PERM Updates |
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PHBV Partners LLP
Effective January 2, 2012, Clifton Gunderson’s Team Health Care has become PHBV Partners LLP. In addition, Clifton Gunderson and LarsonAllen, ranked as two of the nation’s top 20 certified public accounting and consulting firms have merged to form CliftonLarsonAllen LLP (CLA). PHBV Partners is a separate legal entity that will service our regulatory health care clients at the Local, State and Federal Government levels.
Request a copy of PHBV Partners' PERM CMS-6150-F Final Rule: Summary.
On Feb. 25, 2010, the U.S. Department of Health and Human Services released state-specific information relating to the improper payments identified during the Medicaid Payment Error Rate Measurement (PERM) for fiscal years 2007 and 2008.
How Does Your State Measure Up?
The fiscal year 2008 national weighted eligibility rate is 6.70 percent. How does your state measure up? Were you satisfied with your results in comparison to other states? Can your PERM eligibility review process be improved to reduce the number of undetermined cases? Furthermore, is your state ready to evaluate your eligibility program for fiscal year 2011 and implement the Centers for Medicare and Medicaid Services’ proposed changes? Click here for a listing of State Eligibility Rates.
PHBV Partners has performed eligibility reviews of Medicaid and Children’s Health Insurance Program (CHIP) programs relating to the Payment Accuracy and Measurement (PAM) project and PERM since 2003. During that time, we have discovered many states do not have sufficient, knowledgeable resources to dedicate to a project once every three years, as required by the federal government. We have developed effective compliance procedures to fulfill the PERM requirements and to minimize the dramatic impact eligibility error rates have on a state’s budget.
Following is a brief summary of PERM and what you can do to prepare for the next cycle of PERM reviews:
History of PERM
The Improper Payments Information Act of 2002 was established by Congress to require federal agencies to review their programs and determine if any were susceptible to significant erroneous payments. If a program was found to be susceptible to significant improper payments, the agency was required to report the estimated amount of improper payments to Congress, and to submit reports on the actions the agency was taking to reduce erroneous expenditures. In response to this statute, the Department of Health and Human Services published a final rule on Aug. 31, 2007. The rule finalizes the requirements for states to conduct eligibility reviews and estimate the rate of errors in eligibility determinations relating to the Medicaid and CHIP programs. Coinciding with the eligibility reviews, the Centers for Medicare and Medicaid Services (CMS) would perform claim reviews and estimate error rates due to errors in payments of managed care and fee-for-service claims.
The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) provides further guidelines regarding eligibility requirements. Section 203(a)(1)(13) defines express lane eligibility, which provides a state the ability to determine eligibility for a child by relying on information obtained and decisions made by the express lane agency. States must determine an eligibility error rate on an annual basis using a statistically valid sample with respect to enrollment of such children. The sampling must be distinct from the sampling performed for a Medicaid Eligibility Quality Control (MEQC) review or the PERM requirement. Section 601 of CHIPRA addresses specific areas relating to PERM, including self-declaration of eligibility, the integration of MEQC and PERM, and distinguishing state-specific sample sizes to meet PERM requirements.
As your second PERM cycle begins, it is important to understand the proposed rule from the Centers for Medicare and Medicaid Services (CMS) on the Medicaid Program and Children’s Health Insurance Program (CHIP), revisions to the Medicaid Eligibility Quality Control and Payment Error Rate Measurement (PERM) Programs, which was issued on July 20, 2009, to execute the specifications of CHIPRA. The proposed rule includes the following provisions:
- Error rates for CHIP cannot be published until six months after the date on which the final rule becomes effective. States that participated in the fiscal year 2007 and fiscal year 2008 PERM cycles can elect to accept the CHIP PERM error rates or may use the fiscal year 2010 or fiscal year 2011 as the first fiscal year to calculate a PERM error rate for the CHIP program.
- States must verify that claims and eligibility universes, including both the CHIP and Medicaid programs, are complete and accurate by comparing data to the CMS-64 and CMS-21 financial reports. The universes will not contain children enrolled using the express lane eligibility option as the express lane eligibility will be monitored on an annual basis.
- The claim review and eligibility review sample sizes will be limited to 1,000 cases. The samples will not include children enrolled using the express lane eligibility option.
- Payment error rates will be separated between provider errors and state errors. Data processing errors and eligibility determination errors are defined as state errors and medical review errors are defined as provider errors.
- A self-declaration statement for Medicaid and/or CHIP is considered acceptable documentation of eligibility for PERM reviews when state policy allows for self-declaration . The self-declaration statement must be present in the record, in the state-approved format, consistent with other facts in the record, and be no more than 12 months old. States can verify eligibility through a new self-declared statement. If a new self-declared statement cannot be obtained, eligibility can be verified through third-party sources. After all steps are taken and eligibility can not be verified, the self-declared case will be cited as “undetermined,” which will not be included in the state-specific error rate but will be included in the national error rate.
- A process will be implemented to allow states the ability to appeal findings.
- States, with the exception of states operating MEQC waivers and pilot programs, will have the ability to utilize eligibility samples, findings and payment findings, as measured in PERM to meet the MEQC review requirement. The eligibility error rates will be calculated using both the MEQC and PERM measurement requirements.
- The definition of a case for PERM requirements will be an “individual or family.”
- The federal contractor will calculate the state’s eligibility error rates, as well as the state and national-level error rates.
- States will be required to submit and implement corrective action plans no later than 60 calendar days from the date the state’s error rates is posted to the CMS contractor’s Web site, which will be prior to November 15 of each calendar year.
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Problems Concerning PERM
Enrollment in the Medicaid and CHIP programs increased in 1997 to 49.1 million and 7.5 million, respectively, according to the U.S. Department of Health and Human Services fiscal year 2008 Agency Report (Section III). The large enrollment population, combined with the complexity of each Medicaid program and the state’s eligibility systems, presents a high risk for improper payments. Once improper payments have been identified, states are required to refund the federal portion of the overpayments to the federal government.
Each state is required to complete the PERM review once every three years. Due to the complexity of each Medicaid program, it is vitally important that PERM eligibility reviews are performed by individuals with the knowledge and expertise in eligibility programs and the PERM requirements. However, the Code of Federal Regulations, Title 42 Section 431.974, requires that the personnel responsible for the PERM eligibility sampling and review be functionally and physically separate from the state’s agencies and personnel that are responsible for Medicaid and CHIP policy and operations, including eligibility determinations. The intent of this regulation is to ensure independence of the review. Many states do not have sufficient resources with adequate understanding and expertise in eligibility and PERM to effectively complete the tasks required.
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What Can You Do?
While complete details of the final rule have not yet been released, there are a few key things that you can do to prepare:
- Assess your ability to comply with the independent audit requirements. Evaluate the availability of resources and the capability of performing the PERM eligibility reviews with the knowledge and experience necessary to understand the PERM requirements and the intricacies of complex eligibility programs.
- Is your state using express lane eligibility? If yes, consider how your state will meet the annual requirement to determine an eligibility error rate for children enrolled through the express lane eligiblity option.
PHBV Partners is at the forefront of PERM requirements. We are prepared and ready to assist you in complying with the prior and new regulations. Furthermore, Clifton Gunderson’s experience has allowed us to develop comprehensive best practices, including assisting states in developing corrective action plans to minimize the eligibility error rates. Our professional resources and PERM experience will benefit your state when complying with the upcoming PERM changes.
PHBV Partners can assist states in various capacities by completing the PERM requirements entirely, working with state employees to complete a portion of the PERM requirements, or providing training for staff and sharing our best practices.
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PERM Documentation Library
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