Skilled Nursing Facility providers will soon receive a report called the Program for Evaluating Payment Patterns Electronic Report (PEPPER). This report provides Medicare claims data in specific targeted areas comparing the SNF to other SNFs throughout the US.  The Report will be mailed to SNFs via regular mail on August 30th in an envelope with red print on the outside.  You should have already received a postcard from TMF Health Quality Institute [HQI], a CMS contractor indicating that your report will arrive by the end of August.

The Pepper program was initiated in 2003, but has focused on other types of providers over the years.  It is now adding SNFs. PEPPER gives provider-specific Medicare data statistics for services vulnerable to improper payments, according to the federal government, and allows providers to see how their facility compares to all other SNFs across the state, nation or MAC jurisdiction.  For SNFs, the targeted areas were determined by recent OIG reports in 2010 and 2012 and conversations with CMS staff, and include:

  • Therapy RUGs with High ADLs
  • Nontherapy RUGs with High ADLs
  • Change of Therapy Assessment
  • Ultrahigh Therapy RUGs
  • Therapy RUGs
  • 90+ Day Episodes of Care

This report will summarize Medicare claims data to help SNF providers identify areas at risk for abuse or improper payments and the PEPPER data is shared with both the MACs and the Medicare Recovery Auditors (RAs); but not the Zone Program Integrity Contractors (ZPICs).  HQI did acknowledge, however, that CMS contractors also have much more sophisticated databases and systems for looking at SNF Medicare claims data.

The SNF PEPPER is a report that summarizes a SNF’s Medicare claims data in areas that may be at risk for abuse or improper payment. PEPPER compares a SNF’s claims data statistics with aggregate statistics for other SNFs in the state, MAC/FI jurisdiction and the nation. SNFs with high billing patterns (at or above the national 80th percentile) are identified as “outliers” and are encouraged to ensure that they are complying with Medicare payment policy, that services provided to beneficiaries are medically necessary and that the medical record documentation supports the services that are billed.

PEPPER cannot identify the presence of improper payments; only a review of the medical record can determine whether services are medically necessary and appropriately billed.  Functional Pathways will work with clients who submit their reports to them to assist in a review of areas where they are identified as an “outlier” on the report.  Clients may contact Sheila Capitosti directly at when they receive their reports.

For more information on SNF PEPPER, go to