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Payment Error Rate Measurement (PERM)

The Payment Error Rate Measurement (PERM) is an audit program that was developed and implemented by the federal Centers for Medicare and Medicaid Services (CMS) to comply 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+).


  • Colorado’s next PERM cycle is federal fiscal year 2013 (October 2012 – September 2013).



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 higher 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


  • Groups of states are selected on a rotational basis once every three years.
  • Colorado is one of 17 States, or Cycle 2 states, randomly selected by CMS for federal fiscal year (FFY) 2013 and previously in FFY 2010 and 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 that the services were actually provided, medically necessary, coded correctly, and properly paid or denied.
    • For the PERM cycle, CMS uses two contractors to perform claims reviews:
      1. The Statistical Contractor, the Lewin Group, who collects universe claims data quarterly from states and uses a stratified random sampling design to draw the sample for review.
      2. The Review Contractor, A+ Government Solutions, who uses the sample list to request copies of medical records from the providers and reviews for medical necessity, correct coding, correct payment or denial of claims, and services actually provided. 


  • Eligibility Review
    • Recipient's eligibility determinations are reviewed for accuracy.
    • The Department of Health Care Policy and Financing (the Department) has awarded Myers and Stauffer, LC to review eligibility determinations in FY 2013. 


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?


How will providers know if any of their claims have been selected?

  • A+ Government Solutions 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 75 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?

  • A+ Government Solutions will send out the request letters and, if necessary, follow-up letters and calls.  The Department will also send follow-up letters and make follow-up calls to the providers when necessary.
  • 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.
  • The Department’s Program Integrity section will recovery any monies from claims from medical records that have not been submitted or after the 75-day calendar due date.


What about maintaining patient privacy?


What happens if there is an error finding in medical review?

  • A+ Government Solutions 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 visit the CMS website at
  • Providers can also visit the CMS PERM "Providers" web page.
  • Providers can also participate in Provider Education Calls/Webinars to learn more about the PERM process and provider responsibility.  CMS will make the same presentation on each date followed by a live question and answer session.  Find the "2013 Webinar Invitation" on the CMS Provider Education Calls web page for more information.
    • CMS will host the provider education calls/webinars on the following dates:
      • Tuesday, May 21, 2013 1:00pm - 2:00pm MST
      • Wednesday, June 5, 2013 1:00pm - 2:00pm MST
      • Tuesday, June 18, 2013 1:00pm - 2:00pm MST
      • Tuesday, July 2, 2013 1:00pm - 2:00pm MST


Who do providers contact with PERM questions?