Case mix index (CMI) has become a standard indicator of hospital disease severity in the United States and internationally. However, CMI was designed to calculate hospital payments, not to track disease severity, and is highly dependent on documentation and coding accuracy. The authors evaluated whether CMI varied by characteristics affecting hospitals' disease severity (eg, trauma center or not). The authors also evaluated whether CMI was lower at public hospitals than private hospitals, given the diminished financial resources to support documentation enhancement at public hospitals. CMI data for a 14-year period from a large public database were analyzed longitudinally and cross-sectionally to define the impact of hospital variables on average CMI within and across hospital groups. Between 1996 and 2007, average CMI declined by 0.4% for public hospitals, while rising significantly for private for-profit (14%) and nonprofit (6%) hospitals. After the introduction of the Medicare Severity Diagnosis Related Group (MS-DRG) system in 2007, average CMI increased for all 3 hospital types but remained lowest in public vs. private for-profit or nonprofit hospitals (1.05 vs. 1.25 vs. 1.20; P<0.0001). By multivariate analysis, teaching hospitals, level 1 trauma centers, and larger hospitals had higher average CMI, consistent with a marker of disease severity, but only for private hospitals. Public hospitals had lower CMI across all subgroups. Although CMI had some characteristics of a disease severity marker, it was lower across all strata for public hospitals. Hence, caution is warranted when using CMI to adjust for disease severity across public vs. private hospitals.