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2020 Target Areas for PEPPER

August 26, 2020
Compliance, Documentation, Billing, & Coding By Patty Klinefelter, Director

The Q4 CY19 release of the Home Health Agency (HHA) Program for Evaluating Payment Patterns Electronic Report (PEPPER) is now available for download through the PEPPER Resources Portal.




The report is available without cost to CEOs, presidents, administrators or compliance officers. A six-digit CMS Certification Number is needed as a measure to preserve confidentiality. PEPPER is a valuable resource that is sometimes overlooked by compliance leadership.

The Centers for Medicare & Medicaid Services (CMS) is mandated to protect the Medicare Trust fund from fraud, abuse and waste. One of several strategies used is the PEPPER report.

CMS contracts with TMF Quality Institute to develop, produce and disseminate PEPPER reports. The reports use comparative data to find services that are possibly at a high risk for improper payments and are used as an educational tool to help providers assess these risks for improper payments. The report summarizes a provider’s claims data statistics and compares the data with aggregate Medicare data from other providers.

Home health reports are distributed annually, at no cost, to registered users and are confidential. The reports identify outliers for targeted areas and cannot identify individual, patient-specific improper Medicare payments. The report summarizes statistics for three federal fiscal years and is refreshed with each release with the oldest fiscal year rolling off with the new year added.

Home Health targeted areas are case mix, average number of episodes, episodes with 5 or 6 visits, non-LUPA payments, high therapy utilization and outlier payments. The most important part of the PEPPER Report shows the agency’s statistics for all targeted areas for the most current calendar year. Outlier data is color coded with high outliers shown in red and low outliers shown in green. The agency’s data is compared to the national, jurisdiction and state data.

Other areas of the PEPPER provide individual tabs for each targeted area and include suggested interventions which are noted when the targeted area is above the 80th percentile.

In addition, the report provides data of the top home health diagnosis and top home health therapy episodes comparing individual agencies with national, state and jurisdiction data.

But, what is new are the 2020 targeted areas related to the Patient Driven Groupings Model (PDGM).

The PEPPER Team coordinated with CMS to evaluate changes to the HHA PEPPER related to the transition to PDGM. PDGM considers the following factors:

  1. Admission source: If the beneficiary was treated in an institutional setting (e.g., short-term acute care hospital, long-term acute care hospital, IRF, IPF, or SNF) within 14 days prior to the HHA admission, the HHA receives a higher adjustment than it would if the beneficiary was admitted to the HHA directly from the community setting.

  2. Comorbidity adjustment:
    • High comorbidity adjustment: There are two or more secondary diagnoses that are associated with higher resource use when they are both reported together, rather than separately. These two diagnoses may interact with one another, resulting in higher resource use.
    • Low comorbidity adjustment: There is a reported secondary diagnosis that is associated with higher resource use.
    • No comorbidity adjustment: There are no reported secondary diagnoses that could be considered either a low or high comorbidity adjustment.
CMS evaluated and approved three new target areas designed to assess the potential for circumventing these new payment adjustments: High Comorbidity, Low Comorbidity and Admission Source.

The HHA PEPPER will include these new target areas after one year of PDGM claims. The Q4CY20 HHA PEPPER release (scheduled for distribution in July 2021) will reflect these changes. Any current target areas that are no longer applicable will be retired.

After retrieving your report, LW Consulting, Inc. suggests you:

  • Analyze the report
  • Identify outliers which are the 80 or 20 percentiles.
  • Incorporate the new information and PDGM target areas into the agency’s QAPI/Compliance program.
  • Use the report as a guide for auditing and monitoring efforts to help identify and prevent payment errors.
  • Audit medical records to determine if documentation supports the claim.


If your agency is in need of a compliance program assessment or audit, please contact Patty Klinefelter at 540-686-1311 or email

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