Payment Error Rate Measurement

The Centers for Medicare and Medicaid Services (CMS) administers and oversees the Payment Error Rate Measurement (PERM) program.  PERM measures improper payments in Medicaid and CHIP to produce a National Error rate for each program.  PERM does not measure fraud; it determines the number of claims paid in error based on our states policies and program requirements.

PERM operates on a three-year cycle moving through all fifty states. States are divided into 17 states per cycle.  Montana is a Cycle 3 state along with: Alaska, Arizona, District of Columbia, Florida, Hawaii, Indiana, Iowa, Louisiana, Maine, Mississippi, Nevada, New York, Oregon, South Dakota, Texas, and Washington.  The error rates are based on reviews of the fee-for-service (FFS), data processing, and eligibility components of Medicaid and CHIP.  Error rates are published each November on a rolling three-year calculation using all states data. 

The current PERM audit process was developed through the establishment of many acts.

  • Improper Payments Information Act (IPIA) 2002 required federal agencies to review programs susceptible to erroneous payments.
  • Improper Payments Elimination and Recovery Act (IPERA) of 2010 amended the IPIA and required additional processes to identify improper payments.
  • The Improper Payments Elimination and Recovery Improvement Act (IPERIA) 2012 amended the IPERA and required additional process to recover and reduce improper payments.


CMS uses three contractors to perform the PERM reviews.  The Lewin Group is responsible for collecting the claim data from the State of Montana and pulling a random sample.  Empower AI is responsible for conducting the data processing and medical record reviews.  Providers will be contacted by Empower AI for medical records.  Booz Allen Hamilton will review the eligibility on sampled claims to determine if a case, either a new application or renewal, was processed correctly based on federal and state eligibility policies.

When a claim is initially selected for review, providers receive 75 days to submit documentation to support the claims billed.  If additional documentation is needed to review the claim, providers are given 14 days to submit the verifications.  If providers fail to turn in all of the requested documentation, the claim will be considered an error and an overpayment may be recouped by the State of Montana.  If the documentation provided does not support the claim as billed, the claim will be considered an error and an overpayment may be recouped by the State of Montana.

Providers will not receive notification if a claim is found to be correct.

Introduction to PERM

PERM Process

CMS PERM Provider page

For more information about PERM

State of Montana
PERM /IPV Supervisor

Amy Kohl
(406) 444-9365

Medical Record and Data Processing Review Contact
Valerio Varani
(406) 444-9365

Eligibility Review Contact
Christen Leblanc Birkholz
(406) 417-8227

PERM Medical Review Contractor:
Empower AI (formally known as NCI Inc.)
1530 E. Parham Road
Henrico, VA 23228
Phone: 800-393-3068

PERM Eligibility Review Contractor:
Booz Allen Hamilton
One Preserve Parkway, Suite 200
Rockville, MD 20852
Phone: 301-838-3600