than just the hospital-wide level. A cardiology department and an orthopedic department will have very different CMIs because they treat fundamentally different conditions with different resource profiles. Tracking CMI by service line over time helps identify whether a department’s patient acuity is shifting, whether documentation practices are consistent, and whether the department’s revenue aligns with the complexity of care it delivers.
You can also segment CMI by payer. The standard CMS definition focuses on Medicare discharges, but many hospitals calculate an all-payer CMI that includes commercial insurance and Medicaid cases. The relative weights stay the same since they’re based on DRG assignments, but the patient mix changes, which can produce a noticeably different number. When comparing your CMI to benchmarks or other facilities, make sure you’re comparing the same type: Medicare-only versus all-payer, and the same fiscal year’s weight table.
Common Reasons CMI Changes
A shift in your CMI over time could reflect several things, and not all of them mean your patients got sicker or healthier:
- Changes in patient population. Adding a new surgical program or losing a specialist can shift the types of cases your hospital handles.
- Documentation improvements. Better capture of comorbidities and complications raises CMI without any change in actual patient acuity.
- Annual weight updates. CMS recalibrates DRG weights each fiscal year. A procedure that carried a weight of 2.0 last year might carry 1.9 or 2.1 this year, shifting your CMI even if your case volume is identical.
- Coding accuracy. Errors in DRG assignment, whether from incomplete documentation or incorrect code selection, can artificially suppress or inflate CMI.
When investigating a CMI change, it helps to separate volume effects from weight effects. If your CMI dropped but your discharge count and patient types are stable, the annual weight recalibration is a likely culprit. If your discharge mix shifted toward lower-acuity cases, that’s a volume composition issue, not a coding problem.