​​​​​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 payments and report the improper payment estimates to Congress. CMS developed PERM to comply with this Act. The IPIA was amended in 2012 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 PERM review in Federal Fiscal Year (FY) 2007. After PERM FY 2016, CMS decided PERM will be moving back three months from a Fiscal Year review period, to a Reporting Year (RY) review period of July 1 through June 30 to align with state fiscal years and to allow for additional time to complete the cycle before reporting. California is currently participating in the RY 2020 PERM review.

CMS engages three contractors to administer PERM. The contractors for the RY 2020 PERM are listed below:

• Statistical Contractor - The Lewin Group

• Medical Review Contractor – NCI AdvanceMed, Inc.

• Eligibility Review Contractor: Booz Allen Hamilton

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.

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

Payment Error Rate Measurement Program Fee-For-Service Review Component Section

What authority requires providers to participate in the Payment Error Rate Measurement (PERM) Program?

The Centers for Medicare & Medicaid Services (CMS) engaged three contractors to conduct PERM reviews: a Statistical Contractor (SC), Eligibility Review Contractor (ERC), and a Review Contractor (RC). For the Medical Review of fee-for-service (FFS) claims, the RC and the Department of Health Care Services (DHCS) will be contacting providers throughout the State to request medical records either in hard copy or electronic format. The purpose of the Medical Review is to determine if the claims were paid correctly.

Providers are required as per Section 1902(a)(27) of the Social Security Act to retain records necessary to disclose the extent of services provided to individuals receiving assistance and furnish CMS with information regarding any payments claimed by the provider for rendering services. The furnishing of information includes medical records.

In regard to the Children’s Health Insurance Program (CHIP), section 2107(b)(1) of the Act requires a CHIP State Plan to provide assurances to the Secretary that the State will collect and provide any information required to enable the Secretary to monitor program administration and compliance and to evaluate and compare the effectiveness of the States’ CHIP plans. In addition, the collection and review of protected health information contained in individual-level medical records for payment review purposes is permissible by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and implementing regulations at 45 Code of Federal Regulations, parts 160 and 164.

How will PERM affect providers?

Providers selected to participate in the Medical Review will be contacted by DHCS to verify the correct medical records contact name and address, and a formal request for medical records will be sent via fax and mail by both DHCS and the RC. Providers must submit the information electronically or in hard copy to the RC by the due date noted on the RC’s formal request. Please note that it will be the responsibility of the provider identified on the claim to ensure that any and all supporting medical records, from any and all provider(s) who rendered a service for which the claim payment under review was requested, is submitted in a timely manner. Those providers who do not submit the requested information as directed by DHCS and the RC may be subject to suspension from the Medi-Cal program by DHCS.

Who do providers contact with questions?

Please forward all inquiries to the PERM email box at PERM@dhcs.ca.gov. Please note that PERM-related medical record documentation or any documentation containing Personal Health Information (PHI) should not be sent via email.

How can providers find out more about PERM?

The CMS Providers page was developed to help providers better understand the PERM process and what may be required during a PERM review. The provider FAQ contains answers to the questions that are most commonly asked by providers. Links are provided to learn more about the recovery audits and Medicaid integrity audits. Please note that, as a provider, you may be requested to participate in a review or audit separate from the PERM review.

Payment Error Rate Measurement (PERM) Program Eligibility Review Component

For PERM RY 2020, Eligibility will be reviewed. During this process, the Eligibility Review Contractor (ERC) will review state-specific policies that will affect eligibility reviews. After reviewing state-specific policies, onsite case reviews will occur for the selected cases. During these case reviews, the ERC will review the selected cases and verify that the beneficiaries were indeed eligible to receive Medi-Cal benefits.

Once case reviews are complete, error findings will be presented to the State. The State can then proceed through the difference resolution process where the state appeals errors if they disagree with the ERC’s decision to cite an error regarding beneficiaries’ eligibility. Once this process is complete, the error rate will be published on CMS’ website. For more information about the Eligibility Review process, please visit the CMS PERM site.

Who should County Welfare Departments (CWDs) contact with questions?

Please forward all inquiries to the PERM email box at PERM@dhcs.ca.gov.

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Last modified date: 11/22/2019 1:09 PM