Accessing Hospice PEPPER Reports Can Help Avoid Audits

Hospices who understand and consider their Program for Evaluating Payment Patterns Electronic Reports (PEPPER) from their Medicare Administrative Contractor (MAC) can leverage that information to anticipate and correct payment issues that could lead to targeted probe and education (TPE) audits if left unaddressed. 

PEPPER contains provider-specific Medicare claims data that may indicate or create the perception of inappropriate or excessive payments. Hospices can access the annual reports electronically. Medicare contractor TMF Health Quality Institute generates the reports each April.

“There is a tremendous correlation between those reports and payment-related scrutiny. It’s intended to be used as an educational guide for hospices or their ongoing auditing and monitoring efforts … but it is the bluntest fraud monitoring device for hospices,” said Carrie Cooley, principal and CEO of consulting firm Weatherbee Resources in a Hospice News webinar sponsored by Optima Healthcare Solutions.


Hospice utilization among Medicare decedents rose to exceed 50% for the first time during 2018, according to the U.S. Centers for Medicare & Medicare Services (CMS). As utilization climbs, so does the amount of dollars CMS spends on hospice care, spurring the agency to step up enforcement in an effort to control costs. Medicare hospice expenditures rise by about $1 billion annually.

The Office of Inspector General (OIG) at the U.S. Department of Health and Human Services in late 2018 issued a report on payment-related vulnerabilities in the Medicare hospice program. Based on its findings, OIG recommended that CMS strengthen the survey process and improve oversight to “identify hospices that engage in practices that raise concerns.” This was the first in a series of OIG reports throughout 2018 and 2019 that identified payment and quality-related problems in U.S. hospices. 

The claims data contained in the PEPPER reports can help hospices compare their paid claims over time to other providers in their state, their local jurisdiction and nationally, for 11 metrics flagged by CMS. 


“The report allows you to identify and trend how your hospice’s data may have changed over time or where you may have other areas of vulnerability,” Cooley said. “A failure to retrieve a PEPPER report could really negatively impact the hospice provider. If someone is under a large-scale audit and the hospice has access to the report but did not retrieve it, the government might say it was known or that they should have known that they had payment vulnerabilities, for example, related to long length-of-stay patients.” 

Documentation errors and omissions, live discharges and lengths of stay beyond six months are three red flags that could cause regulators to come knocking at a hospice’s door, according to a 2019 report.

Many hospices do not retrieve their PEPPER reports, leaving themselves more vulnerable to audits or other regulatory action. Medicare’s contractor TMF generated a total of 4,401 PEPPER reports for Fiscal Year 2018, for instance, but only 2,264 were retrieved, according to Cooley. By failing to retrieve the reports, a hospice is foregoing potential opportunities to take corrective action that could stave off or shape the outcome of an audit. 

“The sooner you can retrieve your own PEPPER data, the more time you have for self-monitoring and self-correction,” Optima said. “And none of us want to wait until CMS or a contractor comes knocking before we decide to implement self-monitoring and self-correction.” 

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