PEPPER can help you focus on likely RAC targets

Identify areas where you need to improve

Analyze the data in your hospital's Program for Evaluating Payment Patterns Electronic Report (PEPPER) to identify areas where your hospital may be vulnerable to denials from the Recovery Audit Contractors (RACs), suggests Deborah Hale, CCS, president, Administrative Consultant Services LLC, a Shawnee, OK, health care consulting firm.

The report provides data on the Centers for Medicare & Medicaid Services (CMS) target areas where there are likely to be payment errors due to billing, MS-DRG coding, and/or admission necessity issues.

PEPPER is a spreadsheet that contains hospital-specific data for target areas, which include one-day stays, hospital readmissions, and DRGs that have historically been associated with Medicare payment errors. The data can help hospitals identify potential overpayments as well as potential underpayments.

"The PEPPER data alert hospitals to potential problems and should be used to determine the focus of internal audits or validation studies. It can help case managers identify areas where medical necessity of admissions is questionable, readmissions are too frequent, or where there is over-coding or under-coding," Hale says.

PEPPER previously was distributed to hospitals through the state's Quality Improvement Organization (QIO) as part of the Hospital Payment Monitoring Program. The report was not available for about a year. Beginning in early 2010, PEPPER is produced and distributed to hospitals by the TMF Health Quality Institute under a contract with CMS. The reports are available through My Quality Net for registered users.

CMS provides PEPPER to the fiscal intermediaries/Medicare administrative contractors (FI/MACs). The RACs have the ability to generate PEPPER data for individual hospitals.

The current PEPPER has 11 target areas, including five involving potential coding errors and six involving admission necessity areas.

The report shows the percentile in which your hospital falls in each target area and compares your rank to other acute care hospitals in your state, MAC jurisdiction, and for the nation, identifying areas that may be questionable in terms of medical necessity. The report includes data on both the high and low statistical outlier target areas for each measure.

The PEPPER data can help hospitals set priorities on how to focus their auditing and monitoring efforts, Hale says.

The first step case managers should take is to find out who in their hospital has access to the PEPPER data, such as the hospital's Quality Net Security administrator, usually the person who is involved in reporting of your hospital's quality data. Ask him or her to give you a passcode that will allow you access to the data.

Hospitals should use PEPPER to identify areas that look unusual compared to the rest of their state. Then take the data one step further and drill down to see if they represent a problem, Hale says.

When you get the report, look at where your hospital falls in terms of the 11 indicators. If your hospital falls in the 80th percentile or above or below the 20th percentile, you should look carefully at those categories to find out why, Hale advises.

Higher values may indicate questionable medical necessity or coding errors. If a hospital's scores are consistently low in the medical necessity measures, that may indicate over-utilization of observation services, she adds.

For instance, a high number of short stays may imply that the admission wasn't necessary and the patient should have been treated on an outpatient basis. If certain medical necessity measures fall in the 80th percentile or above or the 20th percentile or below, it could be an indication that your hospital isn't using observation status appropriately.

Look at which DRGs are generating the greatest number of one-day stays and why and determine whether you need to examine them further. Your data may reflect appropriate level of care determinations for your particular circumstances, Hale says.

For instance, if your hospital uses physician advisors appropriately, you are more likely to have a higher rate of one-day stays than a hospital that relies too heavily on screening criteria alone.

Look beyond the percentiles in which your hospital falls and examine the number of cases that fall into the outlier categories, Hale says.

"If there are just a few cases, that doesn't raise as much concern as something that involves a high volume of cases," she says.

If your hospital has more 30-day readmissions than the rest of the state, look at whether the patient was provided incomplete care during the first admission and readmission was needed to provide services that should have been provided during the first stay, Hale advises.

[For more information, see www.pepperresources.org.]