A new CMS report or login can quickly become another compliance worry.
You may be asking: Is this urgent? Who should review it? Does it mean CMS found a problem? Could this lead to an ADR or payment issue?
For Medicare-certified hospice agencies, PEPPER is not something to ignore. PEPPER gives your agency a claims-based look at billing patterns that CMS considers higher risk for improper Medicare payments.
That does not mean every outlier has done something wrong. It does mean your agency should know what the report says, how to read it, and what to review internally.
*This article was written in consultation with Mariam Treystman.
At The Home Health Consultant, we help Medicare-certified agencies understand CMS updates, billing risk, survey readiness, and compliance expectations before they become bigger problems.
We are writing this article to help hospice agencies understand what PEPPER is, what changed in the FY 2025 release, and how to use the report as part of a stronger compliance program.
What is PEPPER for Medicare-Certified Hospice Agencies?
PEPPER stands for Program for Evaluating Payment Patterns Electronic Report.
For hospice agencies, PEPPER is a Microsoft Excel report that shows a hospice’s claims-based data statistics. The data comes from paid Medicare hospice claims submitted to the Medicare Administrative Contractor, also known as the MAC.
The report compares your hospice’s billing patterns to other hospices in three comparison groups:
- The nation
- Your MAC jurisdiction
- Your state
The purpose is not to tell you that a payment error definitely occurred. CMS is clear that PEPPER does not identify actual payment errors. Instead, it helps hospices identify possible billing vulnerabilities, monitor changes over time, and prioritize areas for internal auditing.
That distinction matters. A red flag in PEPPER should not be treated as proof of noncompliance. It should be treated as a reason to look deeper.
Is PEPPER a CMS Login, a Portal, or a Report?
PEPPER itself is a report.
Hospices receive their PEPPER files through a secure portal on the CMS CBR PEPPER website on an annual basis. That is why many agencies think of PEPPER as a “CMS login” issue.
However in reality, the login or portal is how the agency accesses the file, and the important compliance tool is the report inside the Excel workbook.
Once downloaded, the Hospice PEPPER workbook contains multiple worksheets. The tabs at the bottom of the workbook help users move through different sections, such as Definitions, Compare, and the individual target areas.
What changed in the FY 2025 Hospice PEPPER Release?
The FY 2025 Hospice PEPPER release includes several important updates.
First, the top terminal diagnosis categories were updated. The updated terminal diagnosis categories include:
- Cancer
- Circulatory or heart disease
- Dementia
- Respiratory disease
- Neurodegenerative disease or stroke
Second, one target area was removed. The target area for Continuous Home Care provided in an Assisted Living Facility is no longer included.
Third, the Long Length of Stay target area was updated. It now includes episodes with a length of stay equal to or greater than 180 days. In previous Hospice PEPPER reports, this target area only included episodes with a length of stay greater than 180 days.
That small wording change matters. An episode that is exactly 180 days now meets the numerator criteria for the Long Length of Stay target area.
How Does PEPPER Define a Hospice Episode of Service?
Some PEPPER target areas are based on claims. Others are based on episodes of service.
For episode-based target areas, PEPPER looks at claims submitted by the hospice for each beneficiary. The claims are sorted from the earliest “Claim From” date to the latest.
An episode is generally included in the report period when the latest claim in the series indicates that the beneficiary was discharged or did not return for continued care within 60 days.
If there is a gap of more than 60 days between one claim’s “Through Date” and the next claim’s “From Date,” PEPPER treats that as the end of one episode and the start of another.
Each episode is included in the report period where the latest “Through Date” falls.
For hospice agencies, this means the timing of claims and the way episodes are built can affect how your data appears in PEPPER.
Which Hospice Billing Patterns Does PEPPER Review?
The Hospice PEPPER target areas focus on claims or episodes that CMS considers at higher risk for improper Medicare payments.
Many target areas are calculated as ratios and shown as percentages. The numerator represents the episodes, claims, days, or services that may suggest risk. The denominator represents the larger group being compared.
For FY 2025, Hospice PEPPER target areas include:
- Live discharges where the beneficiary is no longer terminally ill
- Live discharge revocations
- Live discharges with a length of stay of 61 to 179 days
- Long length of stay, now equal to or greater than 180 days
- Routine Home Care provided in an Assisted Living Facility
- Routine Home Care provided in a Nursing Facility
- Routine Home Care provided in a Skilled Nursing Facility
- Claims with a single diagnosis coded
- Episodes with no General Inpatient Care or Continuous Home Care
- Long General Inpatient Care stays
- Average number of Medicare Part D claims for beneficiaries at home
- Average number of Medicare Part D claims for beneficiaries in an Assisted Living Facility
- Average number of Medicare Part D claims for beneficiaries in a Nursing Facility
- Average number of Medicare Part B claims for beneficiaries at home
- Average number of Medicare Part B claims for beneficiaries in an Assisted Living Facility, Nursing Facility, or Skilled Nursing Facility
The Part D and Part B target areas are reported as rates, not percentages.
Why Do Live Discharges Matter in Hospice PEPPER?
PEPPER includes multiple target areas related to live discharges because CMS views high live discharge patterns as a potential risk indicator.
A beneficiary may be discharged alive from hospice for several reasons. The beneficiary may no longer be terminally ill. The beneficiary may move out of the service area. The beneficiary may be discharged for cause. The beneficiary may also revoke the hospice benefit.
A high proportion of live discharges may suggest that beneficiaries are being admitted who do not meet hospice eligibility criteria. It may also suggest potential quality-of-care concerns or raise questions about whether financial considerations are affecting service delivery.
Revocations receive special attention. A beneficiary has the right to revoke the hospice election at any time and may re-elect hospice later. However, the hospice cannot revoke the election for the beneficiary. The hospice also cannot request or require that the beneficiary revoke.
CMS has identified concerns about patterns where revocations and later re-elections may be used to avoid costly hospitalizations, procedures, drugs, or services. Because of that, PEPPER includes a target area focused on live discharges related to beneficiary revocations.
PEPPER also reviews live discharges with a length of stay between 61 and 179 days. This matters because CMS implemented a higher Routine Home Care payment rate for the first 60 days of care, with a lower RHC rate beginning on day 61. A high rate of live discharges shortly after day 60 may raise questions about whether payment incentives are affecting care decisions.
WhyDoes PEPPER Flag Hospice Claims With Only One Diagnosis?
Hospice claims should include the principal diagnosis and any additional or coexisting diagnoses related to the terminal illness and related conditions.
PEPPER includes a target area for claims with only one diagnosis coded because single-diagnosis claims may suggest incomplete coding.
The official PEPPER User Guide from CMS explains that hospice claims are expected to report all diagnoses related to the terminal illness and related conditions. This helps ensure accurate and complete information about the beneficiaries receiving hospice services.
The guide also reminds hospices that debility, failure to thrive, and unspecified dementia diagnosis codes are not accepted as principal hospice diagnoses on a hospice claim. If one of those diagnoses, or another diagnosis that cannot be used as the principal diagnosis, is reported as the principal diagnosis, the claim will be returned for submission with a more definitive hospice diagnosis.
This is an area where billing, coding, and clinical documentation must work together. A diagnosis should not be added without support. The record must substantiate the conditions being coded.
How Should Hospice Agencies Read PEPPER Percentiles?
PEPPER uses percentiles to show how your hospice compares to other hospices.
Again, the report compares your hospice to three groups:
- All hospices nationwide
- Hospices in your MAC jurisdiction
- Hospices in your state
PEPPER only highlights findings at or above the national 80th percentile.
When your target area percent or rate is at or above the national 80th percentile, your hospice is considered at risk for improper Medicare payments in that target area. In the Compare Targets Report, those values appear in red bold text.
That does not mean an improper payment definitely occurred. It means your hospice is in the top 20% nationally for that target area and should review the area more closely.
CMS also provides jurisdiction and state percentile comparisons. These can be useful, but CMS recommends hospices should give the greatest weight to the national percentile. Jurisdiction and state groups are smaller, and regional practice patterns can influence those numbers.
What Does “No Data” Mean in PEPPER?
“No data” does not always mean your hospice had no claims or no activity.
In PEPPER, CMS data restrictions apply. When the numerator or denominator is fewer than 11, statistics are not displayed.
That means some target areas, state percentiles, or jurisdiction percentiles may be blank or unavailable because there is not enough reportable data.
The target area graphs may also omit data points when there is no reportable data for a time period. If fewer than 11 hospices in the state or jurisdiction have reportable data for a target area, the state or jurisdiction trend line may not appear.
Hospices should be careful not to overinterpret missing data. It may be due to CMS data restrictions, not necessarily because the issue does not exist.
What is the Compare Targets Report in PEPPER?
The Compare Targets Report is one of the most important places to start.
It helps hospices prioritize areas for auditing and monitoring. For each target area with reportable data in the most recent year, the report shows the hospice’s target count, target percent or rate, percentile rankings, and Sum of Payments when calculated.
The color formatting is important. If the hospice’s percent or rate is at or above the national 80th percentile, it appears in red bold text. If it is below the national 80th percentile, it appears in black text.
Hospices should not only look at whether something is red. They should also consider the Target Count and Sum of Payments.
A target area with a high percentile, high target count, and high payment amount may deserve more immediate attention than an area with a high percentile but very few episodes.
What are the Target Area Data Tables in PEPPER?
The Target Area Data Tables give more detail for each target area across three years.
These tables may include the numerator count, denominator count, percent, average length of stay, and Medicare payment data. They also include an Outlier Status column.
The Outlier Status column may show that the hospice is a high outlier. It may also show “Not an outlier” or “No data.”
PEPPER also includes graphs below the data tables. These graphs help hospices see whether percentages changed over time. A sudden increase or decrease may indicate a change in admitting practices, staff turnover, coding or billing practices, utilization review, documentation improvement, hospice services, or even changes in the local provider community.
That is one of the most useful parts of PEPPER. It does not just show one number. It helps your agency ask what changed and why.
What are the Live Discharges by Type Reports in Hospice PEPPER?
Hospice PEPPER also includes Hospice and Jurisdiction Live Discharges by Type Reports.
The Hospice Live Discharges by Type Report gives more detail about beneficiaries discharged alive during the most recent three fiscal years.
Live discharges are grouped into categories such as:
- No longer terminally ill
- Revocation
- Moved out of service area
- Beneficiary transfer
- Discharged for cause
The report shows the number of episodes for each live discharge type, listed by volume. It also shows the proportion of each live discharge type compared with all live discharges and the hospice’s average length of stay.
This report helps hospices go beyond the overall live discharge percentage. It lets the agency see what kind of live discharges are driving the numbers.
That matters because a high revocation pattern requires a different review than a high moved-out-of-service-area pattern or a high no-longer-terminally-ill pattern.
What Should Hospice Agencies Do After Reviewing PEPPER?
A hospice should use PEPPER as a starting point for internal review.
The report should be reviewed by:
- Leadership,
- Compliance,
- Billing,
- Clinical management,
- QAPI,
- and anyone responsible for quality or documentation oversight.
The goal is not to panic over every outlier. The goal is to decide where a focused review is needed.
For example, if your hospice is a high outlier for live discharges, review a sample of records for beneficiaries discharged alive. Look at eligibility, admission documentation, discharge reason, physician documentation, and whether the record supports the decisions made.
If your hospice is a high outlier for revocations, review whether each revocation was truly initiated by the beneficiary. Make sure the hospice did not request, pressure, or require the revocation.
If your hospice is a high outlier for long length of stay, review records for continued eligibility and documentation supporting terminal prognosis.
The best response is a documented review process. Your agency should be able to show what was reviewed, what was found, what corrective action was taken, and how the agency will monitor the issue moving forward.
PEPPER should not be treated as a once-a-year download that gets saved and forgotten.
It gives your hospice a structured way to ask:
- Are our billing patterns changing?
- Are we an outlier nationally?
- Are there areas where documentation does not support billing?
- Do we need to retrain staff?
- Do we need to review admissions, revocations, coding, GIP use, CHC access, or medication coordination?
- Do we have policies that are being followed consistently?
A strong hospice compliance program does not wait for an ADR, audit, complaint, or survey. It uses available data to identify risk early.
Internally, your agency should also decide who is responsible for downloading, reviewing, saving, and acting on the PEPPER report. That responsibility should not be vague.
At minimum, your agency should know:
- Who has access to the secure portal
- Who downloads the report
- Who reviews the Compare Targets Report
- Who reviews the target area details
- Who documents follow-up actions
- Who reports findings to leadership or QAPI
Used correctly, PEPPER can help your agency catch vulnerabilities before they become larger compliance or reimbursement problems.
And because billing risk does not stop with PEPPER, your agency should also know how to monitor ADRs. To continue strengthening your Medicare compliance process, read our related article: How Do You Check For & Submit ADRs in Your NGSConnex Account?
*Disclaimer: The content provided in this article is not intended to be, nor should it be construed as, legal, financial, or professional advice. No consultant-client relationship is established by engaging with this content. You should seek the advice of a qualified attorney, financial advisor, or other professional regarding any legal or business matters. The consultant assumes no liability for any actions taken based on the information provided.
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