Payment Error Rate Measurement (PERM)

Process for Reviewing Income Verifications Against Federal Tax Information (FTI)

For income verification, states have the option to use Internal Revenue Service (IRS) income data that is accessed through the Federal Data Services Hub or other data sources for income verification. However, IRS statute 6103 of the Internal Revenue Code prohibits states from disclosing FTI to any outside source, including CMS improper payment measurement programs. Please see the PERM Manual (PDF) (page 53) for more information and refer any questions to your CMS PERM State Liaison regarding this matter.

**********************************************************************************************************************

Public Health Emergency Update - November 2023

The Centers for Medicare & Medicaid Services (CMS) remains committed to strengthening its program integrity efforts and safeguarding taxpayer dollars through its activities associated with the review of improper payment data.

CMS recognizes that the COVID-19 Public Health Emergency (PHE) has ended and PERM is now operating at normal capacity, while still applying review adjustments to account for remaining applicable waivers and flexibilities.  

Please reach out to your CMS PERM State Liaison if you have any questions or to identify any hardships or additional time needed to respond to a PERM documentation request.

**********************************************************************************************************************

Payment Error Rate Measurement Program

The Payment Integrity Information Act (PIIA) of 2019 requires the heads of Federal agencies to annually review programs they administer and identify those that may be susceptible to significant improper payments, to estimate the amount of improper payments, to submit those estimates to Congress, and to submit a report on actions the agency is taking to reduce the improper payments. 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, CMS developed the PERM program to comply with the PIIA and related guidance issued by OMB. 

The PERM program measures improper payments in Medicaid and CHIP and produces improper payment rates for each program. The improper payment rates are based on reviews of the Fee-For-Service (FFS), managed care, and eligibility components of Medicaid and CHIP in the year under review. It is important to note that the improper payment rate is not a “fraud rate” but simply a measurement of payments made that did not meet statutory, regulatory, or administrative requirements. 2008 was the first year in which CMS reported improper payment rates for each component of the PERM program.