Frequently Asked Questions About PERM
What is PERM?
PERM is a national effort by Centers for Medicare and
Medicaid Services (CMS) to measure the accuracy of payments made
through Medicaid and through the Children's Health Insurance Program
(CHIP), known in Alaska as Denali KidCare.
Why is PERM happening?
The federal government and the State of Alaska want
to minimize fraud, waste, and abuse. Under the Improper Payment
Information Act of 2002 (IPIA), federal agencies must review programs
at risk of major payment mistakes each year, and estimate the amount of
improper payments. The Centers for Medicare & Medicaid Services
initiated PERM to measure improper payments in the Medicaid program and
How does PERM work?
CMS selects a number of claims to review and the
designated contractor contacts the providers that submitted those
claims to ask for supporting medical documents.
How will this affect Alaska Medicaid federal funding?
At the end of an audit, an error rate is determined
for Alaska's Medicaid payments. Alaska must reimburse the federal
government for any incorrectly paid amounts, including those for which a
provider does not send in all requested materials before the deadline.
How will PERM impact Medicaid providers?
Some providers will be asked to provide records for a
claim to show that they accurately billed Medicaid. How quickly and
thoroughly the providers respond has a major impact on the state's
Providers are encouraged to turn in materials right
away, so if they are asked for additional materials, they still have
time to submit them within the required deadline.
If the state finds a provider did not provide a service, the provider must reimburse the state.
When will Alaska's PERM audit's start?
PERM audits are conducted in groups of 17 states
every 3 years. For information on the current PERM cycle, please visit http://medicaidalaska.com (select Providers, then PERM).
When will a payment error rate be determined for Alaska?
The process of evaluating payment accuracy, called
the “production cycle,” takes approximately a year, after which a
payment error rate is calculated. Please visit http://medicaidalaska.com (select Providers, then PERM) for the most recent PERM results.
Is Alaska the only state selected for this type of audit?
All 50 states and the District of Columbia take part
in PERM audits to measure both Medicaid and SCHIP programs.
How does incorrect billing or insufficient documentation or no documentation affect the error rate?
“No documentation” is considered an error, because
there is no evidence to adequately determine whether the services were
provided, were medically necessary, and were properly coded and paid. A
claim with insufficient documentation is considered an error because
it does not support that the payment was correct. The national
contractors determine Alaska’s error rate based on federal and state
What law allows review of these records?
These records requests are permitted under the Health
Insurance Portability and Accountability Act (HIPAA), and compliance
is required for Alaska Medicaid participants.
How far back do I have to keep records?
State law requires that providers keep records available for review for seven years. (7 AAC 105.230)
Sources: Federal Register/August 28, 2006/Rules and
Regulations; State 7 AAC 105.230, 7 AAC 105.240; AS 18.05.042