Payment Error Rate Measurement (PERM)
Payment Error Rate Measurement (PERM) Program
Update: The federal Review Contractor, A+ Government Solutions, is sending out medical record requests to randomly selected Colorado providers.
Sample Medical Record Request Letter
List of documents requested by Type of Services
What is PERM?
PERM is an audit program that was developed and implemented by the federal Centers for Medicare and Medicaid Services (CMS) in complying with the Improper Payments Information Act (IPIA) of 2002. The purpose of the program is to examine eligibility determinations and claims payment of Medicaid program and Children’s Health Insurance Program (CHIP) for accuracy and to ensure that the States only pay for appropriate claims. In Colorado, CHIP is called Child Health Plan Plus (CHP+).
Why is PERM required?
• PERM is required by CMS pursuant to the Improper Payments Information Act of 2002 (IPIA; Public Law 107-300).
• Medicaid and CHIP are identified as programs at risk for significant improper payments by the U.S. Office of Management and Budget (OMB).
• CMS has to report the improper payment error rate and estimates of improper amounts to Congress.
• CMS has to submit the report on actions to reduce erroneous expenditures.
PERM Process
• Group of states are selected on a rotation basis once every three years.
• Colorado is one of 17 States, or Cycle 2 states, randomly selected by CMS for Federal fiscal year (FFY) 2010 and previously in FFY 2007. FFY runs from October 1 through September 30.
How is PERM implemented?
Claims Review
• A claim is reviewed to determine if it was processed correctly, and the services were actually provided, medically necessary, coded correctly, and properly paid or denied.
• For FFY 2010 PERM cycle, CMS uses two contractors to perform claims review:
1. Statistical Contractor (SC) – Livanta LLC, who collects universe claims data quarterly from states and uses a stratified random sampling design to draw the sample for review.
2. Review Contractor (RC) – A+ Government Solutions, Inc., who uses the sample list to request copies of medical record from the providers and reviews for medical necessity, correct coding, correct payment or denial of claims, and services actually provided.
Eligibility Review
• Beneficiary’s eligibility determinations are reviewed for accuracy.
• The Department of Health Care Policy and Financing (the Department) has selected the option to contracting out the PERM eligibility review and the contractor is Myers and Stauffer LC.
What type of review is conducted on a claim?
There are two types of claims review:
• Medical review – examines the accuracy of the claim information to the documentation in the medical record.
• Data processing review – examines the accuracy of the claims processing system.
Why are providers required to participate in PERM?
Providers are required by section 1902(a)(27) of the Social Security Act and 10 C.C.R. 2505-10, Sec. 8.130.2.A to:
• Retain records necessary to disclose the nature and extent of services provided to recipients.
• Maintain records which fully substantiate or verify claims submitted for payment.
• Submit records to federal and state government upon request.
How will providers know if any of their claims have been selected?
• The Review Contractor for CMS will contact providers and request a copy of their medical records to support the medical review.
What do providers need to do?
• Providers need to submit all requested medical records and supported documents within 60 calendar days of the request date, either electronically or hard copies.
• Providers are responsible to submit all requested information in a timely manner.
• Providers need to update the Department with most current and accurate contact information.
Who will send the medical record request?
• The Review Contractor will send out the request letters and the Department will send the follow up letters to the providers.
• It is critical for the Department to have current and accurate contact information of providers to prevent any delay.
What happens if the provider does not cooperate?
• Any claims for which documentation is not received upon request by the government shall be an overpayment subject to recovery regardless of whether or not services have been provided.
• Monies will be recovered by the Department’s Program Integrity for claims that requested information not being submitted or late.
What about maintaining patient privacy?
• The collection and review of protected health information contained in individual-level medical records for payment review purposes is permissible by the Health Insurance Portability and Accountability Act (HIPAA) of 1996 and implementing regulations at 45 Code of Federal Regulations, parts 160 and 164.
What happens if there is an error finding in medical review?
• The Review Contractor will notify the Department about the error and the Department has the option to agree or disagree with its findings.
What happens if the Department disagrees?
• The Department can file a request for a Difference Resolution and providers may be contacted to assist in the Difference Resolution Process.
What if an error is confirmed?
• States are required to return the Federal share of overpayments to CMS. The Department will pursue recoveries as part of the corrective actions according to applicable law and regulations.
Where can I find out more information?
• Providers can go to the CMS website at www.cms.hhs.gov/PERM/
Who do providers contact with PERM questions?
• Matt Ivy at Matt.Ivy@state.co.us or 303-866-2706.