Payment Error Rate Measurement (PERM)

The Payment Error Rate Measurement (PERM) is an audit program developed and conducted by the federal government to comply with law. The program examines eligibility decisions and payments to providers for Health First Colorado (Colorado's Medicaid Program) and Child Health Plan Plus (CHP+) for accuracy.

The Review Year (RY) 2023 PERM cycle will audit payments to providers between July 1, 2021 and June 30, 2022.

Why is PERM required?

  • PERM helps the Department identify areas for improvement and helps cut down on fraud, waste and abuse.
  • PERM is required by the federal law, the Payment Integrity Information Act of 2019, which is a consolidation of the Improper Payments Information Act of 2002 (IPIA, Public Law 107-300) which was amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA, Public Law 111-204) and further amended by the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA, PUB. L. 112-248).
  • Improper payment error rates and estimates of improper amounts must be reported.
  • Actions to reduce erroneous expenditures must be reported.
  • States are required to return the federal share of overpayments. The Department will pursue recoveries as part of the corrective actions according to law and regulation.

Eligibility Review

What is the purpose of the eligibility determination review?

  • The purpose of the eligibility review is to verify the eligibility of sampled cases using state and federal eligibility criteria in effect at the time of the decision under review.

What do eligibility sites need to do?

  • Eligibility sites, if asked by Department staff, will need to answer questions or submit missing case file documentation.

What happens if there is an error finding in the eligibility determination review?

  • Eligibility sites may or may not be contacted about eligibility errors. Communication with eligibility sites will provide instructions.

Payment Review

Why are providers required to participate in PERM?

How will providers know if any of their claims have been selected?

  • Claims are randomly selected. If claims from your office are selected, you will be contacted by the Federal Review Contractor, NCI Information Systems, Inc. (NCI), for copies of your medical records to support the medical review.

Who will send the medical record request?

  • NCI will mail request letters and call providers. If necessary, NCI will mail follow-up letters and make follow-up calls. You can find a blank copy of NCI's letter by clicking on this link: Medical Records Request Letter
  • The Department will also send follow-up letters and make follow-up calls to the providers when necessary.

What do providers need to do?

  • Providers need to submit all requested medical records and supported documents within 75 calendar days of the request date, either electronically or hard copies to NCI.  If additional medical records are requested by NCI, providers will have 14 days to submit them.

What about patient privacy?

What happens if the provider does not cooperate?

  • The Department may recover payments if supporting medical records have not been submitted to NCI.

What happens if there is an error found in medical reviews?

  • NCI will notify the Department about the error, and the Department has the option to agree or disagree with its findings.

What happens if the Department disagrees?

  • The Department can file a request for a Difference Resolution and providers may be contacted to assist in the Difference Resolution process.

What if an error is confirmed?

  • States are required to return the federal share of overpayments. The Department will pursue recoveries as part of the corrective actions according to law and regulation.

Where can I get more information?