• CMS Issues Final Rule for Payment Error Rate Measurement Program
  • September 3, 2010
  • Law Firm: Fowler White Boggs P.A. - Tampa Office
  • On August 10, 2010, the Centers for Medicare and Medicaid Services (CMS) issued its final rule to further improve the Payment Error Rate Measurement program (PERM) for Medicaid and the Children’s Health Insurance Program (CHIP). PERM is a comprehensive and ongoing federal audit intended to measure how frequently errors occur when providers submit claims to states and when states pay those claims. The audit focuses on three distinct areas: data processing; medical necessity; and recipient eligibility.

    The goal of PERM is to curb improper payments in certain governmental programs by making the process more transparent. It seeks to achieve this goal by measuring improper payments among states in Medicaid and CHIP and producing error rates for each program on the national level. These reviews are conducted to determine whether the sampled cases meet applicable Medicaid and CHIP fee-for-service, managed care, and eligibility requirements. CMS specifically chose Medicaid and CHIP because those programs were deemed as being at risk for significant erroneous payments.

    PERM was initially proposed on August 27, 2004, and has subsequently been amended five times. The final rule effects PERM in the following ways: (1) changes the process for reviewing cases in which states have used simplified enrollment efforts such as self declaration for eligibility cases; (2) eliminates duplication of effort between eligibility reviews administered in the same fiscal year; (3) extends the timeframe for providers to submit documentation; and (4) provides states additional time to submit corrective action plans.

    PERM is conducted in all 50 states over a three-year period, with 17 states being conducted annually. Typically, a state will participate in the program only once every three years. The State of Florida was audited in 2008 and will be audited again in 2011.