Uncover Six Targeted Risk Areas Utilizing your Annual PEPPER

This blog was posted on June 20th, 2018

You should check out your Home Health Agency’s (HHA) annual Program for Evaluating Payment Patterns Electronic Report (PEPPER). Why? This underutilized report uncovers risk areas in billing processes, provides insight into episode utilization, and compares your agency’s data to others in the market.

So, what do you need to know about PEPPER?

PEPPER is a comparative report that summarizes a single provider’s Medicare claims data in target areas identified as at risk for improper Medicare payments.  It is using the data from all claims submitted to the Medicare Administrative Contractor’s (MAC’s). The report shows how an agency’s data compares to the national, MAC jurisdiction, and state statistics. An update to these reports will be issued July 2018.

An agency can use PEPPER to compare its claims data over time to identify areas of potential concern and to identify changes in billing practices.  It can help agencies identify both potential overpayments, as well as underpayments.  The PEPPER does not identify the presence of improper payments, but it can be used as a guide for auditing and monitoring efforts. The HHA PEPPER is available only to the executive level of a home health agency.  The HHA’s Chief Executive Officer, Administrator, President, or Compliance Officer can download the report through the PEPPER Resources Portal (accessible through http://pepperresources.org/).

Since CMS is tasked with protecting the Medicare Trust Fund from fraud, waste, and abuse, they are looking for improper Medicare payments.  In 2016, the Comprehensive Error Rate Testing (CERT) program identified home health had a 42% billing error rate, which projects to $7.6 billion in errors per the CERT contractors.

Target areas identified are based on a review of the HHA prospective payment system, a review of studies related to improper payments, an analysis of claims data, and coordination with CMS subject matter experts.  In general, the target areas are constructed as ratios and expressed as percentages or rates, with the numerator representing episodes that may be identified as problematic in terms of risk for improper Medicare payment, and the denominator representing a larger comparison group.

Areas are assessed annually covering the previous calendar year and are reported each July.

Target areas are:

Average Case Mix: (reported as a rate)

Numerator:  sum of case mix weight for all episodes paid to the HHA during the report period, excluding LUPAs (identified by Part A NCH HHA LUPA code) and PEPs (identified as patient discharge status code equal to ‘06’)

Denominator:  count of episodes paid to the HHA during the report period, excluding LUPAs and PEPs

Average number of Episodes: (reported as a rate)

Numerator:  count of episodes paid to the HHA during the report period

Denominator:  count of unique beneficiaries served by the HHA during the report period

Episodes with 5 or 6 visits: (reported as percentage)

Numerator:  count of episodes with 5 or 6 visits paid to the HHA during the report period

Denominator:  count of episodes paid to the HHA during the report period

Non-LUPA Payments: (reported as percentage)

Numerator:  count of episodes paid to the HHA that did not have a LUPA payment during the report period        

Denominator:  count of episodes paid to the HHA during the report period

High Therapy Utilization Episodes: (reported as percentage)

Numerator:  count of episodes with 20+ therapy visits paid to the HHA during the report period (first digit of HIPPS equal to ‘5’)

Denominator:  count of episodes paid to the HHA during the report period

Outlier Payments: (reported as percentage)

Numerator:  sum of dollar amount of outlier payments (identified by the amount where Value Code equal to ’17’) for episodes paid to the HHA during the report period

Denominator:  sum of dollar amount of total payments for episodes paid to the HHA during the report period

The value of the data and how to read it

Comparative data for the three consecutive years can be used to help identify whether the HHA’s target area percents/rates changed significantly in either direction from one year to the next. This could be an indication of a change in admission or treatment practices, staff turnover, a change in medical staff, or changes in the external health care environment.

The HHA PEPPER identifies providers whose data results (percentiles) suggest they are at risk for improper Medicare payments as compared to all HHAs in the nation. The risk status is indicated by the color of the target area percent/rate on the Compare Targets Report. When the HHA’s percent/rate is at or above the national 80th percentile for a target area, the percent/rate is printed in red bold. When the HHA’s percent/rate is below the national 80th percentile, the percent/rate is printed in black.  The percentile value allows an agency to judge how its target area percent/rate compares to all HHAs in each respective comparison group.