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Payment Error Rate Measurement Program 

What is the Payment Error Rate Measurement (PERM) Program? 

The Improper Payments Information Act (IPIA) of 2002 requires the Centers for Medicare & Medicaid Services (CMS) to annually review Medicaid and the Children’s Health Insurance Program (CHIP) to identify areas susceptible to significant erroneous payments and report the improper payment estimates to Congress. CMS developed PERM to comply with this Act. The IPIA was amended in 2010 by the Improper Payments Elimination and Recovery Act (IPERA).

CMS reviews 17 states per Cycle on a 3-year rotational basis. Each Cycle takes approximately 3 years to complete. California is a Cycle 2 state and completed the first PERM review in Federal Fiscal Year (FY) 2007. California is currently participating in the FY 2016 PERM review.

CMS engages two contractors to administer PERM. The contractors for the FY 2016 PERM are listed below:
·        Statistical Contractor - The Lewin Group
·        Medical Review Contractor – CNI Industries
PERM is comprised of three review components: fee-for-service (FFS) paid claims, managed care (MC) capitation payments, and eligibility.  For the FFS review component, randomly selected paid claims and MC capitation payments will undergo a Data Processing Review to ensure that states are meeting statutory, regulatory or administrative requirements. A Medical Review will also be conducted on the FFS paid claims to validate the accuracy of the documentation in the medical records. 
Additional information about each of the review components is located at the links below.

Managed Care

For additional information regarding PERM, please visit the CMS web site.  Additionally, inquiries can be sent to the PERM email box at

Return to the Medical Review Branch main page

Last modified on: 8/16/2016 3:08 PM