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Payment Error Rate Measurement (PERM)

Payment Error Rate Measurement Resources


The Centers for Medicare and Medicaid Services (CMS) developed the Payment Error Rate Measurement (PERM) program in response to the Improper Payment Information Act, 2002 (IPIA, Public Law 107-300). This act required federal agencies to annually review programs they oversee that are susceptible to significant erroneous payments to:

  • Estimate the amount of improper payments
  • Report those estimates to Congress
  • Submit a report of the actions the federal agency is taking to reduce erroneous expenditures

The PERM program is an ongoing federal audit intended to measure how frequently payment errors occur. This federal audit has three distinct areas:

  • Data Processing
  • Medical Review
  • Member Enrollment
PERM Provider Resources

Medical Record Requests

As part of the PERM audit, a CMS contractor will request medical records from a selection of providers and review that information to determine if the service was necessary and that all applicable ForwardHealth policies, procedures, and regulations related to that service were both appropriately documented and provided.

Providers whose claims are selected for medical review will be contacted by mail. The CMS contractor will begin to send letters requesting medical records in the summer of 2018. Selected providers are required by CMS to participate in the audit.

Error rates

It is important for providers to supply information for this federal audit to avoid an error being assigned to a provider's payment. Provider payments for services receiving a PERM error may be recouped.

The estimated payment error rates during the 2015 cycle were as follows:

Program Wisconsin's Rate National Rate
Medicaid .33% 10.10%
CHIP 2.43% 8.64%

The most common reasons for errors are the following:

  • Service documentation — lack of signatures, didn't follow provider handbook documentation requirements
  • Claim submission — other insurance payments entered in the wrong claim fields
  • Diagnosis coding — documentation did not support a diagnosis submitted on the claim

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