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Mark C. Hornbrook
Kaiser Permanente Center for Health Research, Portland, Oregon 97215; and Depart
ment of Community Health Care Systems, School of Nursing, The Oregon Health
Sciences University, Portland, Oregon 97201
INTRODUCTION
295
0163-7525/85/0510-0295$02.00
296 HORNBROOK
of diseases over time and place-vertical equity. It should evolve to keep pace
with new definitions of disease and newly discovered diseases. It should be
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respect to the purpose for which the measure is needed , such as cost (in
designing a payment system), and splitting disease clusters according to signifi
cant differences in their nature that relate to the primary purpose . Determina
tion of how much splitting or lumping is required is a problem in valuation, not
measurement precision . This issue is discussed in a later section. Development
of case-mix measures entails derivation of alternative means of grouping cases
into meaningful classes, which must then be evaluated for consistency with the
measurement goal , be it research , management, or payment.
the past few years . It is not possible to present a comprehensive synthesis of this
literature within the space of this article. Instead, this overview acquaints the
reader with case-mix approaches tailored to the inpatient setting . Hospital
case-mix methods are the most well-developed, and the recent adoption of
prospective reimbursement by the Medicare program brings case-mix measure
ment to the forefront of policy debate, and makes it a high priority among
hospital administrators. This article illustrates the variety of approaches with
six leading case-mix methods, specifies the outstanding issues in the case-mix
field via comparison of these alternative methods, and identifies the most
important conceptual requirements for defining and selecting a measure of case
mix. A more comprehensive treatment of the conceptual issues in this area is
available in Hornbrook (26, 27). The case-mix techniques reviewed here are
Diagnosis-Related Groups , Disease Staging, Patient Management Categories ,
APACHE, Patient Severity Index, and Acuity .
OBJECTIVES
The general aims of this review are to provide an overview of the leading
approaches to case-mix measurement and to illustrate the similarities and
differences among alternative approaches in order to highlight the fundamental
principles of case-mix measurement. This is not a cookbook wherein the ideal
measure for any application is outlined . It is an attempt to foster increased
understanding of the complexities involved in this area for those who are not
familiar with the field and require a general orientation. This article does not
describe how to compute or apply particular methods. The reader must consult
the literature cited to learn the details of each technique.
The specific aims of this article are as follows:
Six case-mix methods developed primarily for hospital care are reviewed in this
section. One method, Diagnosis-Related Groups (DRGs), is now the basis for
reimbursing hospitals for care of Medicare beneficiaries. Another method,
Acuity, is being used to determine nurse staffing levels in a majority of
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hospitals in this country. The other four methods are being studied for their
potential contributions to understanding patterns of health care use and to
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Diagnosis-Related Groups
PURPOSE Diagnosis-Related Groups are perhaps the most well-known and
widely applied case-mix measure. They now serve as the basis for state-wide
hospital prospective reimbursement systems in New Jersey and Maryland and
for the Medicare program (8, 10, 1 1). The purpose of the DRGs is to relate "the
demographic, diagnostic, and therapeutic characteristics of patients to the
output they are provided so that cases are differentiated by only those variables
related to the condition of the patient (e.g. age, primary diagnosis) and
treatment process (e.g. operations) that affect his utilization of the hospital' s
facilities" ( 1 3, p . 2). The developers o f the DRGs rejected patient groups
defined on the basis of principal diagnosis alone because such groups do not
show sufficiently homogeneous utilization patterns. This is because principal
diagnosis does not subsume all of the clinically pertinent aspects of patients'
illnesses, or any relevant socioeconomic characteristics of patients, or any
characteristics of providers or the health care system. Not all of these factors
should be incorporated into a case-mix measure, however, as is discussed
below.
number of classes; and (d) similar length of hospital stay and total resource use
'
for patients within any class.
Primary emphasis in the development of the DRGs was placed on clinical
judgments, whereas secondary emphasis was placed on statistical partitioning
( 1 4). The first step in the DRG classification is the Major Diagnostic Categories
(MDCs). The MDCs represent mutually exclusive and exhaustive groupings of
the International Classification of Diseases, 9th Revision, Clinical Modifica
tion (ICD-9-CM) (7) . The codes are grouped by organ system rather than
etiology, because this method follows the organization of medical specialties
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1. MDC 14, "pregnancy, childbirth and the puerperium ." Initial split: Deliv
ery during this admission?
2. MDC 15, "normal newborns and other neonates with certain conditions
originating in the perinatal period. " Initial split: Died or transferred?
3. MDC 1 7 , "myeloproliferative disorders and poorly differentiated malignan
cy and other neoplasms not elsewhere classified." Initial split: Lymphoma
or leukemia principal diagnosis?
4. MDC 20, "substance use disorders and substance-induced organic dis
orders. " Initial split: Left against medical advice?
5. MDC 22, "bums." Initial split: Transferred to another acute care hospital?
The third level in the DRG hierarchy is specification of lists of medically
significant complications and secondary diagnoses for grouping patients and
identifying case types. Complications and simultaneous diseases were defined
as significant if average length of stay was observed to increase by at least one
day in 75% of the cases in the original DRG database. Finally, age and death
were included as criterion variables for the DRGs.
A total of 470 DRGs were defined. However, only 468 of them represent
300 HORNBROOK
actual case types. DRG 469 is "patients with a principal diagnosis that is invalid
as a discharge diagnosis," and DRG 470 is "patients that are unclassifiable
because of missing or invalid information. "
An illustration of the DRG classification scheme is shown in Figure 1. The
patient's principal diagnosis-the condition that after study is determined to be
the reason for admission to the hospital--determines which MDC applies, in
this case, skin and breast conditions. The surgical procedures performed, if
any, determine placement in the surgical/medical partitioning. Principal di
agnosis determines placement in the medical partitioning. In some cases,
Annu. Rev. Public Health 1985.6:295-322. Downloaded from www.annualreviews.org
diagnosis and procedure criteria are applied jointly, as with cancer of the breast
and mastectomy versus excision versus no procedure. Then, the patient is
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classified by age (usually, age 69 and below versus age 70 and above), and
presence of significant complications or comorbidities are classified as second
ary diagnoses. For trauma and cellulitis without an operating room procedure,
an additional age break is introduced-age 17 and below versus age 1 8 and
above.
The partitioning of MDC 9, "diseases of the skin, subcutaneous tissue and
breast," results in 28 DRGs. Breast disorders comprise nine DRGs-six
surgical groups and three medical groups. The effects of age, complications,
and secondary diseases on resource use within a procedure group is illustrated
by DRGs 257 and 258. Under the Medicare program, total mastectomy for
malignancy carries a relative weight of 1 . 1085 for the older and/or complicated
group, and a weight of 1.0729 for the younger, uncomplicated group ( 10). The
most resource-intensive DRG within this MDC is skin grafts for skin ulcer in
the older and/or complicated group, with a weight of 2.4737 ( 1 0). The least
intensive DRG is trauma to the skin in persons less than 1 8 years old, with a
weight of 0. 3460 ( 1 0). Note that these resource weights were developed with
data from the Medicare population; a younger population may reveal a different
pattern of resource use across the DRGs.
The DRGs, as they have been implemented in reimbursement systems in
New Jersey and the Medicare program, contain another overarching classifica
tion criterion-outliers. In any given DRG, patients whose lengths of stay are
above a specified threshold are considered to be a distinct class of patients. In
New Jersey, patients with very short lengths of stay were treated as separate
classes of patients. Finally, under the new Medicare prospective payment
system, patients with very high costs, but who do not meet day-outlier criteria,
are also considered to be separate sets of patients under each DRG. These
modifications essentially double and triple the number of classification rubrics
under the DRG scheme.
The data base used in construction of the DRGs was developed from a
sample of 332 hospitals subscribing to the Professional Activities Study of the
Commission on Professional and Hospital Activities (CPHA). The sample was
CASE-MIX MEASUREMENT 30 1
Disease Staging
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Principal
Malignancy
Diagnosis of
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Figure 1 Major Diagnostic Category 9: "diseases of the skin, subcutaneous tissue, and breast." A. Surgical partitioning. B. Medical partitioning. Legend: \j.l
OR procedure: Operating room procedure. Age 70 CC: Patient's age> 69 years and/or presence of complications or comorbidities. CC: Presence of
complications and/or comorbidities. Source: Fetter, R. B., et al. 1 98 1 . The New ICD-9-CM Diagnosis Related Groups . Classification System. User's
Manual. New Haven: Health Systems Management Group, Yale Univ.
304 HORNBROOK
Staging criteria for over 400 diseases have been developed (17). These,
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along with some "catch-all" criteria sets, cover nearly all the discharges from
typical community hospitals. A panel of 23 medical consultants was formed to
assist in specification of the medical staging criteria. Each disease was assigned
to two members of the panel to be staged independently. The specific instruc
tions to the panel called for every condition to be divided into at least four
primary stage categories, according to the generic definitions specified above.
Table 1 Disease staging criteria for otitis media and cancer of the lunga
Death Death
Brain abscess; subdural abscess Tumor of any size with direct extension into a adjacent
structure such as the parietal pleura or chest wall, the
Meningitis diaphragm, or the mediastinum and its contents or a tumor
demostrable bronchoscopically to involve a main bron
Otitis media and/or mastoiditis with chus less than 2.0 cm distal to the carina; or any tumor
CNS complications associated with atelectasis or obstructive pneumonitis of
an entire lung or pleural effusion
Facial nerve paralysis Tumor more than 3.0 cm in greatest diameter, or a tumor of
any size that either invades the visceral pleura or has
Labyrinthitis associated atelectasis or obstructive pneumonitis extend
ing to the hilar region. At bronchoscopy, the proximal
Perforated eardrum or mastoiditis extent of demostrable tumor must be within a lobar bron
chus or at least 2.0 cm distal to the carina. Any associated
Acute otitis media with complications atelectasis or obstructive pneumonitis must involve less
than an entire lung, and there must be no pleural effusion.
Acute otitis media Tumor that is 3.0 cm or less in greatest diameter, surrounded
by lung or visceral pleura, and without evidence of inva
Serous otitis media sion proximal to a lobar bronchus at bronchoscopy.
'SOURCE: Gonnella, J. S., ed. 1983. Clinical Criteria for Disease Staging. pp. 192,262-63. Santa Barbara,
Calif.: SysteMetrics, Inc.
CASE-MIX MEASUREMENT 305
on that condition. Only single disease entities, without concern for complica
tions arising from a simultaneous, unrelated condition or factor (e.g. skin
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Other than principal diagnosis, the staging software does not require any
ordering of multiple diagnoses. Moreover, the software will overrule the
principal diagnosis listed if it is a complication or manifestation of a listed
secondary diagnosis, according to the medical criteria. For example, neuro
pathy is considered a manifestation of diabetes mellitus by the software when
both conditions are listed on a discharge abstract, regardless of the order in
which they appear. Staging can be done manually from medical records as
well. Experienced medical records technicians can easily and reliably assign
the stage of disease from a full medical chart. Staging from the record gives
Annu. Rev. Public Health 1985.6:295-322. Downloaded from www.annualreviews.org
more valid results than from the discharge abstract or face sheet because of the
greater amounts of data available.
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Staging has been used in a number of studies to evaluate health care quality
and costs (5, 1 5, 18, 19). It provides a useful framework for organizing clinical
data on the patient for purposes of analysis of utilization patterns.
fined by medical consultants on the basis of principal diagnosis and reason for
admission to the hospital . Reason for admission included factors other than the
diagnosis that were pertinent to use of the hospital at a particular point in time.
Second, the medical consultants specified patient management paths (PMPs),
which describe the essential components of the diagnostic and treatment
regimen for each PMC. These management paths are the key services that are
expected to be provided to a typical patient; they are neither optimal nor
complete care of every individual case, nor are they the most frequently
observed patterns of care for a set of hospitals. The PMPs are not intended to be
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via assignment of dollar costs to each service component. These cost estimates
were derived from an accounting cost-finding methodology applied in six
Western Pennsylvania hospitals. This resource scalar serves as the costliness
weight for the PMC. The PMPs are not used to classify patients, rather only to
derive the costliness weights.
Specification of the patient's reason for admission (RFA) is based on two
factors for which information can be found on the patient's medical record: the
patient's chief problem; and performance of an elective procedure. The RFAs
are defined specific to each underlying disease. The medical consultants
defined which procedures are considered to be elective in determining a PMC .
A basic assumption of the PMCs is that the clinical status of the patient at time
of admission, in addition to the discharge diagnosis, should be assessed for
predicting patterns of resource use during the course of a hospital stay. Data on
the chief problem or presenting condition are not routinely available on most
discharge abstracts. To address this problem, Young et al developed algorithms
for mapping the vector of diagnostic codes and other discharge abstract data
onto the PMCs (which include RFA specifications), so that patients can be
classified into the PMCs without collecting new data on reason for admission.
Validation of this algorithm with medical record data has shown a very high
degree of match in assignment of PMCs between the two approaches. It is
important to point out that the reasons for admission are not defined relative to
the admitting diagnosis; often this diagnosis is assigned by the physician with
the object of gaining a bed for the patient rather than accurately describing the
patient's clinical status at that point. PMCs are defined after discharge on the
basis of all information available regarding the patient's illness and hospital
stay. PMCs do not represent a hierarchical mapping from RFA to principal
diagnosis to PMC; rather, all of these elements were considered simultaneously
by the medical consultants in order to avoid specifying multiple PMCs that lead
to the same PMP, and defining single heterogeneous PMCs that lead to
completely divergent PMPs.
An example of a set of PMPs, and their associated PMCs, is presented in
308 HORNBROOK
Figure 2. The paths incorporate initial diagnostic work-ups, which may lead to
more than one PMC. More than one PMC may be defined if differences in
therapy warrant the split, as with fractures due to bone metastasis .
APACHE
assessing severity among patients in the Intensive Care Unit in order to control
for risk of poor outcome in trials of new therapies (29).
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� Diagnoses
Benign
Components of Therapy Lengths of Stay
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None 2 Days
Chest X-ray Breast Neoplasm
J
�
Elective Admission:
Excisional Biopsy
Palpable Breast
Mass!
I-- Liver Function Studies
Bone Marrow Biopsy
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Mammography!
Operative Procedure Bone Sean
Xeroradiography Malignant
Hormone Receptor Studies 7-10 Days
Breast Neoplasm
I Liver Scan
Surgieal lntervention
Metastatic Workup'
Arterial Blood Gases
Closed Pleural Biopsy
Chemotherapy
Pulmonary Lung Tomagram Lung Metastasis
Chest Tube Insertion
Metastatic Pleural Ruid Examination from Malignant 7-10 Days
for Pleural Effusion
Involvement Pulmonary Function Tests Breast Neoplasm
Oxygen
Sputum Examination
Thoracentesis for
Pleural Effusion
Antibiotics (parenteral)
Physical Therapy 10-14 Days
Surgical Intervention
Skeletal Metastatic Workup' Bone Metastasis
Metastatic Skeletal x-rays from Malignant
Involvement Tomogram Breast Neoplasm
Chemotherapy
n
Physical Therapy 7-10 Days >
til
Radiotherapy
tp
Elective Admission:
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Malignant -
Figure 2 Patient management categories and paths: breast neoplasms. Source: Young, W. W., Swinkola, R. B., Zorn, D. M. 1982. The measurement of �
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hospital case mix. Med. Care 20:509. \0
310 HORNBROOK
Hematologic H emoerit
White blood count (total)
Platelets
Protime, no anticoagulants
shown that patients with severe chronic illnesses are four times as likely to die
during their rcu stays as patients with no chronic conditions (29). Examples of
the component scales of the APS are shown in Table 2.
Unlike other case-mix methods, APACHE does not incorporate specific
diagnosis as a classification dimension because it is not usually relevant for
CASE-MIX MEASUREMENT 311
explaining use of the ICU. Need for life support or close monitoring is the
major reason for ICU admission, and this is related to level of functioning of the
critical organ systems . The developers of APACHE collapsed principal di
agnoses at ICU admission into the seven major organ systems, which constitute
the third part of the APACHE classification system.
The APACHE classification system is typically applied within 24 hours of
admission to the ICU, because this is the period when the greatest degree of
derangement is likely to be observed and when the necessary data are likely to
be available. While APACHE can be applied at any time subsequent to this, it
Annu. Rev. Public Health 1985.6:295-322. Downloaded from www.annualreviews.org
overall hospital case mix because of its focus on intensive care. However, the
principle underlying the APS, objective physiologic measurement, can be
extended to all case types admitted to the hospital in order to achieve greater
precision in classification within general disease areas. Preliminary work by the
developers of APACHE has resulted in identification of 12 factors included in
the APACHE that can serve as a useful subset of the 33 factors with wide
applicability (31a). These are heart rate, mean blood pressure, respiratory rate,
temperature, Glascow coma score, hematocrit, white blood cell count, serum
potassium, serum sodium, serum creatinine, serum pH, and serum Pa02.
These variables are presently measured on nearly all hospital admissions, and
can be scored and summed in the same fashion as with APACHE.
PURPOSE The purpose of the Patient Severity Index (PSI) is to measure the
severity of the patient's illness, so that the performance of physicians with
respect to prescribing appropriate lengths of stay or ancillary services can be
examined and the overall costliness of the hospital can be predicted (25).
The PSI is illustrated in Figure 3. The complete set of definitions for the
various levels of each factor is contained in Hom (25).
Classification of patients with the PSI requires data from the history and
physical examination, progress notes, radiological findings, laboratory results,
and nursing notes. Thus, a comprehensive review of the patient's course is
required. Reliability studies of the PSI have shown a high degree of inter-rater
concordance in assigning severity scores (23) . Validity studies have revealed
positive association between PSI and total charges, length of stay, laboratory
charges, routine charges, and radiological charges (22, 24) .
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Acuity
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Levels
Characteristic 1 2 3 4
Stage of Moderate
Principal Asymptomatic Manifestations Major Manifestation Catastrophic
Diagnosis
Moderate Major
Complications None or (less important (as or more important Catastrophic
veryminor than principal than principal
diagnosis) diagnosis)
Severity rating
(circle one): 2 3 4
Figure 3 Patient severity index. Source: Hom, S. D. 1983 . Measuring severity of illness:
Comparison across institutions. Am. J. Public Health 73:26.
CASE-MIX MEASUREMENT 313
which every nursing service provided to each patient is logged, together with
the time required to perform that service. The average nursing resources
required per patient-by-shift are computed. A system for classifying patients by
level of nursing needs (acuity) is developed by clustering selected activities and
their average performance time. Most acuity systems incorporate level of
dependence (as indicated by activities of daily living), treatments (dressing
changes, isolation procedures, irrigations, etc), medications (oral and IV),
monitoring (instability, suicide precautions, etc), patient education, and other
nursing activities. Each nursing acuity class is assigned an intensity weight
equivalent to hours of care. The range of weights is subdivided into four or five
ordinal classes. The sum (or average) of these ordinal scores, together with the
number of patients, determines the unit staffing level required, based on a
predetermined set of coefficients for that unit. An example of an acuity system
is shown in Figure 4.
Patient acuity systems are prospective judgments regarding the level of
nursing care required for a patient during the next eight-hour shift. They are not
a measure of severity of illness, although more severely ill patients generally
require more nursing care. Acuity is not a measure of actual services provided
to patients, as it is a prospective index. However, it can be assumed that over
large numbers of patients, the nursing care plans imbedded in acuity judgments
are actually implemented, so that acuity is likely to be a good proxy measure of
nursing intensity. Curtin (9) has suggested that acuity and DRGs be combined
into a single classification scheme, with each DRG subdivided into four acuity
levels for the purposes of reimbursing for nursing services.
Minimal Assistance
(Needs help in 1 Or 2 areas), 5 Routine ObselVation (q shift v.s.I&O) 5
...J Moderate Assistance Close ObselVation (q 4 hours v.s. 1&0,
q (Needs help in 3 or 4 areas)' 15 Stage I Alcohol Withdrawal) 10
«
Total Care t!l Unstable Condition (q 1-2 hour assess.,
(Needs help in 5 Or 6 areas), 20 z immediate Post Op., Stage II & III Alcohol)
15
a:
Drainage Tubes Potentially Dangerous (q 30 minutes,
(Hemovac, Foley, N/G)
5 g
Z
assessment Stage IVAlcohol) 20
0 T itrate Dosage.of potentially dangerous
Traction 10 :2: drugs 20
Simple Dressing Closely Watched (confused, demanding,
(Inspection, Reinforcement. Replace) 5 suicide or seizure precautions) 20
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Complex Dressing
(Drains, Special Cleansing, Pack, Bag) 15 Repetitive Requests 15
w
:2: Irrigations
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(Enema, Douche, GU, Catheter, N/G) 10 t!l Intensive Teaching (>1 hour/shift) 20
55 Special Procedure Assists' (Spinal Tap,
20
z
5: Teaching-Home Care, Discharge
a:
I- T horacentesis, Subclavian Insertion) u Planning (10-20 minutes/shift)
10
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Figure 4 Acuity classification system. *Activities of daily living: bathing, dressing, eating,
toileting, transfering, ambulating. Source: Bess Kaiser Medical Center, Kaiser Permanente,
Northwest Region, Portland, Oregon.
Diagnostic Classification
Three of the systems are based on a preexlstmg diagnostic classification
system-DRGs, Staging, and PMCs. The International Classification of Dis
eases, 9th Revision, Clinical Modification (ICD-9-CM) (7), a classification of
diseases, injuries, impairments, symptoms, and causes of death, is now widely
used by US hospitals. The scheme includes over 1 0, 000 categories. The
ICD-9-CM is a comprehensive coding system. It attempts to code the structural
aspects of disease for the pathologist, the clinical manifestations of disease for
the clinician, and the vagaries of human behavior for the statistician. This
comprehensiveness is both a strength and a weakness. There is likely to be a
code number to represent every possible reason for contact with the health care
system-disease, health problem, prevention, consultation, administrative re-
CASE-MIX MEASUREMENT 315
quh'ement, and so on. The ICD-9-CM probably represents the most compre
hensive, finely divided classification system for inpatient care. In this sense, it
represents the ultimate frame of reference for all other classifications related to
in-hospital activities. There are, however, some critical shortcomings with this
scheme, especially for use as the foundation of a case-mix measure.
The ICD-9-CM is not consistent in its coding criteria across diseases. For
example, the dimension of severity, i.e. mild, moderate, severe, may be
applied to any diagnosis, but it is specifically allowed in this system for only a
few selected diagnoses. At any given level of classification, the cells are not
Annu. Rev. Public Health 1985.6:295-322. Downloaded from www.annualreviews.org
When these factors are not consistently coded, a case-mix measure cannot
incorporate them on a uniform basis across all classes.
Utilization Criteria
Two of the case-mix approaches are dependent on utilization data for classifica
tion-DRGs and PSI. Cardiac surgery DRGs, for example, do not require that
the indications for a specific procedure be present, other than a principal
diagnosis of cardia}: disease, only that the procedure was actually performed.
Classification of bum cases by whether or not they were transferred to another
hospital is, literally, an assessment about how the case was handled in the
health care system, rather than an assessment of the intrinsic nature of the bum
injury or the physiologic response. One can presume that most transfers of bum
cases represent transfers to bum units where the patient can receive more
intensive care, appropriate to the severity of the bum, and that the transferring
hospital would receive less payment because less had been done for these cases.
Hospitals can affect the classification of patients in this MDC by whether or not
the patient is transferred, independent of the actual severity of the bum or the
medical need for the transfer. Patients with nonextensive bums who do not
receive an operating room procedure have a relative payment weight of 1 .4225
under the Medicare program; if this case is transferred, the payment weight
rises by 47% to 2.0902 ( 1 0). Full payment is received in the event of a transfer
because the definition of the DRG includes the transfer.
Ideally, a case-mix classification system should be independent of the
utilization patterns because the nature of the disease is exogenous to the
hospital. Cases should not be transformed (other than cured) by how physicians
decide to treat them. The rationale for employing utilization as a measure of
output is two-fold: one is that under the assumption of constant efficiency,
inputs can serve as proxy measures of outputs. If the patient received surgery
and if the physician is providing care of acceptable quality, then it can be
assumed that the patient needed the surgery. Since utilization data are more
readily available than clinical data, this approach is quite attractive. The other
Table 3 Comparison of six case-mix measures w
-
0\
Characteristic Diagnosis-Related Disease Staging Patient Manage- APACHE Patient Severity Acuity
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�
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�
No. of classes 467 x 3 1600 + 1000 + Vcry large 4 and up 4 0
t;'I\
Source data Discharge abstract Medical record or Discharge abstract Medical record or Medical record Direct observation
or medical re- discharge ab- or medical re- disrect observ.
cord Slrac! wrd
Classification Principal di- Principal di- Principal di- Principal di- Diagnoses; his- Nursing assess�
variables agnosis; sec. agnosis; sec. agnosis ; sec. agnosis; lab tory and phy- ment
diag . ; age; diag.; sex; ruag.; reason tests; history sical; lab tests;
prin. surgery; dis- for admission; and physical x-rays; progress
procedure; sec. charge disposi- chief problem; and nursing
procs. ; sex; lion elective proc. notes
discharge dis-
position
Comorbidity in- Yes-specific di- Yes--secondary Yes-secondary Yes--multiple Yes--any factor Yes-any factor
eluded? agnoses diag . as comor- diag. as comor- system impacts that affects that affects
bidily, and nidity and com- length of stay
complicatioos plications
Iatro-genesis No No No No No No
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omitted?
No No Yes No Yes
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Deaths omitted? No
Discharge to No No No No No No
other facility or
against advice
omitted?
Iso-resource Classification
From a theoretical perspective, the DRGs are not based on any definition of the
concept of resource use. Resource heterogeneity can be defined in terms of
length of stay, total costs, type or mode of treatment, type of manpower inputs
required, minutes of physician time required, and so on. Different case-mix
measures are likely to be implied by these differing indicators of resource use.
Users of the DRGs should always bear in mind the fact that they were derived
on the basis of length of stay as the measure of resource use.
The DRGs are not organized by etiology or stage of disease. Complications
and comorbidities enter the scheme as having effects or not; no attempt is made
to scale these factors in terms of their expected influence on patterns of care .
Interactions among multiple complications are not detected by the DRGs.
One of the most important drawbacks to DRGs is that they depend on the
specific data base and analysis employed in their derivation. Data from a
different set of hospitals would probably contain different patterns of practice,
yielding different splits. Moreover, Fetter et al ( 1 3 , 14) do not define "clinical
meaningfulness." Rather, clinical meaningfulness and the appropriate degree
of variance reduction were defined operationally by the DRG physician consul
tants, that is, meaningfulness was what they found to be meaningful among
themselves. Even with identical input data, another group of physicians might
define DRGs differently. This was demonstrated by Young et al (33).
single disease entity, but now it i s known to be at least eight or nine. The DRGs
must be periodically reviewed and reevaluated in terms of new diseases and
within-group homogeneity of resource use. A new procedure that reduces costs
and length of stay for one specific condition within a particular DRG may
render the DRG too heterogeneous to serve as the basis for reimbursement. In
contrast, Staging criteria need be revised only in light of new developments in
understanding of disease processes . APACHE would be revised as new labora
tory tests are devised to replace component scales in the APS.
Acceptability
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Despite their problems, DRGs do have at least four advantages: (a) they
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represent considerably fewer case types than the ICD-9-CM; (b) they can be
applied by means of a simple classification algorithm (now coming to be known
as the "DRG Grouper") to a few data on computerized hospital discharge
abstracts; (c) they represent a sufficiently large number of case types so that
case-mix differences among most hospitals can be detected; and (d) DRGs have
become familiar to many persons in hospitals and reimbursement programs.
Thus , DRGs are the most widely accepted case-mix measure.
Disease staging is likely to be acceptable to physicians because it was
derived by physicians for use by the medical profession and because of their
previous exposure to cancer staging . The medical staging criteria have not been
directly validated to determine whether patients in Stage 2 of a given disease do
actually have a higher risk of adverse outcome than patients in Stage 1 .
Moreover , the face validity o f stage definitions have not been determined via
review by an independent group of physicians or critique from the various
specialty societies. [Several sets of criteria related to otological conditions have
been through a peer review process and published in a specialty journal (32)].
The Staging criteria would be much more acceptable to administrators, re
searchers, and policymakers if high interphysician agreement on stage rankings
and definition could be demonstrated.
Subjective Classification
The two so-called "generic" case-mix methods-PSI and acuity-are limited
only by the discriminatory powers of the raters, i.e. nurses and medical records
technicians, in achieving precision. It is quite possible for a clinical rater to
identify thousands of classes, but the meaning of those classes depends on the
assumptions made by the raters in assessing severity and nursing needs.
Application of the PSI is relatively labor intensive, which reduces its useful
ness as a case-mix measure in applications to large-scale databases. It has not
been computerized , and approximately seven to eight minutes are required to
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rate a chart for severity using the PSI. In preliminary applications of the PSI
paired with medical record coding for the discharge abstract, the incremental
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time required to assign the severity score was around two minutes (S. D . Hom,
personal communication).
The classes of the PSI are ordinal in nature, in that the difference between
level I and level 2 patients is not the same as between level 2 and level 3
patients; moreover, level 2 patients are not twice as severely ill as level 1
patients.
When applied within specific diseases, the PSI provides more homogeneous
groups of patients with respect to resource consumption than the DRGs ,
Staging, and PMCs (25) . The PSI is meant to be "generic" in that it can be
applied across , as well as within, diagnostic categories . That is, all level 1
patients can be grouped, regardless of diagnosis. It is not surprising that the PSI
performs well in classifying patients because the rater must read the entire
medical record for a given episode to produce a severity rating. To duplicate
this intuitive process on the computer would require an extremely large set of
variables and a very complex decision logic. Thus, the subjective approach
enables classification on the basis of complex criteria that would not otherwise
be feasible. However, it is not possible to observe or replicate this process for
any given patient , so that one cannot be sure on what basis the rater arrived at a
severity assignment. For example, this rater may use resource use as an
indicator of severity-"the patient stayed 20 days so he must have been very
sick. " Also, the medical record is, in essence, a justification for what was done
for the patient. Evaluation of the patient's response to therapy, when assessing
severity, assumes that the treatment itself was effective and appropriate. The
medical record does not provide an exogenous set of criteria to discriminate
between resistant diseases and inappropriate diagnosis and treatment.
Standardization
Five of the case-mix measures described herein represent standardized mea
sures that are designed to be replicatable across multiple applications. Acuity,
however, represents thousands of tailored variants. Standardization of acuity
systems has not been pursued because nursing staffs have felt the need to
CASE-MIX MEASUREMENT 32 1
tain the same relative ordering of services within and across case-types. The
alternative hypothesis is that acuity systems do not have any correspondence
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with one another, which seems highly unlikely given that all of the systems are
looking at approximately the same nursing tasks with the same technology.
Acuity systems are likely to be rather robust in their sensitivity to case-type
differences in nursing resource use.
One of the oft-cited limitations of acuity ratings is the bias toward inflating
the ratings by nurses to acquire additional staffing for the unit . Nursing
administrators report that they know who are the most flagrant abusers of the
acuity system and these persons are routinely counselled to bring their ratings
into line. Thus, the acuity system may be subject to some upward creep, but
administrators exert countervailing pressures. However, it is not likely that
acuity creep will be systematically different between cases. Creep is likely to be
shift -specific and, perhaps, unit-specific, so that over the course of the stay, the
acuity rating will vary randomly around the "true" acuity level. That is,
manipulation of acuity ratings is presumed to add random disturbances to the
data, rather than confounding effects.
Valuation of Output
A disadvantage of all the case-mix systems developed to date is that they are not
true measures of output. The ultimate output of a hospital is its contribution to
social welfare. This means that case-types should be valued according to their
social worth, not according to their costs of treatment . An expensive case-type
is merely one that is costly to treat, not one that deserves to be treated. While it
is true that sicker patients usually require more care and services, and that
society usually stipulates that the sickest get higher priority in resource alloca
tion, the risk in case-mix measurement is that the "black box" of the compli
cated classification algorithms obscures an essential feature: greater case-mix
complexity is a reflection of the nature of cost, rather than of the nature of social
welfare. For example, the cost of treating a complicated closed head injury can
be computed and can be shown to be higher than that for uncomplicated
pediatric otitis media. But, it is a different issue to say that treatment of a head
injury is worth more than treatment of otitis media. This caveat is issued to
322 HORNBROOK
warn of the potential trap of any case-mix measure extant in the literature.
Social welfare criteria are required to valuate case mix in order to arrive at a true
measure of output.
Multiple Conditions
One of the critical problems not addressed by most of the above classification
systems is that patients often present with more than one diagnosis or symptom.
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Manipulability
A second research need derives from the imper-atives of the Medicare program.
The manipulability of DRGs and the interhospital differences in within-DRG
variation in use of resources create an imperative for accelerated development
of objective case-mix measures, preferably based on common, inexpensive
laboratory tests. APACHE and Staging show the greatest promise for extension
in this direction.
the point of coding the patients' medical records . If all hospitals have equal
opportunity and are equally proficient in this process, then the relative ordering
of case mixes among hospitals is likely to be preserved. However, it is possible
that some hospitals will play the "DRG game" better than others , thus prolong
ing the difficulty of attaining horizontal and vertical equity in hospital reim
bursement.
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324 HORNBROOK