Describing and paying hospitals: Developments in patient case mix

This report to the membership of the Council of Teaching Hospitals (COTH) of the Association of American Medical Colleges summarizes continuing staff efforts to monitor case mix developments. It was presented in response to a COTH request for development of a state of the art paper on quantifying educational and intensity of care costs peculiar to teaching hospitals. Hospital case mix activity from 1965-1980 is reviewed. The characteristics of eight distinctive approaches to measuring case mix are summarized and discussed. Case mix reimbursement applications presently underway, or in experimental stages, are reviewed. The report describes nine policy issues which will affect the impact, equity, and acceptance of any reimbursement application using case mix: choosing a case mix measure; tying case mix to reimbursement; determining and allocating case-related costs; identifying, collecting, and processing data; deciding which third parties will participate; meeting the needs of different types of hospitals; and designing an exceptions process. Generalized and hospital-specific internal information systems keyed to or based on case mix are discussed. Some past and present research studies on case mix in teaching hospitals are reviewed.