T​he focus by the Office of Inspector General and the Government Accountability Office on identifying fraud and abuse is no secret to skilled nursing facility (SNF) providers. There are new articles and news reports on the issue every day. A Centers for Medicare & Medicaid Services (CMS) blog entry from Nov. 15, 2017, by the principal deputy administrator of operations, Kimberly Brandt, details the improper payment–reduction efforts. The author notes: 

“Due to the successes of actions we’ve put into place to reduce improper payments, the Medicare Fee-For-Service (FFS) improper payment rate decreased from 11.0 percent in 2016 to 9.5 percent in 2017, representing a $4.9 billion decrease in estimated improper payments. The 2017 Medicare FFS estimated improper payment rate represents claims incorrectly paid between July 1, 2015 and June 30, 2016. This is the first time since 2013 that the Medicare FFS improper payment rate is below the 10 percent threshold for compliance established in the Improper Payments Elimination and Recovery Act of 2010.”

In addition, Deputy Brandt says that “improper payments are not always indicative of fraud.” She goes on to say that the most common reason for improper Medicare payments is documentation error, leaving CMS unable to determine whether the billed items or services were actually provided, were billed at the correct level, or were medically necessary.

Although CMS was pleased with the reduction in the rate of improper payments, Brandt says, the agency still had work to do and would continue its efforts to address the problem. One component of those efforts is a document of great use to providers, the Program for Evaluating Payment Patterns Electronic Report (PEPPER). 


CMS releases PEPPER every April. It is filled with statistical data that summarize a SNF’s Medicare claims for areas that have been vulnerable to improper Medicare payments. 

The data are collected from the standard claim form (UB-04 or CMS 1450) submitted by the SNF to bill the Medicare Administrative Contractor for payments. SNF staff can access their own data for these vulnerability (target) areas and compare their facility’s performance to that of other facilities in the same jurisdiction, in the state, and nationally.

These comparisons (shown numerically and in graphs) assist SNF staff to determine whether their facility may be vulnerable to review by Medicare review contractors. The reports can also alert the provider to opportunities for improvements in care practices and data accuracy.

Highlights from This Y​ear

The target areas in this year’s PEPPER report include the following:

  • Therapy Resource Utilization Groups (RUGs) with high activities of daily living (ADL) scores (11–16). This calls into question the accuracy of the ADLs. This is a good checkpoint for providers to evaluate potential over- or under-coding of ADL status. Does the medical record documentation correlate with therapy documentation regarding ADLs? Does the medical record support the coding of bed mobility, transfer, toilet use, and eating in G0110 for both the Self-Performance and Support columns?
  • Nontherapy RUGs with high ADLs (15–16). This indicates potentially inaccurate ADL coding. Correlating the information in the medical record with the ADL coding in G0110 as noted above is crucial to a successful compliance program. As mentioned, the lack of supportive documentation is often the reason for claim denial. 
  • Of course, the data can no longer be modified, but any lack of correlation can and should be used as the basis for additional education and training of all nursing and therapy staff members.
  • Change-of-Therapy (COT) assessments. These indicate the efficacy of therapy and nursing collaboration in providing therapy as ordered. In addition, a low number of assessments can suggest to a Medicare reviewer that the COTs are not being completed as required. Are nursing and therapy staff meeting daily to confirm the delivery of services? If there are barriers to the provision of services as ordered, what are they? 
  • Ultrahigh RUGs. High numbers for this amount of therapy (a total of 720 minutes in seven days, with one therapy discipline providing five days of service, and another discipline, three days) could indicate that the services are not medically necessary. It would appear to be time for an audit of the medical record documentation. Does the documentation support that therapy services were inherently complex?
  • 20-day episodes of care (new this year). The numbers lead to the question of whether the length of stay was appropriate; was care planning in place with an appropriate discharge plan? Did the documentation support that the skilled services were medically necessary and practical to be delivered in the skilled facility for 20 days?
  • 90+ day episodes of care. This is another measure that leads to questions of whether appropriate documentation was in place to support the medical necessity of this episode of care. What were the skilled services, which only licensed and professional staff could safely provide, that required this length of stay? 

Seizing an Opport​unity

Providers ought to find this report extremely helpful. But the SNF PEPPER Retrieval Map by state (https://pepperresources.org/Training-Resources/Skilled-Nursing-Facilities/PEPPER-Portal-Retrieval-Map) reveals how few facilities are using the reports. This is a missed opportunity. 

SNF staff have access to very insightful reports, free of charge, to which Medicare reviewers also have access. It is through the reports that the reviewers determine which facilities to target for review. How else but via this report and a Quality Assessment and Assurance action plan are facility staff going to demonstrate the facility has an effective corporate compliance plan? 

Just as a sprinkle of pepper enhances flavor, the PEPPER report enhances the provider’s corporate compliance efforts. The revised Requirements of Participation that took effect Nov. 27, 2017, detailed in the State Operations Manual Appendix PP, are being implemented in three phases to allow providers time to develop and implement the extensive rule changes. Phase 3 includes a mandatory compliance-and-ethics program (F-895). As noted in the regulation, the program must be “reasonably designed, implemented, and enforced so it is likely to be effective in preventing and detecting criminal, civil, and administrative violations and promote quality of care.” 

The program needs to be developed and implemented by Nov. 28, 2019. 

PEPPER for Audits 

That is where PEPPER can add some zip to a provider’s program. As stated in the SNF PEPPER User’s Guide, Sixth Edition: “As part of a compliance program, a SNF should conduct regular audits to ensure services provided are necessary and that charges for Medicare services are correctly documented and billed. The Program for Evaluating Payment Patterns Electronic Report (PEPPER) can help guide the SNF’s auditing and monitoring activities.” The report needs to be shared among nursing, therapy, and administration. The value of PEPPER increases as those involved in creating the data with the Minimum Data Set and the supporting documentation are then involved in looking at the data, analyzing it, and identifying proactive steps if warranted. 

The PEPPER website—https://www.pepperresources.org/​—features pages to which staff members from nine health care settings (including skilled nursing facilities) can navigate to access their Medicare data. Once there, providers can access the user’s guide, training, resources, and the link to the facility’s PEPPER reports. For those who are new to the reports and need additional assistance, the website offers a help desk and frequently asked questions.

Providers should help themselves, help their residents, and help their staff by passing the PEPPER around. 

Jane Belt, RN, MS, RAC-MT, RAC-CT, QCP, is curriculum development specialist at the American Association of Nurse Assessment Coordination. She can be reached at jbelt@aanac.org. ​