Payment Error Rate Measurement (PERM)

CMS implemented the Payment Error Rate Measurement (PERM) program to measure improper payments in the Medicaid program and the Children’s Health Insurance Program (CHIP). PERM is designed to comply with the Improper Payments Information Act of 2002. For PERM, CMS is using a national contracting strategy consisting of three contractors to perform statistical calculations, medical records collection, and medical/data processing review of selected State Medicaid and CHIP fee-for-service (FFS) and managed care claims. Generally, PERM is conducted in 17 states annually; therefore a single state typically participates in the program once every three years. In FY 2006, CMS reviewed only FFS Medicaid claims. Starting in FY 2007, CMS expanded PERM to include reviews of FFS and managed care claims, as well as beneficiary eligibility, in both the Medicaid and CHIP programs.