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PEPPER is produced in the form of an electronic data-formatted report. Your hospital can access these reports via a secure file-exchange Web site. The report analyzes your hospital’s billing and claims data in comparison to other providers for Medicare Severity Diagnosis Related Groups (MS-DRGs) and discharges that are determined to be at high risk for payment errors due to billing, coding and/or admission necessity issues. If this description sounds similar to what you have heard during the last several years about some of the RACs’ areas of interest, it’s no coincidence!


PEPPER also will include reports on hospitals’ top MS-DRGs for one-day stays and top medical MS-DRGs for one-day stays. Once again, this represents the same type of information and data-mining areas that are the focuses of the RACs.


RAC Preparation

To assist in your hospital’s preparations for RAC activity, I would recommend that you place the analysis of your PEPPER reports at the top of your to-do list. Many hospitals already are analyzing data (billing claims, data, etc…) appropriately to identify areas of risk.


Now, via the PEPPER reports, you have data directly from CMS to review, analyze and critique. To manage your review of this information, I would recommend considering following the business/marketing model of AIDA (Attention, Interest, Desire, Action) within your hospital.




If you are reading this article, you must have an interest in the RACs. Hopefully you are aware of the PEPPER reports and the significant value they offer when it comes to analyzing data. Your challenge is figuring out how to make sure the rest of the applicable personnel in your hospital become aware of the reports. How are you going to do this?



The first question I would recommend asking is “who in my facility is getting access to the PEPPER reports?” Decisions need to be made about how to access, share and analyze this data.



When PEPPER covers focusing on the top Medicare risk areas – including one-day stays, hospital readmissions and DRGs vulnerable to payment errors – this should send a signal within your hospital leadership and RAC point personnel that you want to be reviewing this information.



How will your hospital organize your response to the PEPPER information? Will this information foster reviews of identified risk areas/accounts or DRGs that appear to be disproportionally problematic when compared to other hospitals within your state? If you perform reviews, will they be internal or external? From what time period will claims be reviewed? Will you need to involve physician leadership for these issues? Who will the PEPPER reports be shared with within your hospital? There are a host of additional management oversight questions to ask yourself as you move forward in attempt to draw the maximum benefit from the PEPPER information.


The PEPPER reports should be a primary source of data analysis for your RAC preparation efforts. Planning who will access the information and how it will be shared in your hospital is a first step to using this information wisely to prepare for RACs and other auditors.


About the Author


Bret S. Bissey, MBA, FACHE, CHC, is a nationally recognized expert in healthcare compliance. He is the author of the Compliance Officer’s Handbook, published in 2006, and has presented at more than 40 regional and national industry conferences/meetings on numerous compliance topics. He has more than25 years of diversified healthcare management, operations and compliance experience.


Contact the Author:



Bret Bissey, MBA, FACHE, CHC

A veteran in healthcare compliance (since 1997), Bret Bissey has served as senior vice president and chief ethics compliance officer at UMDNJ in Northern New Jersey. The author of the Compliance Officer’s Handbook, he has been a thought leader and popular speaker at industry conferences and meetings for many years. Bissey has more than 30 years of diversified healthcare management, operations, consulting, and compliance experience.

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