Payment Error Rate Measurement (PERM)
In response to the Improper Payments Information Act of 2002, the federal Office of Management and Budget identified Medicaid (MA) and the Children's Health Insurance Program (CHIP) as programs at risk for significant improper payments. As a result, CMS developed the Payment Error Rate Measurement (PERM) program. The PERM program measures improper payments in MA 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 MA and CHIP in the Federal Fiscal Year (FFY) under review. Each state participates in the PERM program in three year cycles. The PERM Audit takes approximately 2.5 years to complete.
The Department of Human Services (DHS) PERM team consists of representatives from the Office of Medical Assistance Programs (OMAP), Office of Income Maintenance (OIM), Office of the Budget, Office of Long Term Living (OLTL), Office of Developmental Programs (ODP), and Office of Administration (OA). The Bureau of Program Integrity (BPI), under OA, manages the PERM process for Pennsylvania and serves as the liaison between DHS and the Centers for Medicare and Medicaid Services (CMS).
The FFY 2012 PERM audit was Pennsylvania’s last completed PERM cycle. The Commonwealth achieved a successful audit outcome with an overall error rate of 1.00% in comparison to the national overall error rate of 5.7%.
The FFY 2015 PERM audit cycle began on August 14, 2014. PERM is based on the Federal Fiscal Year (FFY) and, in accordance, will include claims paid between October 1, 2014 and September 30, 2015. The claims under review will be selected in quarterly time frames starting with October 1, 2014 and ending with September 30, 2015. CMS has determined an error rate goal of 0.86% for Pennsylvania in the FFY 2015 cycle.


  • PERM is a federally-mandated audit.
  • Pennsylvania is participating in its fourth PERM audit.
  • PA’s error rate has improved with each cycle.
  • The focus of the claim types changes for each cycle.
  • To implement the requirements of IPERIA, CMS developed the PERM program. Under PERM, CMS conducts reviews in three component areas (fee-for-service [FFS], managed care, and eligibility) for both the Medicaid and CHIP programs. The results of these reviews are used to produce national program error rates, as well as state-specific program error rates.
  • State Responsibilities: (1) provide coordinator; (2) provide claims and payment data to statistical contractor; (3) educate providers on PERM process and assist with medical record collection; (4) assist review contractor with accessing state policies for review; (5) assist review contractor with on-site and/or remote data processing reviews; (6) request difference resolution/appeals for differences and re-price partial errors; (7) participate in cycle calls with CMS; (8) develop and implement corrective actions to reduce improper payments; and (9) return Federal Financial Participation (FFP) of FFS and managed care overpayments.
Attached are the FY2012 PERM Pennsylvania state-specific error rates and our comparison to the national average.
National Overall Estimated Error Rate 5.7%
PA MA Overall Estimated Error Rate 1.0%

National FFS Estimated Error Rate 3.4%
PA MA FFS Estimated Error Rate 1.8%
National MA Managed Care Estimated Error Rate 0.2%
PA MA Managed Care Estimated Error Rate 0.0%
National MA Eligibility Component Estimated Error Rate 3.3%
PA MA Eligibility Component Estimated Error Rate 0.1%
National CHIP Estimated Error Rate 6.8%
PA CHIP Estimated Error Rate 1.1%
Attached are the Final Reports received from CMS for the FY2012 PERM Audit for PA
Provider Education Webinar/Conference Calls will be held on:
Wednesday, June 17, 2015 from 3:00-4:00 pm ET
Wednesday, June 24, 2015 from 3:00-4:00 pm ET
Wednesday, July 15, 2015 from 3:00-4:00 pm ET
Wednesday, July 22, 2015 from 3:00-4:00 pm ET
Please click on QuickTip 178 or RA Banner links as listed below for details.
Provider QuickTips related to PERM 
RA Banner Alerts related to PERM 
Providers can expect Medical Record Request Letters from A+ Government Solutions to begin in June 2015. 
DATA PROCESSING: The Statistical Contractor (SC) is The Lewin Group
Reviewers examine the random sample of MA and CHIP FFS and managed care provider claims, both paid and denied, and look for potential issues. Some of the potential errors are:
Was the claim a duplicate claim?
Was the claim paid for a non-covered service?
Was the claim paid as a FFS claim when it should have been paid as a managed care claim?
Should Third Party Liability (TPL) have paid the claim? If yes, was TPL payment pursued?
Did the claim have a pricing error?
Did the payment system lack system edits to correctly pay the claim (i.e. gender conflict or
payment for services dated after the end of eligibility/death of a recipient)?
Did the claim have review element errors, such as data entry, rate cell, or managed care?
Did the claim contain data entry errors, such as wrong dates or wrong units? 
MEDICAL REVIEWS: The Medical Review Contractor (RC) is A+ Government Solutions
Providers are required to retain records necessary to disclose the extent of services provided to individuals receiving Medicaid and to furnish CMS or their agent with information regarding any payments claimed by providers for furnishing services as mandated in section 1902(a)(27) of the Social Security Act.
The complete documentation for the selected claims is requested from the providers, with the exception of capitated managed care claims, Medicare crossover claims, buy-in claims, and denied claims. The paid claims are reviewed to determine if the service was necessary and if the provider’s documentation is in compliance with all applicable policies, procedures, and regulations for services provided.
Recipient eligibility reviews are conducted on recipient case files. The case file is reviewed to verify that the worker correctly granted, denied or closed eligibility for MA or CHIP in accordance with all Federal and State regulations, the Medicaid and CHIP State Plan, and DHS policies and procedures. DHS retrieves claims of recipients in the sample for services provided during the month of the eligibility review and these claims become the basis for the payment error if a recipient eligibility error is discovered.

Lori D'Agostino (PERM Coordinator and Medicaid-Claims Primary)
Patricia Weik (Medicaid- Eligibility)
Nathan Huyett (CHIP)

Statistical Contractor -- The Lewin Group
3130 Fairview Park Drive
Falls Church, VA
Fax: (703) 269-5705
Review Contractor – A+ Government Solutions
A+ Government Solutions
1300 Piccard Drive, Suite 204
Rockville, MD 20850
Toll Free number to fax medical records: 1-877-619-7850
For questions relating to medical record requests, and tracking, please contact:
Albert Key, Health Information Management Manager
A+ Government Solutions
Phone: 301-987-1119
Centers for Medicare & Medicaid Services
Office of Financial Management, Provider Compliance Group
7500 Security Blvd., Mailstop C3-09-27
Baltimore, MD 21244-1850
FY 2015 PERM Cycle Manager:
Allison Bramlett, CMS Division of Error Rate Measurement (DERM)
Phone: 410-786-6556

CMS PERM Website:
The “providers” page helps to better understand the PERM process and what you may be required to do during a review. Select “Providers” from the menu on the left side of the page.