Knowledge Base Article

The fourth quarter FY 2022 Short-Term Acute Care Program for Evaluating Payment Patterns Electronic Report (PEPPER) was released last week. At the same time, the 36^th Edition of the related PEPPER User’s Guide is now posted on the PEPPER Resources website.

About the PEPPER

As part of a hospital’s Compliance Program, regular chart audits should be completed to confirm guidance with Medicare coverage, coding, and billing requirements. The PEPPER is a free resource that provides a compare of a hospital to its state, MAC region, and the nation for specific Target Areas. This comparison enables a hospital to identify whether it is an outlier as compared to other short-term acute care hospitals.

In general, there are two types of Target Areas, targets related to DRG coding and admission necessity focused target areas. The “PEPPER does not identify the presence of payment errors, but it can be used as a guide for auditing and monitoring efforts. A hospital can use PEPPER to compare its claims data over time to identify areas of potential concern:

• Significant changes in billing practices
• Possible over- or under – coding, and
• Changes in lengths of stay.”

When CMS approves a Target Area it is because it has been identified as prone to improper Medicare payments. Historically, target areas have been the focus of past Office of Inspector (OIG) or Recovery Auditor audits.

35^th Edition PEPPER User’s Guide, What’s New?

Three target areas have been removed from the report including Excisional Debridement, Emergency Department Evaluation and Management Visits, and Chronic Obstructive Pulmonary Disease.

In keeping with the trend that MMP has noticed where services are moving away from the inpatient hospital setting, the existing Spinal Fusion target area has been modified to now include hospital outpatient spinal fusion claims.

The last change is to the existing Percutaneous Cardiovascular Procedures target area. This has been modified to remove reference to the following two outpatient codes in the denominator:

• Current Procedural Terminology® (CPT®) code 92942, and
• Healthcare Common Procedure Coding System (HCPCS) code C9606.

Moving Forward

Also included in the PEPPER User’s Guide are suggested interventions for when a hospital is a high or low outlier for each of the review targets.

DRG Coding Focused Target Area Example: Unrelated OR Procedure

• Suggested Interventions for High Outliers: “This could indicate that there are coding or billing errors related to over-coding of DRGs 981, 982, 987, 988, or 989. A sample of medical records for these DRGs should be reviewed to determine whether the principal diagnosis and principal procedure are correct.
• Suggested Intervention for Low Outlier: “This could indicate that the principal diagnosis is being billed with the related procedures No intervention is necessary.”

Admission Necessity Focused Target Area Example: Spinal Fusion

• Suggested Interventions for High Outlier: “This could indicate that unnecessary spinal fusion procedures may have been performed. A sample of medical records for spinal fusion cases, including both the inpatient and outpatient setting, should be reviewed to validate the medical necessity of the procedure. Medical record documentation of 1) previous non-surgical treatment, 2) physical examination clearly documenting the progression of neurological deficits, extremity strength, activity modification, and pain levels, 3) diagnostic test results and interpretation, and 4) adequate history of the presenting illness, may help substantiate the necessity of the procedure.”
• Suggested interventions for Low Outlier: “Not applicable, as this is an admission-necessity focused target area.”

Of note, more than half of the target areas in the 36^th Edition User’s Guide are admission-necessity focused. Moving forward, I encourage you to review your hospital’s latest PEPPER and take advantage of suggested interventions available in the User’s Guide, paying close attention to documentation that may help substantiate the inpatient admission.

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