Use Hospice PEPPER Reports To Mitigate Risk And Improve Operations

"It's much easier to open up your PEPPER report than it is to respond to a government oversight investigation." Currently, only about half of the nation's hospices realize this, Catherine Krause, Associated Consultant at The Corridor Group noted during a recent Webinar hosted by Home Health Care News. Krause joined Toby Clinkenbeard, Senior Product Manager, Hospice at Homecare Homebase to discuss "Strategies to Mitigate Risk Using Your Hospice PEPPER report."

The two health care experts provided guidance on understanding PEPPER reports, utilizing them to assess risk, and discussed how PEPPER data can help hospices mitigate risk.   Watch the entire Webinar.

The Purpose of PEPPER

PEPPER is an acronym for "Program for Evaluating Payment Patters Electronic Report."  PEPPER data is available for hospitals, hospices, home health agencies, and other health care providers.  Visit PepperResources.org to access and review your report.

The reports are valuable educational tools that summarize provider-specific data and present it in a useful format for comparison. PEPPERS are based on Medicare claims data.  They focus on specific target areas that Medicare has identified as being at-risk for improper payments.

Krause explained that PEPPERs "use data mining to turn raw data into useful information" that hospices and regulatory bodies can then use to evaluate performance and identify possible red flags.

"We know that there are independent agencies that have access to this Medicare claims data set. So if other agencies and groups are monitoring our claims data, doesn't it make sense that we would want to do the same?"


It's important to understand that PEPPERs are not punitive. Rather, they provide opportunities for providers to be proactive and mitigate risk. Use them in your own agency to identify operational issues and correct them before they draw scrutiny from regulators.

How to Read a PEPPER

Hospice PEPPERs report data for 11 care areas targeted as being potentially at risk for coding errors, billing errors, unnecessary services, and other issues that contribute to improper payments.  The most recent addition to the list (added in 2017) is "Long General Inpatient Care Stays." This is part of CMS' effort to control costs and combat waste, fraud, and abuse.

Here's a screen shot of a sample PEPPER for the "Routine Home Care Provided in a Nursing Facility" targeted area.


The graphical interface shows how an individual hospice is performing compared to other providers over a three-year period.  Remember that the PEPPER data is claim-driven, not census-driven.

  • The bars represent the hospice's annual performance in each targeted compared to the 80th percentile benchmark
  • The solid red line is the national 80th percentile
  • The broken red line is the jurisdictional 80th percentile
  • The dotted red line is the state 80th percentile

The hospice in the example image is above the national 80th percentile for Routine Home Care (RHC) Provided in a Nursing Facility, but is substantially below the percentages for other hospices in its state and jurisdiction. In general, anything over 80% is considered an outlier, but Krause supplied this caveat - and warning:

"Just because you're over the 80th percentile, you're not necessarily an outlier. You can be national outlet, but well under the curve compared to others in your state or MAC jurisdiction.  But remember the hospice still has the burden of proof, so have documentation prepared if your percentile is high in a target area."


Regulators Are Using PEPPER in New Ways

CMS has always taken improper payments and fraud seriously, but an aging population and budget constraints mean that CMS is increasingly focused on cost cutting and fraud prevention.  

Still, most improper payments are not fraudulent, the agency's 2017 annual report noted:

For example, instances where there is insufficient or no documentation to support the payment as proper are cited as improper payments under current Office of Management and Budget guidance.  The majority of Medicare FFS improper payments are due to documentation errors where CMS could not determine whether the billed items or services were actually provided, were billed at the appropriate level, and/or were medically necessary. 


This cost focus means that regulators scrutinize documentation like never before, using data mining and reports (like PEPPER) to highlight anomalies. Remember the phrase "forewarned is forearmed?" Krause echoed that adage: "If the OIG is looking at your data, then you should be looking at it as well."

Everyone is familiar with the ADR payment review model, but now there is a new one. MAC providers are using PEPPER analysis to implement a new pre-payment review model called "Targeted Probe and Educate."

TPE is intended to increase accuracy in very specific areas.  MACs use data analysis to identify:

  • Providers and suppliers who have high claim error rates or unusual billing practices.
  • Items and services that have high national error rates and are a financial risk to Medicare.
  • Providers whose claims are compliant with Medicare policy won't be chosen for TPE

While rare, some hospices are currently undergoing TPE review. It may happen more frequently in the future, so be prepared.

NOTE: If your hospice is targeted for TPE review, you'll be notified by regular USPS mail! It's very important to make sure that whoever in your organization opens the mail understands the significance of the notification. The clock starts ticking when the letter is mailed.

Use PEPPER Data to Mitigate Risk & Improve Operations

PEPPER reports give you the data you need to identify problem areas and take necessary action, but unfortunately, many hospices aren't using it. Krause explained that administrators are so busy "doing more with less," that stringent review of data tends to fall through the cracks.

"Putting processes in place seems overwhelming, and if things seem to be going well, go with the flow.  When hit with audits however, the problems show up in hindsight."

Cilnkenbeard cited the importance of robust software reporting systems like Homecare Homebase's "PEPPER Dashboard." While PEPPER reports are yearly, HCHB's tool presents them on a monthly basis. This data allows you to proactively address process/documentation issues on an ongoing basis. You can identify and correct a problem within weeks, instead of waiting months or even years and risking regulatory intervention.

It's easy to get started managing risk using PEPPER data:

  • Open the report
  • Follow the data trends
  • Ask "WHY?" and keep asking until you find and understand the problem.
  • Work on fixing the problem

A robust internal audit process is an important risk management tool as well.  Make sure you understand the CMS list of hospice responsibilities.  Comply with them, measure them, and share data with your employees Krause urged, because "key performance measurements should be the best kept secret in the organization!"

PEPPER Is a Tool, but Documentation Is Key

PEPPERs shine a light on potential problem areas.  Note the word "potential." If your documentation supports the level of care you're billing for, then you're fine.  You can make the case to regulators.

CMS understand that mistakes happen, and improper payments are generally cause by human error, not intent to defraud. Proper documentation is essential to proving that and avoiding errors in the first place, according to Krause.

"It bears scrutiny to ensure that all technical components required for claim submission are met. Just meeting the 80% standard doesn't verify the completeness of the medical record if it were requested by Medicare for review."


Regardless of a hospice's PEPPER report scores, the organization bears the burden of proof if medical records are pulled for review.  You can't just point to the PEPPER graph and explain that you're doing a great job: you must prove it through documentation.

Krause stressed the importance of full, accurate, and understandable information in your patient documentation:

"The person reading the document knows nothing about the hospice, patient, or caregivers. Certification documents must represent a cohesive, complete narrative of the patient's condition and care and be backed up by measurable data points."


Remember that your current hospice patient data will appear on your PEPPER report for the next three years. That's a huge risk moving forward, when you consider both ongoing and post-patient review processes, Krause stressed. "If you're not already documenting and looking at eligibility determinations across the board, then you need to start today."

Good data begins (and ends) with good documentation.  Contact our Homecare Homebase experts to learn how our in-depth reporting tools help you leverage data to improve care and operational efficiency.  We help you wring the most benefit out of PEPPER and other data.