Payment Error Rate Measurement (PERM)
August 11, 2020
The Centers for Medicare & Medicaid Services (CMS) remains committed to strengthening its program integrity efforts and safeguarding taxpayer dollars by taking steps to resume activities associated with the review of improper payment data.
Under provisions of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, President Trump declared on March 13, 2020 that, as a result of the effects of the Coronavirus Disease 2019 (COVID-19), a national emergency exists, retroactive to March 1, 2020. On January 31, 2020, Secretary Azar of the Department of Health & Human Services (HHS) declared a nationwide public health emergency, retroactive to January 27, 2020.
On April 2, 2020, CMS announced that it was exercising its enforcement discretion to adopt a temporary policy regarding the Payment Error Rate Measurement (PERM) program. Accordingly, CMS suspended all improper payment-related engagement/communication or data requests to providers and state agencies, including calls and communications regarding existing PERM Corrective Action Plans (CAPs).
Effective August 11, 2020, CMS will resume PERM-related engagements with providers and states, as described below:
- Cycle 2 (RY 2020): At the time of the PERM suspension, CMS had completed all data and documentation requests necessary to complete national reporting for RY 2020. CMS will hold a cycle call to follow up on end of cycle activities on August 12, 2020.
- Cycle 3 (RY 2021): CMS will resume all improper payment-related engagement/communication and data requests to providers and state agencies. CMS will hold a cycle call on August 12, 2020 with all Cycle 3 states to follow up on next steps.
- Cycle 1 (RY 2022): The Cycle 1 kick off call will be scheduled in the near future. States will receive an appointment and meeting materials prior to the call.
In addition to the specific communications outlined above, CMS will resume regular PERM check-in meetings with all cycle states. Please reach out to your CMS PERM liaison if you have any questions or to identify any hardships or additional time needed with responding to a PERM documentation request. CMS will continually evaluate PERM program activities to gauge whether any future suspension might again become necessary.
We believe that this guidance is a statement of agency policy not subject to the notice and comment requirements of the Administrative Procedure Act (APA). 5 U.S.C. § 553(b)(A). For the same reasons explained above, the CMS additionally finds that, even if this guidance were subject to the public participation provisions of the APA, prior notice and comment for this guidance is impracticable, and there is good cause to issue this guidance without prior public comment and without a delayed effective date. 5 U.S.C. § 553(b)(B) & (d)(3).
The Improper Payments Information Act (IPIA) of 2002 (amended in 2010 by the Improper Payments Elimination and Recovery Act or IPERA) requires the heads of Federal agencies to annually review programs they administer and identify those that may be susceptible to significant improper payments, to estimate the amount of improper payments, to submit those estimates to Congress, and to submit a report on actions the agency is taking to reduce the improper payments. The Office of Management and Budget (OMB) has identified Medicaid and the Children's Health Insurance Program (CHIP) as programs at risk for significant improper payments. As a result, CMS developed the Payment Error Rate Measurement (PERM) program to comply with the IPIA and related guidance issued by OMB.
The PERM program measures improper payments in Medicaid and CHIP and produces error rates for each program. The error rates are based on reviews of the fee-for-service (FFS), managed care, and eligibility components of Medicaid and CHIP in the fiscal year (FY) under review. It is important to note the error rate is not a “fraud rate” but simply a measurement of payments made that did not meet statutory, regulatory or administrative requirements. FY 2008 was the first year in which CMS reported error rates for each component of the PERM program.