Payment Error Rate Measurement (PERM)


Pursuant to 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 nationwide, 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. Accordingly, the Centers for Medicare & Medicaid Services (CMS) is taking the steps below to allow states to focus their resources on combating COVID-19.

Effective immediately CMS is exercising its enforcement discretion to adopt a temporary policy regarding the Payment Error Rate Measurement (PERM) program. Accordingly, CMS is suspending all improper payment-related engagement/communication or data requests to providers and state agencies, until further notice. This includes calls and communications regarding existing PERM corrective action plans.

Additionally, CMS is exercising its enforcement discretion to adopt a temporary policy of relaxed enforcement regarding activities related to the Medicaid Eligibility Quality Control (MEQC) ( program until further notice to state agencies from CMS.

Additional guidance regarding the administration of the PERM and MEQC programs will be provided in the coming weeks. Please reach out to your CMS PERM state liaison or CMS MEQC state liaison if you have any questions.

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.

Page Last Modified:
07/10/2020 10:27 AM