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WELCOME
TO THE
CALIFORNIA ACDIS CHAPTER
PEPPER BASICS
Cheryl Ericson, MS, RN, CCDS, CDIP
Associate Director of Education, ACDIS
CDI Education Director, HCPro
cericson@hcpro.com
Hot Topics for Organizations
• Although there are many different government
audits Program for Evaluating Payment Patterns
Electronic Report (PEPPER) provides an
organization with foresight into potential
vulnerabilities that can result in denied claims
and recoupment
– The data is based on paid Medicare claims for a
particular organization
– Allows STAC version is a comparison across all
paid MS-DRGs for a particular period of time
Hospital Vulnerability/Accountability
• An article in Healthcare Highlights quotes Asst.
U.S. Attorney Robert Trusiak
– “If hospitals receive {PEPPER data} information that
their billing is way out of line, the government expects
them to act on it. . . When hospitals are outliers in a
risk area, they are expected to audit medical records
and find out if there’s a compliance problem or a
reasonable explanation. . .”
• Failure to review PEPPER data can be interpreted
as reckless disregard or deliberate ignorance in a
False Claims Act case
Some Compliance Programs May Fail to Reduce the Risk of False Claims, Sept. 27, 2011; Wolters Kluwer Law & Businesses
What is PEPPER?
• A free resource released quarterly for short-term
acute care hospitals through QualityNet
– Access is restricted to QualityNet
– Identify your facility’s administrator
• An annual version is available for other healthcare
entities that may be direct mailed
– Long term acute care hospitals (LTAC)
– Critical access hospitals
– Inpatient psychiatric facilities
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– Inpatient rehabilitation facilities
PEPPER Basics
• Provides a quarterly analysis of hospital-specific
Medicare inpatient claims (MS-DRG) that are
vulnerable to improper payment
– Potential overpayments
– Potential underpayments
• Official website for information, training and
support
– http://www.pepperresources.org/
Definitions Page
• The MS-DRG target areas included in
PEPPER are defined on this page and
generally fall into one of two categories
– Coding-focused
• MS-DRG assignment
• CC/MCC capture rates
– Medical Necessity
• Short stay (one or two days) admissions
• Readmissions
• Top one day stays medical DRGs
• Top one day stays surgical DRGs
Our Focus is Coding Targets
• Reported as percentages (%)
– The numerator (top number) consists of those
discharges prone to MS-DRG coding errors
– The denominator (bottom number) includes
the numerator MS-DRGs as well as the MSDRGs to which the claim is often reassigned
Numerator
Denominator
Target Area Definition
• Are cases being inaccurately assigned to the
higher weighted respiratory infections (MS-DRG
177 & 178) compared to simple pneumonia
(MS-DRG 193, 194, 195)?
MS-DRG 177 & 178
MS-DRG 177, 178, 179 & 193, 194, 195
PEPPER Interpretation
The percentage of cases and/or volume of cases
within each target area are the basis for comparison
across organizations within . . .
1. Medicare Administrative Contractor (MAC)
2. The same state as the organization
3. The United States
The value of these comparisons will vary with the
type of organization
• State comparison may not be as relevant to
“flagship” organizations as community hospitals
Percentile by Comparison Group
Compare Page Data
• The volume of discharges for each target
• The percent (%) of cases for each target
based on the target definition
• How each target ranks by percentile in
comparison to other organizations
– Jurisdiction, state and the Nation
– A percentile is not the same as
“percentage” as it is a ranking value not on
a scale of 0 to 100%
• Associated total value ($) of the paid
claims (sum of payments)
Vulnerability
• Best practice is to review a sample of claims
whenever the organization is a high outlier or
when there is a sudden spike in the volume of
cases within a particular target area
– Verify the accuracy of DRG assignment
• Rebill overpayments whenever they are
discovered
• Not limited to 60 days to rebill and overpayment
PEPPER Basics
• Identification of outliers
– Comparison with other facilities in the U.S. with
paid MS-DRGs for the same time period
– Thresholds at the 80th and 20th percentile
• High outliers are above the 80th percentile
– May result in overpayments
• Low outliers are below the 20th percentile
– May result in underpayments
– May benefit from CDI implementation or refresh
Identifying Risk Areas at a Glance
High Outlier Ranking Report
Basic PEPPER Review for CDI
• A common metric of success for CDI
departments is CC/MCC capture rate
• One of the basic reviews using PEPPER data is
monitoring the trends associated with CC/MCC
capture rates
• The measure of single CC or MCC can also be
significant depending on the mission of the CDI
department
– A high volume of cases with a single CC or
MCC can impact mortality index and increase
vulnerability to denials
Basic PEPPER Review for CDI
CC/MCC Capture for Medical DRGs
This is a positive trend and
potentially shows the positive impact
of a CDI department
CC/MCC Capture for Surgical DRGs
This is a “flat” or potentially negative
trend, but is very low compared to the
medical capture rate
• Suggests opportunities for CDI
Evaluating Specific Targets
• A more in-depth review of PEPPER data from a
CDI perspective would involve analysis within
specific coding target areas
• If multiple high outliers the sum of payment
column can be used to prioritize target areas
based upon amount of money at risk of
recoupment
Sum of Payments within a Target
Sum of Payments within a Target
• To prioritize cases focus on the cost per case at
risk rather than the total dollars at risk
– Both stroke and simple pneumonia are high
outliers the value of each is as follows
• Stroke = $308,646/35 cases = $8,818 each
• Simple pneumonia = 224,829/29 = $7,753 each
Evaluating Specific Targets
• Can indicate opportunities of improvement
• Pneumonia can be the principal diagnosis in two
different MS-DRGs
– Simple pneumonia cases can often be treated
in the outpatient setting
• A high volume of simple pneumonia cases is often a
documentation issue
• Pneumonia, unspecified (486) as the Pdx
Sum of Payments within a Target
Respiratory Infections
Simple Pneumonia
Evaluating Specific Targets
• Can indicate areas of vulnerabilities
– Perform internal monitoring of the accuracy of coding
• Compare to volume of TIA cases
– Is the organization a destination for stoke patients?
Stroke Graph
Not Enough Cases to Graph
Summary
• PEPPER data can indicate possible
opportunities or vulnerabilities
• CDI can demonstrate impact by influencing
coding targets beyond CC/MCC capture
• Conduct internal audits to ensure
coding/documentation accuracy when a high
outlier and/or approaching high outlier status
– Ignorance is not a defense to false claims
charges
Thank you. Questions?