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Have You Reviewed Your SNF PEPPER Report?

September 01, 2020
Documentation, Billing, & Coding By Kay Hashagen, Senior Consultant

On July 29, 2020, the Centers for Medicare & Medicaid Services (CMS) released the Q4 FY19 Program for Evaluating Payment Patterns Electronic Report (PEPPER) for Skilled Nursing Facilities (SNF).


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According to the notice sent on August 21, 2020 by the PEPPER Team, most SNFs have not opened or reviewed their most recent PEPPER reports.

Although the pandemic and concerns regarding COVID-19 have the SNF industry focus elsewhere, which is understandable, the need to review and compare your SNF billing practice trends reported on the PEPPER is crucial to the overall compliance audit program. Remember not to lose site of the reimbursement, as CMS has not. In fact, CMS announced the re-opening of audits on August 17,2020. The CMS Coronavirus Disease (COVID-19) Provider Burden Relief Frequently Asked Questions (FAQs), released July 2020, outlined that beginning August 3, 2020, regardless of the status of the public health emergency, CMS will reinstate a phased audit approach, first conducting post-payment audits performed by Medicare Administrative Contractors (MACs). The timeline to launch Targeted Probe and Educate (TPE) program and pre-payment reviews conducted by the MACs, Supplemental Medical Review Contractor (SMRC) and Recovery Audit Contractor (RAC) have yet to be determined but it is anticipated these will resume at the conclusion of 2020.

What to Review on the PEPPER?

The key focus area for SNFs related to the PEPPER reports is the information on the Ultrahigh Therapy Resource Utilization Groups (RUGS). The PEPPER report will show your facility’s Ultrahigh RUG level, for the past three years compared to state, MAC, and National levels. The RUG levels reported correspond to the therapy type and intensity of treatment minutes provided and would be a critical compliance audit element to compare to therapy services provided post implementation of the Patient Driven Payment Model (PDPM).

CMS was clear that the change from the RUG IV Prospective Payment System (PPS) to PDPM is a reimbursement change only. The expectation for patient care, including type and intensity of therapy minutes, should remain stable. If your historical demonstration of therapy type and intensity is high (based on data clearly outlined in the PEPPER reports) and your current performance under PDPM is significantly lower, this could trigger an Additional Documentation Review (ADR). We expect to see CMS reviewing records from pre-PDPM to verify that the RUG levels based on the intensity of therapy were appropriate for patients' clinical needs.

According to the SNF PEPPER Retrievals–PEPPER Resources Portal, as of August 20, 2020, SNFs in most states have not opened their PEPPER reports. For example, in Pennsylvania only 18% of SNFs have opened; New Jersey only 15.92% have opened; and in Maryland only 18.30% have opened. Across the country, the trend is similar. In Texas, only 14.51% have opened and in California, only 8.79% have opened their PEPPER report. You can be sure that CMS is looking at the information in these reports as it clearly shows trends in the utilization of therapy for achieving RUG levels.

If you do not open and analyze your PEPPER report, how will you know your billing compliance risks? If you do not calculate and analyze your current therapy type and intensity pre- and post-PDPM, how will you know your compliance risk?

LW Consulting, Inc. has been conducting MDS audits since October 1, 2019 and have seen a downward trend in the therapy type and intensity in minutes provided post-PDPM up to March 2020 when the Federal Public Health Emergency was declared. It is important that you open your PEPPER report, know your patterns, and then, review your PDPM therapy intensity.


If you have questions or need assistance in analyzing your PEPPER report regarding therapy type and intensity, please contact Kay Hashagen at 410-777-5999 or email

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