Guest Post: A peck of PEPPER, Part 1

by Linda Renee Brown, RN, MA, CCDS, CCS, CDIP

My analytical side is always harassing me to get it more involved in what I do. So I decided to dig into our hospital’s PEPPERs. PEPPER is the Program for Evaluating Payment Patterns Electronic Report, issued quarterly. (Calling it a PEPPER report is like calling an ATM an ATM machine; it comes from the department of redundancy department.) The acronym ST-PEPPER stands for short term acute care hospitals’ PEPPER.

Glenn Krauss previously provided a good overview of PEPPER both here on the ACDIS Blog and through his contributions to an article in the April 2011 edition of the CDI Journal. While I have been aware of PEPPER for some time, I did not have access to our reports until fairly recently. And, to be honest, PEPPER can be a little intimidating. You need to become familiar with what the reports tell you and then you have to be comfortable doing a little digging into your own facility data after you’ve reviewed the reports.

I really recommend that a new user of PEPPER become comfy cozy with the user guide provided by PEPPER Resources. You might discover that it’s not really that difficult to learn, and if you love to crunch numbers and analyze information the way I do, it’s almost fun.

If you don’t understand percents versus percentiles, now is the time to learn it. For areas that PEPPER identifies as potential risks for audit, your report will give you a percentage, based on a numerator/denominator. The numerator is always the targeted DRGs, and the denominator is a larger base of DRGs.

So if you are looking at the stroke/intracranial hemorrhage target area, the numerator is the number of cases in DRG 61-66 (CVA/ICH with or without thrombolytics), and the denominator is DRG 61 – 69 (all of the above, plus carotid disease and TIAs). Let’s say your hospital had 20 cases in DRG 61-66; that would be the numerator. Your facility had 80 cases in DRG 61-69, so 80 would be the denominator. So the ratio would be 20/80 or 1/4 or 25%. That is your percent.

Now PEPPER takes your percent and compares it to the percents for hospitals in your state, in your Medicare Administrative Contractor/Fiscal Intermediary (MAC/FI) jurisdiction, and in the nation. The percentile is where your hospital falls among its peers. If your facility percent is higher than that of 75% of the hospitals in the nation, your national percentile is 75%. If your percent is lower than the percent held by 75% of the hospitals in the nation, your national percentile is 25%. If that’s still too confusing, the PEPPER Resources website offers tutorials.

PEPPER focuses on what it calls “outliers,” hospitals whose percentile is above 80  or below 20.   Hospitals whose percentile is above 80 (remember, their percent is higher than 80% of hospitals in the group) are high outliers.  Hospitals whose percentile is below 20 (their percent is lower than 80% of hospitals in the group) are low outliers. For many of the target areas, PEPPER recommends facilities with high outliers review their charts for overcoding, and low outliers for undercoding.

The Office of the Inspector General (OIG) is tasked to detect and prevent fraud, waste, and abuse, improve economy and efficiency, and hold accountable those who do not meet requirements or who violate the law. Among the numerous focus areas in the 2012 OIG Work Plan, (which is a document that outlines the OIG target areas for the coming year) is Medicare inpatient and outpatient payments—to be evaluated by reviewing hospitals that are the most risky and the least risky, as determined by data analysis. It’s fascinating reading.

So when you get your PEPPER, which is an Excel spreadsheet, the first thing you should see is your “Compare” page. On the Compare page, you will get an overview of each target area, with numbers specific to your hospital, for the last reported quarter of data.

What I like to do is go through it and highlight all the targets in which my hospital is a high or low outlier for either national, jurisdictional, or state. (National is most important, followed by jurisdictional, then state.) Then, I scrutinize those target areas, pull cases in those target DRGs, and review them for coding accuracy and clinical documentation support.

But PEPPERs include 12 quarters worth of data, so evaluating trends is important. After the Compare page, there is a tab for each target area, followed by a tab with a line graph of the hospital’s percentiles for the previous 12 quarters, if data is available. So maybe this quarter we were just under the 80th percentile, but for the previous 11 quarters, we were above. Should I look at this target? Yes, I think so.

Don’t assume that because your hospital is a high outlier for a given target, that automatically means there’s a problem. There may not be. You may trigger as a high outlier for stroke/ intracranial hemorrhage (ICH) because you are a stroke center and receive a large number of referrals for stroke/ICH.  You may trigger as a high outlier for 2-day stays in heart failure because your hospital aggressively follows core measures, and you’ve got a great relationship with the nursing home next door and the home health agency across the street–so you get your patients out quickly.  Nevertheless, I would still do a random audit of cases in those DRGs to protect your facility against potential audit risks.

At the same time, I would also not assume that because your hospital is a low outlier for a target area, that you are free and clear.

You want your medical records to reflect the most accurate severity of illness, intensity of services, and resources expended, and too many low outliers might mean you’re not capturing those variables effectively. Working with your report will give you an enhanced awareness of what areas are particularly vulnerable to scrutiny, and so all the target areas should gather your attention. Look at what processes are working well, and try to apply them across the board.

In my next entry, I will discuss some of the target areas and talk about strategies for using PEPPER to its best advantage. Happy hunting!

Editor's note: Brown, at the time of the article's original response, was an independent CDI consultant based in Carrollton, GA. With experience in critical care, nursing education, disease management, case management, and long-term care, she has worked as a CDI specialist, educator, director, and consultant. She is a frequent writer on topics involving clinical documentation and published her own "The Case Manager's Quick Guide to Diagnostic Related Groups" in 2013.