Get Your PEPPER . . . MS-DRG Data and More

The Program for Evaluating Payment Patterns Electronic Report (PEPPER) was developed in 2002 by TMF Health Quality Institute in support of CMS’ Hospital Payment Monitoring Program. State Quality Improvement Organizations (QIOs) began distributing PEPPER to the short-term acute care hospitals in their state in 2003.

PEPPER provides provider-specific Medicare data statistics for discharges/services vulnerable to improper payments. This is important from a compliance and revenue integrity perspective. PEPPER can support a hospital or facility’s compliance efforts by identifying where it is an outlier for these risk areas. This data can help identify both potential overpayments as well as potential underpayment. Originally PEPPER was focused on acute-care hospital reporting but now gathers and provides reports and data on many healthcare settings (see below). Each PEPPER area has a “user’s guide” that you can accessed and downloaded.


  • Acute Care Hospital
  • Home Health Agencies
  • Inpatient Psychiatric Facilities
  • Long-Term Acute Care Hospitals
  • Skills Nursing Facilities
  • Critical Access Hospitals
  • Hospices
  • Inpatient Rehabilitation Facilities
  • Partial Hospitalization Programs

PEPPER uses a Microsoft Excel file summarizing provider-specific Medicare data statistics for target areas often associated with Medicare improper payments due to billing, MS-DRG coding and/or admission necessity issues. Target areas are determined by the Centers for Medicare & Medicaid Services (CMS).   All of the data tables, graphs, and reports in PEPPER were designed to assist the hospital or facility in identifying potential overpayments as well as potential underpayments.

For example, the PEPPER for Acute Short-Term Hospitals short-term is in three comparison groups: the nation, Medicare Administrative Contractor (MAC) jurisdictions, and the state in which the hospital operates. These comparisons enable a hospital to determine whether it is an outlier, differing from other shortterm acute care hospitals. PEPPER determines outliers based on preset control limits. The upper control limit for all target areas is the 80th percentile. Coding-focused target areas also have a lower control limit, which is the 20th percentile. PEPPER draws attention to any findings that are at or above the upper control limit (high outlier) or at or below the lower control limit (low outliers for coding-focused areas only).

The PEPPER list of risk areas for Acute-Care Hospitals is lengthy but does include the following:

  • Stroke, Intercranial Hemorrhage
  • Simple Pneumonia
  • Unrelated OR procedure
  • Excisional Debridement
  • Transient Ischemic Attack
  • Percutaneous Cardiovascular Procedures
  • 3-Day SNF Qualifying Admission
  • Respiratory Infections
  • Septicemia
  • Single CC/MCC
  • Ventilator Support
  • Chronic Obstructive Pulmonary Disease
  • Syncope
  • 1-Day Stay Medical DRGs

There is a PEPPER homepage portal that you can go to in order to submit a request for PEPPER data. Note however, that this provider information is limited to individual provider’s; Chief Executive Officer, Present, Administrator, Compliance Officer, or quality Assurance/Performance Improvement Officer:   CMS and the PEPPER team consider the PEPPERs to be sensitive information and thus have established security measures to protect the reports from unauthorized access. However, you can view “nation” PEPPER data without any special access or password.

Another good resource is a recent CMS MLN Matter which discussed PEPPER and provided several helpful links. Go to the following to view the March 11, 2021, CMS MLN which included PEPPER : 2021-03-11-MLNC | CMS

It is especially important to keep in mind that the Office of Inspector General encourages hospitals to develop and implement a compliance program to protect their operations from fraud and abuse. As part of its compliance program, a hospital should conduct regular audits to ensure charges for Medicare services are correctly documented and billed. Take the time to obtain and review the PEPPER for your hospital or facility, see if your hospital is a high or low outlier. If you are an outlier, this could very well mean that a documentation and coding audit/review is needed. Having a timely, thorough, and complete audit conducted with auditors which have expert level of knowledge will be an asset to address any concerns.

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This program has been approved for continuing education unit(s) (CEUs) for use in fulfilling the continuing education requirements of the American Health Information Management Association (AHIMA). Granting of Approved CEUs from AHIMA does not constitute endorsement of the program content or its program provider.