June 20, 2016
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Proposed Changes To The Payment Error Rate Measurement And Medicaid Eligibility Quality Control Programs In Response To The Affordable Care Act (CMS-6068-P)
- Review Period: The PERM program will review Medicaid and CHIP payments made by states July through June of a given year. Under the current rule, the PERM program reviews payments made in a Federal FY (October through September).
- Eligibility Review Responsibility: A federal contractor will conduct PERM eligibility reviews with support from each state. Under the current rule, states are required to conduct eligibility reviews and report the results to CMS.
- Eligibility Universe: The PERM program will conduct eligibility reviews (in addition to medical and data processing reviews) on FFS and managed care payments sampled for the PERM program. The eligibility review will be conducted on the beneficiary associated with the sampled claim. Under the current rule, states create separate universes of eligible individuals that are sampled for eligibility review.
- Federal Improper Payments: Improper payments will be cited if the federal share amount is incorrect (even if the total computable amount is correct). Under the current rule, improper payments are only cited on the total computable amount (i.e., federal share + state share).
- Sample Sizes: A national sample size will be calculated to meet national Medicaid and CHIP improper payment rate precision requirements. The national sample size will then be distributed across states to maximize precision at the state level, and state-specific sample sizes would be based on factors such as each state’s expenditures and previous improper payment rate. Under the current rule, state-specific sample sizes are calculated based on the state’s previous improper payment rate and state level precision and combined to total the national sample size.
- Corrective Action: States will continue to implement Corrective Action Plans (CAPs) for all errors and deficiencies; however, there will be more stringent requirements added for states that have consecutive PERM eligibility improper payment rates over the 3% national standard established under section 1903(u) of the Social Security Act (the Act).
- Payment Reductions/Disallowances: Potential payment reductions/disallowances under section 1903(u) of the Act will be applicable for eligibility reviews conducted during PERM years in cases where a state’s eligibility improper payment rate exceeds 3%. CMS will only pursue disallowances if a state does not demonstrate a good faith effort to meet the national standard, which is defined as meeting PERM CAP and MEQC pilot requirements.
- The MEQC program will be restructured into a pilot program that states must conduct during their off-years from the PERM program to ensure continuous oversight of both Medicaid and CHIP state eligibility determinations.
- States will be required to review a number of items not fully reviewed through the PERM program (e.g., negative cases).
- States will have flexibility in different areas to focus pilot reviews; however, should a state have consecutive PERM eligibility improper payment rates over the 3% national standard per section 1903(u) of the Act, the state will lose this flexibility and CMS will provide direction for reviews.
- States must submit corrective actions for identified errors.