Federal Payment Error Rate Measurement (PERM)
Introduction:
California is one of 17 States randomly selected by the Centers for Medicare and Medicaid Services (CMS) for the Payment Error Rate Measurement (PERM) initiative for Federal fiscal year (FFY) 2007 (October 1, 2006 - September 30, 2007). For FFY 2007, CMS will only measure Medicaid fee-for-service (FFS) claim payments and premium payments made on behalf of beneficiaries for accuracy.
Helpful Links Outside of DHCS - A&I
Centers for Medicare & Medicaid Services PERM Web Site
Downloads
Proposed Rule [PDF, 101KB]
Interim Final Rule [PDF, 168KB]
Second Interim Final Rule [PDF, 295KB]
(Above PDF files provided by CMS)
Who can I contact at the Department of Health Care Services if I have more questions?
Should you have more questions about PERM, feel free to e-mail the Department of Health Care Services - Audits & Investigations at
PERM@dhcs.ca.gov
Why is PERM required?
- PERM is required by CMS pursuant to the Improper Payments Information Act of 2002 (IPIA; Public Law 107-300).
- The IPIA directs Federal agencies to annually review its programs and report the improper payment to Congress.
- Medicaid is a Federal program potentially identified as a program at risk for significant erroneous payments; therefore,
- CMS must provide estimates of the accuracy of medical payments made by Medicaid as part of their annual budget request using PERM.
Why are States required to participate in PERM?
States are required to participate under the statutory provisions of section 1902(a)(27) of the Social Security Act (the "Act"). The Act requires states to:
- Submit expenditures, claims data, medical policies and processing manuals and other necessary information for, among other purposes, identifying improper payment.
- Submit corrective action reports for the purpose of reducing their payment error rates.
How will PERM be implemented?
CMS will use a national contracting strategy involving 3 contractors:
- Statistical contractor - The Lewin Group
- Documentation/database contractor – Livanta LLC
- Medical Review contractor – TBD
What reviews will be included in PERM?
A claim will be reviewed to determine if it was processed correctly, the service was medically necessary, coded correctly and properly paid or denied.
- Processing Review - Will examine the accuracy of the claims processing system.
- Medical Review - Will validate the accuracy of the claim information to the documentation in the medical record.
What can you tell me about implementation?
The data processing reviews are to begin in January 2007. The medical record reviews are expected to begin in April 2007. The reviews occur on a quarterly basis, and will include a random sampling of approximately 200-300 FFS paid and denied claims.
What requires providers to participate in PERM?
Providers are required by section 1902(a)(27) of the Social Security Act to:
- Retain records necessary to disclose the extent of services provided to individuals receiving assistance.
- Furnish CMS or their agent with information regarding any payments claimed by providers for furnishing services including medical records.
How will providers know if they have claims selected?
If a claim is selected, Livanta LLC will contact you to request a copy of your medical records to support the medical review of the Claim.
What is the provider’s role in the PERM Initiative?
When the contractor calls:
- Verify that your name and address are correct.
- Confirm how you want to receive the requests:
- Submit all requested medical record information within 90 calendar days of the request date. The information may be submitted either electronically or hard copies.
What is the purpose of the medical record review?
The medical record review validates that services billed on the claim were:
- Actually provided
- Medically necessary
- Coded correctly
- Paid or denied correctly
What happens if the provider does not cooperate?
Failure to submit the requested medical information will result in a claim adjustment against the provider’s claim. The monies will be recovered by Audits & Investigations (A&I).
What about maintaining patient privacy?
The Health Insurance Portability and Accountability Act (HIPAA) permits the collection and review of protected health information to meet the CMS PERM requirements. The records do not need to be de-identified.
What happens when the reviews are completed?
The CMS contractor will notify A&I of its review findings one month before error rates are finalized. A&I will attempt to resolve any differences if we disagree with the contractor’s findings.
What is the impact?
Provider notification and appeal procedures are not modified from the normal appeal process.
What if an error is confirmed?
States are required to return the Federal share of overpayments to CMS. Monies will be recovered by the State of California.