Q&A: Interpreting PEPPER data

Q: What should revenue integrity teams at short-term acute care hospitals keep in mind before analyzing Program for Evaluating Payment Patterns Electronic Report (PEPPER) findings?

A: Understanding PEPPER is the first step in using it effectively. Julie Hall, EHRC, CRCR, COC, co-founder and principal consultant at Integrated Revenue Integrity in Sturbridge, Massachusetts, recommends referencing the PEPPER user guide, which is updated with the publication of a new quarterly report and available through the training and resources web page. The guide defines the most recent target areas and breaks down CMS’ rationale for selecting them, offering valuable insights into how the metrics have changed over time. Along with instructions for downloading the report and navigating the PEPPER Portal, the guide also outlines actionable steps hospitals can take after reviewing the data.

Before analyzing a new report, revenue integrity professionals should understand exactly what each target area is measuring. A target area is a measure CMS has identified as potentially vulnerable to improper payment. It may involve coding, diagnosis-related groups (DRG), patient status, length of stay, admissions, or other Medicare billing patterns.

Each measure has a defined numerator and denominator, representing the cases that meet the criteria for the target area and the broader population against which those cases are compared, respectively. However, it’s important to review CMS’ criteria for each target area, as they are not always straightforward. Ronald Hirsch, MD, FACP, ACPA-C, CHRI, vice president of the regulations and education group at R1 RCM Inc. in Murray, Utah, emphasizes that interpreting the PEPPER requires more than looking at the percentile.

“Interpreting the PEPPER is not easy; even after interpreting hundreds of them, I still have to go back to the definitions tab on occasion to double-check my findings,” he says.

Before analyzing a measure, revenue integrity staff should determine what it is actually measuring, understand the difference between the numerator and denominator, and consider whether their facility’s data suggests that the facility may be too aggressive or too conservative.

Editor’s note: This answer was excerpted from “The return of PEPPER: How to get the most out of the report,” in the October 2026 issue of the NAHRI Journal. The NAHRI Journal is a quarterly journal featuring in-depth analysis and expert advice and is an exclusive benefit of NAHRI membership. Not a member? Join today.