How can the practice of undercoding affect a hospital's MS-DRG case mix?

The practice of undercoding can significantly lower a hospital's MS-DRG case mix index, which is a measure that reflects the diversity and complexity of the cases treated in the facility. When a hospital engages in undercoding, it reports fewer or less severe diagnoses and procedures than were actually performed on patients. This means that the coding does not fully capture the true nature of the services provided.

As a result, the hospital's case mix index appears lower than warranted, meaning that it does not accurately account for the higher complexity of the cases treated. This can have serious implications for the hospital’s financial health, as a lower case mix index can lead to reduced reimbursement rates from Medicare and other payers. Essentially, undercoding misrepresents the hospital’s patient care workload, reducing its ability to be compensated adequately for the services actually rendered.