Payment Error Rate Measurement (PERM) Medicaid Audit

The Improper Payments Significant Information Act of 2002 directs Federal agency heads, in accordance with the Office of Management and Budget (OMB) guidance, to annually review its programs that are susceptible to significant erroneous payments and report the improper payment estimates to Congress.  OMB identified the Medicaid and the Children’s Health Insurance Program (CHIP) as programs at risk for erroneous payments.

CMS will measure the accuracy of Medicaid and CHIP payments made by States for services rendered to clients through the Payment Error Rate Measurement (PERM) program. CMS will primarily use Empower. AI Inc. who will collect medical policies from the State and medical records from providers. 

Medical records are needed to support required medical reviews for PERM so that the CMS review contractor can review the fee-for-service Medicaid and CHIP claims to determine if the claims were correctly paid.

Providers must submit the information within 75 days of receiving the request, using the submission instructions from Empower AI Inc.  During this 75-day timeframe, Empower, AI Inc. will follow up to ensure documentation has been submitted before the timeframe has expired. 

In addition, State officials may contact providers to assist in identifying the required documentation for submission.  For reviews that require extra information, Empower, AI Inc. will contact providers for additional documentation. Providers will then have 15 days to respond to this request. 

It is important that providers cooperate with submitting all requested documentation timely. Insufficient or missing documentation will count against the State as an error and the State will then pursue reimbursement for cited errors from the provider.

Michele Krpata, BSW, CPC, CPMA

Compliance Officer, Quality Reporting Analyst

For more information and application instructions for the Phase 3 General Distribution of Provider Relief Fund go to