CMS Expands Requirements for PERM, CHIP

The Centers for Medicare & Medicaid Services on Tuesday issued final regulations that will implement improvements to the Payment Error Rate Measurement (PERM) for Medicaid and the Children's Health Insurance Program (CHIP).

PERM is designed to detect and measure improper payments made in Medicaid and CHIP and then establish a national-level error rates for each program. The reviews are conducted to determine whether sample cases meet applicable Medicaid and CHIP fee-for-service, managed care, and eligibility requirements. PERM is usually conducted in 17 states annually, so every state typically participates in the program once every three years.

"Like other large federal programs, Medicare, Medicaid, and CHIP are susceptible to errors or improper payments," says CMS Administrator Don Berwick, MD. "Reducing payment errors in federal programs is a key goal of the entire Obama Administration and the rules we are issuing....allow us to implement strategies for reducing the rate of errors in Medicaid and CHIP more effectively."

Taking into consideration comments received from states, advocacy groups, and educational institutions, the final regulation implements changes to programs required by the CHIP Reauthorization Act (CHIPRA) of 2009 and other operational changes.

The rule will change the process for reviewing cases in which states have used simplified enrollment efforts such as self-declaration for eligibility cases.

The final rule does the following:

• Eliminates duplication of effort between eligibility reviews administered during the same fiscal year
• Extends the timeframe for providers to submit documentation
• Provides states with additional time to submit corrective action plans.

As part of the federal-state partnership, CMS will be conducting educational sessions with state oversight staff to promoted better understanding of the changes to the programs established by the final rule. CMS also will work with the states on ways to further reduce payment errors in Medicaid and CHIP.