Maryland Department of Health
Provider Services

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CMS Payment Error Rate Measurement (PERM) Program

​The Centers for Medicare & Medicaid Services (CMS) developed the PERM program to comply with the Payment Integrity Information Act (PIIA) of 2019 and related guidance issued by Office of Management and Budget (OMB) who identified Medicaid and the Children's Health Insurance Program (CHIP) as programs at risk for significant improper payments.

  • The PERM program measures improper payments in Medicaid and the Children’s Health Insurance Program (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. 
    • 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. ​
  • The PERM program reviews each states’ Medicaid program once every three years.

PERM Medical Records Request and Review Process

  • CMS requests all medical record documentation associated with a randomly selected sample of Medicaid and CHIP Provider and supplier claims for the reporting year under review.
    • A medical review determines whether the service was medically necessary, provided in the appropriate setting, billed correctly, and coded accurately.
  • CMS uses a PERM Review Contractor (RC) to conduct a medical review of payments to determine proper or improper payment. 
  • If you receive a CMS PERM Medical Record Request (MRR) letter​, CMS recommends that providers respond to the medical records request, as soon as possible, without waiting until the due date. 
    • ​If a provider does not submit the requested medical record(s) within the 75-day allowable time frame, Medicaid will consider the payment for the claim to be an improper payment. 
      • ​​Maryland Medicaid may seek recovery of the payment for the claim from the provider.
  • Each CMS medical record request letter has instructions for submitting requested records and documentation to the PERM Review Contractor RC. 

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