What is PEPPER?

The Program for Evaluating Payment Patterns Electronic Report (PEPPER) is a Microsoft Excel file summarizing provider-specific Medicare data statistics for target areas often associated with Medicare improper payments due to billing, DRG coding and/or admission necessity issues. Target areas are determined by the Centers for Medicare & Medicaid Services (CMS).

PEPPER facilitates the prioritization of areas on which a hospital or facility may want to focus auditing and monitoring efforts. Hospitals and facilities are encouraged to conduct regular audits to ensure that medical necessity for admission and treatment is documented and that bills submitted for Medicare services are correct.

PEPPER can be used to review three years of data statistics for each of the CMS target areas, comparing performance to that of other hospitals or facilities in the nation, specific Medicare Administrative Contractor (MAC) jurisdiction and state. PEPPER can also be used to compare data statistics over time to identify changes in billing practices, pinpoint areas in need of auditing and monitoring, identify potential DRG under- or over-coding problems and identify target areas where length of stay is increasing. PEPPER can help hospitals and facilities achieve CMS’ goal of reducing and preventing improper payments.

Due to data restrictions established by CMS, hospital/facility data are not displayed for a time period in PEPPER for any given target area if the numerator or denominator count is less than 11. This data restriction may result in a small number of hospitals and facilities either not receiving a PEPPER (numerator count is less than 11 for all time periods, all target areas) or their PEPPER may not display data in some time periods for some target areas.

TMF Health Quality Institute, under contract with CMS, began providing PEPPER to all providers in the nation in January 2010.

PEPPER was developed for short-term acute care hospitals in 2002 by TMF Health Quality Institute in support of CMS’ Hospital Payment Monitoring Program. State Quality Improvement Organizations (QIOs) began distributing PEPPER to the short-term acute care hospitals in their state in 2003. PEPPER was developed for long-term acute care hospitals in 2005. In 2008 QIOs were no longer responsible for working to reduce the improper Medicare fee-for-service error rate, and the Hospital Payment Monitoring Program ended. In 2009 TMF was contracted by CMS through the Office of Financial Management Provider Compliance Group to develop, produce and distribute PEPPERs to all short- and long-term hospitals in the nation. The first release under this contract was completed in early 2010. Since then TMF, at CMS’ direction, has developed additional types of PEPPER for other providers.

In 2011 PEPPER was developed for critical access hospitals, inpatient psychiatric facilities and inpatient rehabilitation facilities.

In 2012 PEPPER was developed for hospices and partial hospitalization programs.

In 2013 PEPPER was developed for skilled nursing facilities.

In 2015 a PEPPER was developed for home health agencies.

View the PEPPER distribution schedule and information on how to get your PEPPER.

Who benefits from PEPPER?

CEOs and Administrators

Use PEPPER to:

• Access tables and graphs displaying billing activity over time in comparison with other hospitals or facilities
• Review hospital- or facility-specific data and comparative target area statistics for the state, jurisdiction, and nation
• Track and trend administrative data statistics to identify changes in billing practices and Medicare reimbursement for CMS target areas

Chief Financial Officers

Use PEPPER to:

• Identify areas of potential overpayments and underpayments
• Identify DRGs with a high proportion of short-stay outliers (for long-term care hospitals)
• Compare length of stay data to length of stay data for the jurisdiction
• Assess Medicare reimbursement for target areas, track and trend over time

Compliance Officers

Use PEPPER to:

• Review hospital- or facility-specific data statistics for target areas identified by CMS as at high risk for improper payment
• Identify areas of potential overpayments and underpayments 
• Help prioritize areas for compliance auditing and monitoring 
• Access data tables and graphs displaying billing activity over time in comparison with other hospitals or facilities

Utilization Review/Quality Improvement Staff

Use PEPPER to:

• Identify areas that may be in need of closer study to determine  admission necessity or whether a procedure or treatment was performed in the appropriate setting 
• Monitor readmission rates to assist in identifying opportunities for improvement related to case management, discharge planning and quality of care 
• Identify target areas where the average length of stay is increasing (or decreasing, in the case of long-term care hospitals)  
• Aid efforts to improve medical record documentation

Health Information Management Staff

Use PEPPER to:

• Identify potential DRG over-coding and under-coding 
• Identify DRGs that are problematic on which the hospital or facility may want to focus auditing and monitoring 
• Access tables and graphs displaying billing activity over time in comparison with other hospitals or facilities, which can be used for educational training activities 
• Prioritize areas for coding compliance auditing and monitoring 
• Aid efforts to improve medical record documentation