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​​Medicaid Program Integrity
 • Excluded Provider ListPDF
 • Provider Audits in Alaska
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Payment Error Rate Measurement (PERM)
 • PERM FAQs

Medicaid Program Integrity

Payment Error Rate Measurement (PERM)

Frequently Asked Questions

What is PERM?
The federal Payment Error Rate Measurement (PERM) program is administered by the Centers for Medicare and Medicaid Services (CMS) through federal contractors, and measures improper payments in Medicaid and Denali KidCare (DKC). Individual state error rates are measured for each program, and are then combined to form a national error rate which is reported to Congress. Error rates are based on reviews of eligibility determinations and fee-for-service (FFS) payments made during the state fiscal year (SFY) under review.

Why was the PERM program created?
PERM was developed by CMS to comply with the Improper Payments Information Act (IPIA) of 2002, which was amended by the Improper Payments Elimination and Recovery Act (IPERA) in July 2010. These Acts require the heads of Federal agencies, including the Department of Health and Human Services (HHS), to annually review their programs and identify those which may be susceptible to significant improper payments. As required by the Payment Integrity Information Act (PIIA) of 2019, the amount of improper payments is required to be estimated and those estimates are submitted to Congress, along with a report on actions the agency is taking to reduce the improper payments. Medicaid and DKC were identified as programs at risk for significant improper payments. Therefore, HHS must report the estimated error rates for the Medicaid and DKC programs each year for inclusion in the Performance and Accountability Report (PAR). CMS implemented the PERM program in a Final Rule published on August 31, 2007 (72 FR 50490) and made revisions in a Final Rule published August 11, 2010 (75 FR 48816) and again on July 5, 2017.

What are the benefits of the PERM program?
The PERM program:

  • Identifies program vulnerabilities that result in improper payments.
  • Promotes efficient Medicaid and DKC program operations.
  • Helps to ensure medical services are provided to eligible members.

How often are states measured under PERM?
PERM reviews each state once every three years, rotating between three cycles, or groups, of 17 states. Alaska is part of Cycle 3 and will be measured as part of Reporting Year (RY) 2024. This means that all claims paid during the period of July 1, 2022 through June 30, 2023 are part of the universe of payments from which an audit sample is drawn.

How will I know a claim I submitted is selected for review?
Any claim that is paid between July 1, 2022 and June 30, 2023 with Medicaid or DKC funding will be part of the payment universe. A sample of claims will be randomly drawn from each quarter, and these will be the claims reviewed by the federal contractor. If a claim you submitted is selected, you will be notified via mail.

Does PERM apply to me?
Payments made to all provider types will be in the PERM universe.

Who will contact me?
All providers with claims selected to be in the PERM sample for RY24 will receive a letter from the CMS Review Contractor, Empower AI. This letter will have the CMS logo across the top. Please do not ignore this letter.

For more information:
CMS offers additional PERM information. The Providers link on the left side menu provides additional information specific to providers. Please check back often for updates and bookmark this page for your reference.

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