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Payment Error Rate Measurement (PERM)

Payment Error Rate Measurement Resources

Background

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

Centers for Medicare and Medicaid Services Payment Error Rate Measurement 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 send PERM Initial Request for Records Example Letter Packet. 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 2022 cycle were as follows:

Program Wisconsin's Rate National Rate
Medicaid 6.78% 15.62%
CHIP 2.74% 26.75%

The most common reasons for errors are the following:

  • Missing provider documentation — lack of documentation from the record that are required to support payment
  • Provider not risk-based screened prior to claim payment –providers were not subjected to risk-based screening as part of their contract onboarding.
  • Incorrect manual calculation - a discrepancy for the total computable amount following the Benefit Adjustment Factor calculations.

Last revised February 13, 2023
 
 
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