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:
The PERM program is an ongoing federal audit intended to measure how frequently payment errors occur. This federal audit has three distinct areas:
Payment Error Rate Measurement Overview for Providers PERM Initial Request for Records Example Letter Packet (PDF) PERM Provider Education FAQs (PDF) PERM Overview for Providers Webinar
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 send PERM Initial Request for Records Example Letter Packet. Selected providers are required by CMS to participate in the audit.
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 2022 cycle were as follows:
The most common reasons for errors are the following:
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