How does under-coding affect a hospital's MS-DRG case mix?

Under-coding refers to the practice of not capturing all the relevant diagnoses and procedures during the coding process. When a hospital engages in under-coding, it often results in the assignment of a lower and less complex MS-DRG (Medicare Severity Diagnosis Related Group) than what may actually be appropriate for the patient’s condition. This leads to a case mix that does not accurately reflect the severity of the patients treated by the hospital.

By coding only some of the diagnoses or procedures, the hospital essentially reports a lower case mix index, which is designed to reflect the resource intensity and complexity of cases being treated. This can negatively impact the hospital's financial reimbursement from payers, particularly from Medicare, since funding is often linked to the accuracy of MS-DRG coding. Consequently, inaccurate and insufficient coding practices can lead to a lower case mix index than what is warranted based on the hospital's actual patient population.

This understanding of under-coding emphasizes the importance of accurate and comprehensive data documentation and coding to ensure that the hospital receives appropriate compensation and reflects the true nature of its patient care.