Could “Severity of Illness” Impact Your Hospital’s Bottom Line?

January 09, 2023

By Molly Hegarty, MS RDN

Malnutrition is a frequently missed diagnosis that can negatively impact hospital revenue. In previous blog posts, we’ve outlined how undocumented malnutrition leaves payments on the table, but a technology-driven, multidisciplinary approach to screening, assessing and documenting a secondary diagnosis of malnutrition can result in higher hospital reimbursements.

Under the Medical Severity-Diagnosis Related Group (MS-DRG) system used by the Centers for Medicare and Medicaid Services (CMS) for hospital payments for Medicare beneficiaries, malnutrition may qualify as a either a major complication/co-morbidity (MCC) or complication/co-morbidity (CC) thereby increasing the base level reimbursement for the primary diagnosis. However, hospitals routinely rely on another classification system, the All Patient Refined DRG (APR-DRG) developed by 3M, to determine the most accurate assessment of the patient’s severity of illness (SOI) and risk of mortality (ROM). So it’s important to understand how diagnosing malnutrition fits into this model.

What is SOI and How Does it Impact Hospital Reimbursement?

Severity of Illness or SOI, refers to the extent of physiologic decompensation or organ system loss of function. Plainly, SOI is a measure of how sick a patient is, based on their clinical condition, functional status among other factors. Some payors, including many state Medicaid programs, opt to use the AP-DRG method to classify hospital inpatient stays into clinically meaningful diagnostic groups which will determine the amount the hospital gets paid for a given condition regardless of actual length of stay. But unlike the MS-DRG system in which reimbursement is driven by the primary diagnosis and the existence of only one CC or MCC, APR-DRGs take into consideration all secondary diagnoses and procedures that impact the complexity of the patient’s situation including age, gender, risks and expected course of treatment. In this method, hospital payments will be adjusted based on the resulting impact of the SOI level, so it is critical to document all of the patient’s contributing conditions. If malnutrition goes undocumented and undiagnosed, then the true picture of the patient’s SOI will be underestimated.

In general, every complete inpatient stay is assigned to a single DRG using a computerized algorithm that considers the patient’s diagnoses, age, procedures, and discharge status. Each DRG has a relative weight that reflects the typical hospital resources needed to care for a patient in that DRG relative to the hospital resources needed to care for the average patient. SOI can be calculated using the All Patient Refined Diagnosis Related Groups (AP-DRG) system algorithms. SOI scores are based on all comorbidities (like malnutrition) and are stratified into four levels: 1. Minor, 2. Moderate, 3. Major, and 4. Extreme. Each patient encounter is then assigned to one of the four levels based on the number, nature, and interaction of complications and comorbidities. Higher severity levels will trigger higher payments due to the increased expected cost of caring for these complex patients. So a secondary diagnosis of protein-calorie malnutrition may affect the overall SOI for the patient. Payment would increase based on the shift in the APR relative weight for this case. See the example below to see the extent of this effect.

Comparison of Impact of Severe Malnutrition on AP-DRG Severity of Illness, Relative Weight and Hospital Reimbursement Revenue

Base AP-DRG Group194 (heart failure)194 (heart failure)
Primary DiagnosisCongestive Heart Failure (CHF)Congestive Heart Failure (CHF)
Secondary Diagnosis•   Chronic Obstructive Pulmonary Disease (COPD)
•   Atrial Fibrillation
•   Chronic Obstructive Pulmonary Disease (COPD)
•   Atrial Fibrillation
•   Severe Protein Calorie Malnutrition
•   Decubitus Ulcer
Severity of Illness (SOI)24
Risk of Mortality (ROI)24
APR relative weight0.70352.3149
Estimated Reimbursement (Given an average DRG base rate of $6000)$441.00$16,204.30
 Source: Adapted from CDI Strategies, Volume 12, Issue 4, 2018.

Tracking Quality Improvement & Utilization

Beyond payment, hospitals further use these AP-DRG SOI and ROM factors to track and compare quality and resource utilization, as well as to generate health status risk scores that health plans and payors use to predict costs for healthcare services. These factors help healthcare providers determine the appropriate level of care for each patient, and can also be used to help predict outcomes and guide critical treatment decisions. SOI can also serve as a targeting system that helps clinical facilities reach KPIs and reduce unnecessary resource expenditures.

According to 2018 data from The Agency for Healthcare Research and Quality, malnutrition affects more than 30% of hospitalized patients, but only 8.9% received a coded malnutrition diagnosis upon discharge. As discussed in this ASPEN video overview of a study published in Nutrition in Clinical Practice, malnourished patients are at much higher risk for poor health outcomes, require significantly longer hospital stays and are more likely to be readmitted. If you compare patients with malnutrition to those without a diagnosis of malnutrition, you see just how big an impact malnutrition has in terms of cost and outcomes:

  • Longer length of stay: 9.0 days vs 4.7 days
  • Higher in-hospital mortality: 3.4 times higher
  • Higher hospital costs: $9,969 more per stay
  • Higher readmission rates: 89.2% vs 77.2%

Junum helps hospitals address malnutrition so they can maximize the value of their clinical teams, drive revenue and deliver better patient care. Junum’s MalnutritionCDS™ software improves clinical workflows, saves physicians time, and helps CDI and Coding teams more accurately determine a patient’s true severity. As one of our Client hospital physician leaders said, “the specificity of malnutrition metrics we are able to quantify [now with Junum] are a game-changer in calculating risk of mortality and severity of illness.”

By accurately assessing and documenting the severity of illness of their patients, hospitals can ensure that they are reimbursed appropriately for the care they provide. Accurate SOI can also help payors better understand the resource utilization and costs associated with treating complex cases. This can inform their decision-making and help them identify opportunities for cost containment and efficiency improvements.

Overall, tracking SOI in malnutrition cases is beneficial for hospitals, patients, and payors. It helps hospitals provide the best possible care to their patients, and it helps payors understand the costs and resource utilization associated with treating malnutrition cases. By working together, hospitals and payors can improve patient outcomes and control costs, ultimately benefiting the healthcare system as a whole.

At Junum, we help hospitals achieve better SOI accuracy and improved malnutrition care. Get an inside look at how our tools drive higher reimbursements by scheduling a demo at

¹ All Patient Refined Diagnosis Related Groups (AP-DRGs): Methodology Overview. Version 20.0. 3M Health Information Systems; 2003.
² Fernandes, et al. Does malnutrition influence hospital reimbursement? A call for malnutrition diagnosis and coding,Nutrition,Volume 74,2020,110750.
³ Souza J, Santos JV, Canedo VB, Betanzos A, Alves D, Freitas A. Importance of coding co-morbidities for APR-DRG assignment: Focus on cardiovascular and respiratory diseases. Health Information Management Journal. 2020;49(1):47-57. doi:10.1177/1833358319840575
⁴ Based on 2018 HCUP data. Guenter P, Abdelhadi R, Anthony P, et al. Malnutrition diagnoses and associated outcomes in hospitalized patients: United States 2018. Nutr Clin Pract. 2021.

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