BACKGROUND An independent health care evaluating organization reported on the Internet that the 1996-1998 mortality rate for simple pneumonia (one of the diagnoses in diagnosis-related group [DRG] 89) was 11.06% (expected rate, 7.69%)--a rate much higher than suggested by the medical center's prospective quality surveillance. Chart review was undertaken to explain this reported higher mortality rate. METHODS Two-hundred forty-six charts of patients (123 expired, and 123 alive at discharge) were reviewed; each chart concluded with a principal diagnosis. The differences between the originally coded principal diagnosis and the recoded principal diagnoses were examined. RESULTS Application of Coding Clinic guidelines revealed that a principal diagnosis of simple pneumonia should have been coded in only 85 (34.6%) of the charts. The remaining charts should have been coded as respiratory failure (13.8%), congestive heart failure (11.4%), respiratory infections and inflammations (7.7%), and other diagnoses (32.5%). Coding occurred prior to discharge summary dictation in 48.4% of the cases. On the basis of the findings, the actual calculated mortality rate of simple pneumonia was 6.6%. CONCLUSIONS Coding in advance of discharge summary completion and nonexplicit documentation of the principal diagnoses occurred frequently. Reasons for miscoding included failure to distinguish between principal and final diagnoses, delay in discharge summary dictation, and inadequate documentation.