Payment Error Rate Measurement

RY 2021 (PERM) Program

The Payment Error Rate Measurement (PERM) program measures improper payments in Medicaid and CHIP to produce a National Error rate for each program.  The error rates are based on reviews of the fee-for-service (FFS), data processing, and eligibility components of Medicaid and CHIP in the fiscal year under review.  The review period for RY 2021 is July 1, 2019 - June 30, 2020.  PERM changed the naming convention from Fiscal Year (FY) to Reporting Year (RY) so it aligns with the year that the report on improper payments is released.  PERM does not measure fraud; it determines the amount of claims paid in error based on our states policies and program requirements.

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.

The Centers for Medicare and Medicaid Services (CMS) administers and oversees the PERM audits.  States are organized into 3 groups or cycles.  Montana is a Cycle 3 state.  Other Cycle 3 states include;  Alaska, Arizona, District of Columbia, Florida, Hawaii, Indiana, Iowa, Louisiana, Maine, Mississippi, Nevada, New York, Oregon, South Dakota, Texas, and Washington.

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.  AdvanceMed is responsible for conducting the data processing and medical record reviews.  Providers will be contacted by AdvanceMed 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

Heather Smith
(406) 444-4171

Medical Record and Data Processing Review Contact
Heather Smith, Interim
(406) 444-4171

Eligibility Review Contact
Brenda Paulsen
(406) 444-4166

PERM Medical Review Contractor:
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