The way states determine Medicaid and Children’s Health Insurance Program (CHIP) eligibility and improper payments is subject to change under a CMS Proposed rule. The CMS proposal makes improvements to the to the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) programs by implementing provisions of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). CMS is accepting comments on the Proposed rule until August 22, 2016 (Proposed rule, 81 FR 40596, June 22, 2016).
Programs. The PERM program measures improper payments in Medicaid and CHIP programs based on reviews of the fee-for-service (FFS), managed care, and eligibility components of Medicaid and CHIP. In part due to changes to Medicaid eligibility brought on by the ACA, CMS is not conducting the eligibility measurement component of the PERM program for Fiscal Years (FYs) 2015 through 2018, in order to update the eligibility measurement methodology. The MEQC program requires states to report to HHS the ratio of erroneous excess medical assistance payments to total expenditures for medical assistance. Under Section 1903(u) of the Social Security Act (SSA), HHS is required to withhold payments in excess of a 3 percent threshold for eligibility-related improper payments. For the same reasons that CMS is temporarily suspending the PERM program, CMS is not operating the MEQC program over the FY 2015 through 2018 period.
PERM. The Proposed rule would make several changes to the review and methodology components of the PERM program. Specifically, CMS is proposing to (1) change the review period from October through September to July through June; (2) include federal contractors in the PERM eligibility review process; (3) conduct PERM reviews based upon FFS and managed care payments sampled for the PERM program; (4) cite improper payments when the federal share amount is incorrect, even if the total computable amount is accurate; (5) develop a national sample size to meet improper payment rate precision requirements; (6) impose more stringent requirements under corrective action plans (CAPs) for states that have consecutive PERM eligibility improper payment rates over the 3 percent standard; and (7) implement payment reductions for eligibly reviews where a state’s eligibility improper payment rate exceeds 3 percent, if the state does not demonstrate a good faith effort to meet the national standard.
MEQC. Under the Proposed rule, CMS is planning to restructurethe MEQC program as a pilot program for the off years of the PERM program so that states continue to have a mechanism to conduct oversight of Medicaid and Chip eligibility. Although states will have some flexibility to define their pilot programs, under the proposal, if a state has consecutive PERM eligibility improper payment rates over the 3 percent national standard, CMS will direct the state’s pilot program. Under the Proposed Rule, states would also be required to submit corrective actions for identified errors.
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