Payment Error Rate Measurement (PERM)

What is PERM?

Based on requirements of the Improper Payments Information Act (IPIA) of 2002 (amended in 2010 by the Improper Payments Elimination and Recovery Act or IPERA), the Office of Management and Budget (OMB) has identified Medicaid and the Children’s Health Insurance Program (CHIP) as programs at risk for significant improper payments. As a result, the Centers for Medicare and Medicaid Services (CMS) developed the Payment Error Rate Measurement (PERM) program to comply with the IPIA and related guidance issued by the OMB.

The PERM program measures 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 (MC), and eligibility components of Medicaid and CHIP. 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. 


PERM Resources

The Centers for Medicare and Medicaid Services (CMS) Payment Error Rate Measurement (PERM) program recorded the Provider Education webinar conducted in April 2022. The recorded webinar is intended to educate the provider and supplier community about the PERM program and explain the responsibilities to those who are participating in the Medicaid program and/or Children’s Health Insurance Program (CHIP). The objectives of this recorded webinar is for those participating in the Medicaid and CHIP programs to better understand:

  • The PERM program.
  • The PERM medical review process.
  • PERM medical record and documentation requests.
  • Methods for record submission.
  • Provider best practices.
  • PERM resources for providers.

Please click here watch the PERM Provider Training Webinar.

Additional CMS PERM Resources.


What Does PERM Review?


Focuses on whether a determination – a new application or renewal – was processed correctly based on federal and state eligibility policies.

Review Elements:

Age, citizenship, immigration status, state residency, SSN, pregnancy, household size, tax filer status, income, resources/assets, blindness, disability, medical eligibility, health insurance (CHIP), signature on application/renewal.

Data Processing

Claims are validated that they were processed correctly based on information found in the state’s claims processing system, state policies, and supporting documentation.

Review Elements:

Beneficiary information, provider enrollment, payment accuracy.

Medical Records

The CMS Review Contractor will request documentation from providers. Claims are validated that they were paid correctly by assessing the following:

  • Adherence to states’ guidelines and policies related to service type
  • Completeness of medical record documentation to substantiate claim
  • Medical necessity of the provided service
  • Validation the service was provided as ordered and billed
  • Claim coded correctly


Medical Record Requests for PERM

Medical records are needed to support fee-for-service Medicaid and CHIP claims to determine if the claims were correctly paid.

If a claim is selected in which your National Provider Number (NPI) was identified on the claim to receive reimbursement, the CMS PERM reviewer will send a request for a copy of the required medical records to support the medical review of the claim

The Iowa Medicaid provider has 75 days to submit the requested records

The CMS PERM reviewers will follow up to ensure that the Iowa Medicaid providers submit the documentation before the time frame has expired

If the submitted documentation is incomplete, the CMS PERM reviewers may contact you for additional documentation. The provider will have 14 days to respond to the request.


Expectations of Medicaid Providers

  • Submit requested medical records to the CMS PERM Reviewers within 75 days.
  • It is the responsibility of the provider who is identified to receive payment on the claim, to ensure that any and all supporting medical records, from any and all providers who rendered a service on the claim, is submitted in a timely manner.
  • Cooperate with submitting all requested documentation in a timely and complete manner because the lack of a response or submission of insufficient documentation will count as an error.
  • Failure to cooperate with the records request made will result in CMS directing Iowa Medicaid to recover the provider payment associated with the records request.


PERM Findings - What Happens Next? 

Official Medicaid and CHIP national improper rates are reported annually in the CMS Agency Financial Report (AFR) each November.

After AFR is posted, states receive their specific improper payment rates and findings through the Error Rate Notifications, Cycle Summary Reports, and CAP Templates.

The Corrective Action Process (CAP) is officially started after the release of official improper payment rates.