CMS Issues Final Rule for Payment Error Rate Measurement

As part of the Administration’s enhanced efforts to reduce improper payments in Federal programs, the Centers for Medicare & Medicaid Services (CMS) issued the final regulations that will fully implement improvements to the Payment Error Rate Measurement (PERM) for Medicaid and the Children’s Health Insurance Program (CHIP).

PERM measures improper payments in Medicaid and CHIP and produces national-level error rates for each program. These reviews are conducted to determine whether the sampled cases meet applicable Medicaid and CHIP fee-for-service, managed care, and eligibility requirements. Generally, PERM is conducted in 17 states annually; therefore a single state typically participates in the program once every three years.

With comments received from states, advocacy groups, and educational institutions, the final regulation implements changes to both programs required by the Children’s Health Insurance Program Reauthorization Act (CHIPRA) of 2009, and makes other operational changes to the programs based on stakeholder feedback. The rule changes the process for reviewing cases in which states have used simplified enrollment efforts such as self-declaration for eligibility cases; eliminates duplication of effort between eligibility reviews administered in the same fiscal year; extends the timeframe for providers to submit documentation; and provides states additional time to submit corrective action plans.

As part of the federal-state partnership, CMS will conduct educational sessions with state oversight staff to ensure there is a complete understanding of the changes to the programs set forth by the final rule and will work with them on ways to further reduce payment errors in Medicaid and CHIP.