Skilled nursing PEPPER reports were published again this week, restoring after a three-year
dormancy the facility-level billing-outlier report that CMS and its contractors use to steer
auditing attention. Separately, the CY 2027 Physician Fee Schedule proposal — whose comment
period closed Monday, the day before CMS expanded its ACCESS Model to pay for monitoring in
heart failure and COPD — would bar the third-party staffing arrangement that most remote
patient monitoring vendors are built on.
Why it matters for vendors: Both stories create demand that is far more
geographically concentrated than the headlines suggest. Applying PEPPER's own 80th-percentile
outlier logic to the Medicare billing dimensions Rehinged can observe,
1,163 facilities sit above the national threshold on three or more measures —
and 61.9% of them are in California and New York alone, because those states'
median facility already bills above the national 80th percentile. Compliance and coding-audit
vendors have a two-state quarter. Meanwhile the remote monitoring proposal cuts hardest at the
2,908 buildings that carry the heaviest chronic-disease census and the thinnest nursing staff —
the ones least able to hire the monitoring clinicians CMS now wants employed in-house.
Regulatory
Reimbursement
SNF PEPPER Reports Return After Three Years — Restoring a Billing-Outlier Benchmark That Systematically Flags High-Cost States
What happened
Skilled nursing facilities regained access to their Program for Evaluating Payment Patterns
Electronic Report this week, the first SNF PEPPER release since April 2023. CMS has been
relaunching the report type by type across 2026 — short-term acute care in March, critical
access hospitals in May, hospice in June, long-term acute care and inpatient rehabilitation in
July, home health and inpatient psychiatric in August — with skilled nursing and partial
hospitalization arriving in the September wave. The report gives each facility its own Medicare
fee-for-service statistics across target areas identified as vulnerable to improper payment,
covering the most recent twelve quarters, and compares that facility against national, Medicare
Administrative Contractor jurisdiction, and state peer groups. A facility at or above the
80th percentile on a target area is designated a high outlier; coding-focused
areas also carry a 20th-percentile low-outlier flag. Index Analytics administers the program
under CMS contract, and access runs through the PEPPER Portal using existing NPPES and PECOS
credentials.
Why it matters
PEPPER does not assert that a payment error occurred, and CMS is careful to say so. What it
does is hand nearly fifteen thousand facilities a single page telling them where they sit
against their peers on billing intensity — and hand the compliance-services market a buying
trigger it has not had since 2023. Expect immediate demand for coding audits, therapy
documentation review, medical-record ADR readiness and revenue-cycle assessment. But the
trigger is not evenly distributed, and vendors who work the whole country equally will waste
the quarter. PEPPER's headline comparison is national, and the nation is not the market a
California or New York operator actually competes in.
Rehinged applied PEPPER's own outlier rule — the national 80th percentile — to the four
Medicare billing dimensions observable in the scored facility base: service days per Medicare
stay, payment per stay, payment per service day, and the share of days falling in the
high-acuity non-therapy ancillary PDPM categories. Across the
12,880 facilities with complete data on all four,
1,163 facilities — 9.0% — exceed the national 80th percentile on three or more,
and 305 exceed it on all four. Those 1,163 buildings account for
$6.37 billion in Medicare allowed charges. They are larger than the rest of
the market at 143 beds against 106, they are 91.5% for-profit, and they bill
$22,080 per Medicare stay against $12,346 everywhere else. The thresholds
themselves are 32.4 service days per stay, $15,502 per stay, $555 per service day, and 2.0%
of days in high-acuity NTA categories.
1,163
facilities above the national 80th percentile on 3+ measures
305
above the threshold on all four
$6.37B
Medicare allowed charges in the flagged group
Medicare payment per stay — flagged facilities vs. everyone else
All other facilities
$12,346 per stay
Three or more flags
$22,080 per stay
Facilities above the national 80th percentile on 3+ measures — top 8 states
The concentration is the story. California holds 471 of the 1,163 flagged facilities
and New York 249 — together 61.9% of the national total, against 5.4% of the
facilities in Texas and 1.0% in Florida. Put as a share of each state's own market,
47.8% of California facilities and 45.1% of New York facilities clear three
or more national thresholds, against 5.9% in Texas and 1.9% in Florida. This is not evidence
that half of California is billing improperly. It is arithmetic: California's median facility
bills $19,436 per Medicare stay and New York's $17,200, while the national median is $12,253
and the national 80th-percentile threshold is $15,502 — so in both states the typical
building already sits above the line the nation draws for outliers, on cost structures and
lengths of stay those markets have carried for years. Vendors selling compliance auditing,
coding review and therapy documentation should build the fourth quarter around California,
New York and New Jersey, and should lead with benchmark interpretation rather than
remediation — the operator opening this report does not need to be told they may be
defrauding Medicare, they need to be told why a national percentile put them there and what
the jurisdiction and state comparisons on the same page actually say.
Watch for: whether CMS holds SNF PEPPER to the annual cadence the relaunch
schedule implies, which would make this an every-autumn buying moment rather than a one-time
event. Watch also for whether Medicare Administrative Contractors and Unified Program Integrity
Contractors begin drawing probe-audit targets from the restored data — the report itself is
advisory, but the same claims patterns feed targeted review.
Regulatory
Technology
Staffing
CMS Would Bar the Outsourced Remote Monitoring Model in 2027 — the Same Week It Expanded Payment for the Outcomes That Model Produces
What happened
The CY 2027 Physician Fee Schedule proposed rule would, beginning January 1, 2027, limit
reimbursement for remote patient monitoring and remote therapeutic monitoring to services
furnished by clinical staff who are direct employees of the billing practitioner or that
practitioner's practice. CMS wrote that many practices billing these codes had delegated most
or all of the monitoring function to outside vendors who supplied the devices, ran patient
outreach, reviewed the data and employed the clinical staff — arrangements CMS says do not
carry the oversight it expects. The proposal also confines RTM to established patients,
requires a separately reportable initiating visit at the onset of monitoring, and revalues
practice-expense inputs for device supply and setup downward on the view that current rates
overstate what practices actually pay. The comment period closed Monday, September 14.
Why it matters
Wednesday's edition covered CMS expanding the ACCESS Model with heart failure and COPD tracks,
putting federal payment behind continuous monitoring for two conditions that define much of the
post-acute census. This proposal points the other way on the same quarter's calendar. CMS is
willing to pay for the outcome and unwilling to accept the delivery structure that made it
scalable: the device-plus-staffing bundle is precisely the model that let small practices and
thinly staffed facilities participate at all. For vendors, the threat is not the payment rate,
it is the org chart. A company whose revenue depends on employing the nurses who watch the
dashboards would need its customers to employ them instead — and the customers with the most
patients to monitor are the least equipped to do that.
Rehinged crossed chronic-disease concentration against nursing capacity across the
12,072 facilities carrying both measures.
5,228 facilities sit in the top quartile nationally on heart failure or
COPD prevalence — more than 54% of Medicare beneficiaries with non-ischemic heart failure, or
more than 44% with COPD. Of those, 2,908 also run registered nurse staffing below the
national median of 0.58 hours per resident per day. That group averages
0.40 RN hours per resident per day, 2.56 stars, and 48.9% annual nursing
turnover. These are the buildings the proposed rule reaches: the monitoring demand is
concentrated in them, and the staff who would have to perform the monitoring in-house are
not.
5,228
facilities in the top quartile for heart failure or COPD
2,908
of those also below median RN staffing
48.9%
average nursing turnover in that group
Registered nurse hours per resident per day
National median
0.58 RN hprd
High-burden, low-staffed facilities
0.40 RN hprd
High chronic burden with below-median RN staffing — top 8 states
Texas carries 412 of these facilities and California 286, with Florida, Ohio
and Illinois each between 166 and 195 — a footprint that looks nothing like the California
and New York concentration in the PEPPER analysis above, which is the practical point for
anyone building one territory plan for both stories. Note also that this is a different cut
of the market than Wednesday's ACCESS analysis: that one isolated facilities carrying heart
failure and COPD together, while this one asks which facilities with either condition lack
the nursing capacity to absorb a monitoring function. Remote monitoring vendors selling into
skilled nursing should stop assuming the facility can supply the clinical labor and start
modeling two structures — a licensure partnership in which an employed-clinician group bills,
or a software-only posture in which the vendor sells the platform and the customer staffs it.
Chains with employed medical directors and centralized clinical teams become materially more
attractive than independents this quarter. Vendors with material RPM revenue in Texas,
California and Florida should be reading the final rule the day it drops.
Watch for: the final CY 2027 Physician Fee Schedule rule, typically issued in
early November and effective January 1. Watch specifically for whether CMS softens the direct
employment requirement to permit contracted clinical staff under practitioner supervision,
which is the single change that would preserve the existing vendor model, and for how far the
practice-expense revaluation on device supply lands.