Charts and graphsPayment Error Rate Measurement (PERM)

The PERM program measures and reports an unbiased estimate of the true 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.

  • Review Period: The PERM review period is payments made from July through June to align with state fiscal years and to provide additional time to complete the cycle before reporting improper payment rates. The upcoming cycle will review Medicaid and CHIP payments made in Reporting Year (RY) 2025 for July 1, 2023, through June 30, 2024.
  • Statistical Contractor (SC) – The Lewin Group (Lewin): The SC will be collecting state’s claims and payment data, processing the data to ensure completeness and compliance with PERM requirements, and selecting samples. The SC may have questions regarding data differences and changes from the last cycle, payment methodologies, and identifying Medicaid versus CHIP matched payments. The SC is also responsible for national and state improper payment rate calculations that are provided to states at the end of each cycle.
  • Eligibility Review Contractor (ERC) – Booz Allen Hamilton (Booz Allen): The ERC will be performing eligibility reviews on the samples selected by the SC to inform the resulting improper payment rate. The ERC may have questions regarding topics such as state eligibility policies, eligibility systems, eligibility processes, and eligibility case documentation.
  • Review Contractor (RC) – Empower AI: The RC will be performing data processing and medical reviews on the samples selected by the SC to inform the resulting improper payment rate. The RC may have questions regarding topics such as state claims adjudication systems; managed care programs; vendors; third-party administrators, like Pharmacy Benefit Managers (PBMs); fee schedules; special programs (e.g., waivers); and claim submission policies.

The PERM audit is important to all Medicaid providers because CMS and the review contractor Empower AI will be sending letters to various Medicaid providers requesting medical records to validate that the service was ordered, provided, documented and billed appropriately.  Please make sure that your release of information/compliance/audit departments are aware and respond to the records requests in a timely manner.  Providers should start receiving the letters sometime in late March or April 2024.

  • Empower AI makes initial calls to providers to verify provider contact information.
  • Empower AI establishes a point of contact with providers and sends record requests
    •   Providers have 75 days to submit documentation
  • Empower AI makes reminder calls and sends reminder letters on days 30, 45, and 60 until the medical records are received
    • If the provider does not respond, NCI sends a non-response letter on day 75 to the State PERM representative
    • If the submitted documentation is incomplete, NCI requests additional documentation
    • The provider has 14 days to submit additional documentation
    • A reminder call is made, and a letter is sent on day 7
    • If the provider does not respond, NCI sends a 15-day non-response letter.

Failure to submit documentation or if the submitted documentation is incomplete, the claim(s) will be considered an error and subject to recoupment.

The last page of each letter packet is the provider instructions for record submissions to the RC.

When submitting records, we highly recommend the use of the corresponding Medical Review (MR) cover sheet with each submission for quick and accurate processing of record submissions. The MR cover sheet is included with your PERM letter.

General PERM Information

(Centers for Medicare and Medicaid Services):

Questions? Contact Us

Steve McNichols, PT/CFE Medicaid Audit Coordinator or Melissa Rosales SURS Analyst
North Dakota Health and Human Services, Medical Services Division
600 E. Boulevard Ave., Dept. 325
Bismarck, ND 58505-0250

Phone: (701) 328-4831