The Hospice PEPPER examines Medicare claims and payment patterns that CMS believes may warrant additional attention. It doesn’t tell you that something is wrong. It helps identify where you may want to ask questions—and where your hospice may have potential exposure that deserves a closer look.

The FY 2025 Hospice Program for Evaluating Payment Patterns Electronic Report—better known as the Hospice PEPPER—is now available.

After the PEPPER program was paused in 2024, CMS has resumed releasing these reports. The current Hospice PEPPER uses Medicare claims data from FY 2023 through FY 2025 and gives hospice management another opportunity to look at its organization through a lens similar to the one CMS and its contractors may use.

If you operate a Medicare-certified hospice, I would recommend downloading your PEPPER and making its review part of your regular management and compliance process.

At a high level, PEPPER is intended to help providers identify areas of their Medicare claims activity that may be vulnerable to improper payments and therefore may warrant additional auditing or monitoring. CMS’s own materials emphasize an important distinction:

PEPPER does not identify that a payment error has occurred.

It identifies patterns that may warrant further review.

That distinction matters.

A result that differs significantly from other hospices doesn’t automatically mean something is wrong. Your patient population, referral sources, service area, sites of care and other characteristics may legitimately produce results that differ from your peers.

But neither should an unusual result simply be ignored.

The PEPPER identifies the question. Your review has to find the answer.

What Is the Hospice PEPPER Looking At?

The current Hospice PEPPER contains 15 Target Areas.

That may sound like a lot—and it is—but management doesn’t necessarily need to think of them as 15 unrelated statistics.

Most can be viewed within four broader areas:

Eligibility, Length of Stay & Live Discharges

Where Hospice Care Is Being Provided

Coding & Levels of Care

Services Being Billed Outside the Hospice Benefit

Looking at them this way makes it easier to understand what the PEPPER is really trying to tell you.

1. Eligibility, Length of Stay & Live Discharges

Four Target Areas fall generally within this group:

• Live Discharges — No Longer Terminally Ill
• Live Discharges — Revocations
• Live Discharges with Length of Stay of 61–179 Days
• Long Length of Stay

These measures approach the issue from different directions, but they can raise some fundamental questions about who is being admitted to hospice, how long they remain on service, why they leave hospice, and whether continued hospice eligibility is appropriately supported.

A live discharge is not inherently inappropriate.

Patients can stabilize or improve to the point that they are no longer considered terminally ill. Beneficiaries can choose to revoke the hospice benefit. Other legitimate circumstances can result in a patient leaving hospice alive.

But patterns matter.

CMS notes that hospices with relatively high proportions of live discharges may warrant review of whether beneficiaries met hospice eligibility requirements and whether financial considerations could be influencing service delivery. CMS has also identified concerns about patterns involving revocation followed by hospital care and subsequent hospice readmission.

Long Length of Stay deserves particular attention

The FY 2025 Hospice PEPPER changed the definition of Long Length of Stay to include episodes with a length of stay of 180 days or greater, rather than only those exceeding 180 days.

A long hospice stay does not, by itself, establish that the patient was ineligible for hospice.

Prognosis is not an exact science. Some appropriately admitted patients will live considerably longer than originally anticipated while continuing to meet Medicare’s hospice eligibility requirements.

But a hospice with a substantial or increasing concentration of long-stay patients should understand what is producing that result.

What types of patients are generating those stays?

Are particular diagnoses involved?

Are there concentrations among particular referral sources, physicians, facilities or locations?

Does the documentation continue to support eligibility?

PEPPER can identify the pattern. It cannot determine whether the pattern is appropriate for your patients.

That requires additional review.

2. Where Hospice Care Is Being Provided

Three Target Areas examine the percentage of Routine Home Care provided to beneficiaries residing in particular institutional settings:

• 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

CMS and the OIG have historically expressed concerns about potential overutilization of hospice services involving beneficiaries residing in certain facility settings, which is why PEPPER monitors these patterns.

But again, context matters.

A hospice that has developed strong relationships with assisted living or nursing facilities may legitimately have a substantially different patient mix than a hospice whose patients are predominantly cared for in private residences.

The question isn’t necessarily:

Why are we different from everyone else?

The better question may be:

Can we explain why we’re different—and does the underlying clinical and operational information support that explanation?

An unusual result may reflect nothing more than the hospice’s referral relationships and patient population.

Or it may identify something management should understand more closely.

You don’t know which until you look.

3. Coding & Levels of Care

Three more Target Areas address somewhat different issues, but all provide information about what the hospice’s Medicare claims are saying about its patients and the care being provided:

• Claims with a Single Diagnosis Coded
• No General Inpatient Care or Continuous Home Care
• Long General Inpatient Care Stays

Claims with a Single Diagnosis

CMS expects hospice claims to report the principal diagnosis as well as additional or coexisting diagnoses related to the terminal illness and related conditions. The Hospice PEPPER therefore identifies the percentage of claims containing only one diagnosis code.

A high result doesn’t automatically mean claims are coded incorrectly.

But it may warrant asking whether the diagnoses being reported adequately describe the conditions affecting the patients being served.

Again, the objective isn’t to add diagnoses simply to make a claim appear more complex.

The objective is accurate and complete reporting.

No GIP or CHC

The No General Inpatient Care or Continuous Home Care Target Area looks at hospices that provide no GIP or CHC during the reporting period.

These are higher levels of hospice care intended for particular patient circumstances.

Not every hospice will necessarily have the same utilization of these services. But the absence of these levels of care may raise questions about whether patients who require them have appropriate access when the clinical circumstances warrant their use.

Long GIP Stays

The Long General Inpatient Care Stays measure looks at extended periods of GIP.

GIP is intended for circumstances requiring inpatient management that cannot feasibly be provided in another setting.

A longer GIP stay may be completely appropriate for an individual patient.

But if extended GIP stays become a pattern, management should understand what is producing them and whether the continued level of care is appropriately supported.

Once again:

The statistic identifies where to look. It doesn’t provide the conclusion.

4. Services Being Billed Outside the Hospice Benefit

The remaining five Target Areas examine Medicare Part B and Part D claims associated with hospice beneficiaries:

• Average Number of Medicare Part D Claims — Beneficiaries Residing at Home
• Average Number of Medicare Part D Claims — Beneficiaries Residing in an Assisted Living Facility
• Average Number of Medicare Part D Claims — Beneficiaries Residing in a Nursing Facility
• Average Number of Medicare Part B Claims — Beneficiaries Residing at Home
• Average Number of Medicare Part B Claims — Beneficiaries Residing in an ALF, NF or SNF

Although there are five separate measures, the broader management question is similar:

Are services, items or drugs being billed elsewhere in Medicare that should potentially have been covered or coordinated by the hospice?

CMS has identified concerns about Medicare paying separately for services or drugs related to the terminal illness and related conditions that should have been covered under the hospice benefit.

That makes these Target Areas particularly interesting from both a compliance and financial-management perspective.

A high number of outside Part B or Part D claims does not establish that the hospice should have paid those claims.

Some may be completely unrelated to the terminal illness and related conditions.

But if your hospice has comparatively high outside Medicare utilization, management should understand what is being billed, why it is being billed outside the hospice benefit, and whether the financial responsibility has been assigned appropriately.

That may require looking beyond the PEPPER itself.

And that’s precisely the point.

Don’t Just Look at Whether You’re an Outlier

PEPPER compares hospice results nationally, within the hospice’s Medicare Administrative Contractor jurisdiction, and within its state.

Those comparisons are useful.

But I wouldn’t reduce a PEPPER review to simply looking for Target Areas at or above the 80th percentile.

CMS’s User Guide itself recommends considering other information when determining where to focus review efforts, including the Target Count and Sum of Payments associated with applicable Target Areas.

That makes sense.

Two results can both appear unusual while representing very different levels of potential financial or compliance exposure.

And I would pay particular attention to trends.

The Hospice PEPPER provides multiple years of information. A significant movement in your own results can sometimes be more informative than where you happen to fall relative to everyone else.

CMS specifically notes that significant changes can result from changes in areas such as staffing, coding and billing personnel, utilization review, documentation, services or patient population.

So ask:

What changed?

And then:

Why?

PEPPER Isn’t the Only Hospice Claims-Based Data Worth Watching

Hospice management should also be aware that PEPPER is not the only claims-based information CMS is now using to evaluate hospice utilization and payment patterns.

CMS has also developed the Service and Spending Variation Index (SSVI), which uses claims-based measures to evaluate differences in hospice service utilization and Medicare spending occurring outside the hospice benefit.

Several of the issues examined through SSVI overlap conceptually with questions raised by PEPPER—including length of stay, live discharges, service utilization and non-hospice Medicare spending. CMS has stated that it intends to determine individual hospice SSVI scores annually.

That makes SSVI another measure I believe hospice management should understand rather than simply wait for CMS or another oversight organization to interpret for them.

I’ll address the SSVI separately in a future article.

The PEPPER Identifies the Question. Your Review Has to Find the Answer.

Your Hospice PEPPER contains information CMS believes can help identify vulnerabilities and areas that may warrant additional auditing or monitoring.

That doesn’t make PEPPER an audit.

And an unusual result isn’t a finding that your hospice did anything wrong.

But that’s also not a reason to ignore it.

If CMS is looking at these patterns, hospice management should understand them too.

What does your PEPPER show?

What has changed?

Where does your hospice differ from others?

Why?

Can you explain the result?

Does the underlying clinical, billing and operational information support it?

And is there anything management should address before somebody outside the organization asks the same questions?

The PEPPER provides the information. The value comes from understanding what that information means for your hospice.

Have You Reviewed Your Hospice PEPPER?

The FY 2025 Hospice PEPPER is currently available through the PEPPER Portal.

If you haven’t downloaded yours, I would recommend doing so.

Then don’t simply file it away and/or only look for unusually high results.

Use it to better understand your organization.

And if you would like assistance, IFS4hh can review and summarize your Hospice PEPPER from a financial, reimbursement and operational perspective, identify the Target Areas and trends that appear most worthy of management’s attention, and help determine where additional investigation may—or may not—be warranted.

The objective isn’t to make your hospice look like every other hospice.

The objective is to understand why your results look the way they do—and whether there is anything you should be doing about them.