Payment Error Rate Measurement (PERM) Audit for Providers
What is PERM?
The Improper Payments Information Act (IPIA) of 2002, amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA), requires the heads of federal agencies to annually review programs that they administer to:
- Identify those that may be susceptible to significant improper payments.
- Estimate the amount of improper payments.
- Submit those estimates to Congress.
- Submit a report on corrective actions the agency is taking to reduce improper payments.
The PERM audit measures improper payments in Medicaid and CHIP and produces improper payment rates for each program. Improper payment rates are based on reviews of fee-for-service (FFS), managed care and eligibility of Medicaid and CHIP in the year under review.
How is PERM performed?
The Center for Medicare and Medicaid Services (CMS) uses a 17-state rotation for PERM so each state is reviewed once every three years. Arizona is a Cycle 3 state. CMS conducts a medical record review of fee-for-service (FFS) payments to determine the appropriateness of the payment. A random sample of payments is selected from all Medicaid and CHIP FFS payments a state makes in a year. Those providers that provided services for payments in the random sample selected will be contacted to provide medical documentation. Medical records are requested from the provider by the PERM Review Contractor hired by CMS.
Customer service representatives from the PERM Review Contractor will call all providers in the sample to identify the appropriate medical record point of contact for each provider. A written request will be faxed or mailed to the provider’s office. The request will specify the types of documents needed for each claim type and will provide instructions for how to submit the records to the PERM Review Contractor. If the documentation submitted is incomplete, additional documentation will be requested.
If the provider is unable to provide sufficient documentation, the PERM Review Contractor will cite the payment as an error and the state will be required to recoup the payment from the provider.
What are the provider responsibilities for PERM?
- Keep your contact information up-to-date with AHCCCS.
- Ensure that you are meeting the medical record documentation requirements for each claim type.
- Respond to the request for records as soon as possible but no later than the due date.
- Respond to any additional requests for medical records no later than the due date.
