NAMD Issues Statement on Recent PERM Report

January 19, 2012

NAMD Issues Statement on Recent Medicaid PERM Report
January 19, 2012

Washington, DC – Matt Salo, Executive Director of the National Association of Medicaid Directors (NAMD), issued the following statement regarding CMS’ state-by-state Payment Error Rate Measurement (PERM) report.[i]

“Program integrity is among the highest priorities of the nation’s Medicaid Directors and is a key component of any initiative or program.  Directors are constantly seeking to promote economy, efficiency, accountability, and integrity in the management and delivery of services in order to ensure that they are effective stewards of the Medicaid program’s limited resources. States are fully committed to working with federal policymakers and agencies, but resources must only go to effective, high-value initiatives.

“The recent release of state payment error rates to Members of Congress is an opportunity to reiterate our long-standing concerns with implementation of the PERM project. While the objective of the PERM initiative is well-intentioned, the project has been undermined by design flaws and ineffective execution. Countless states report that the composite and overall error rates are a poor measure of fraud, waste and abuse and the overall integrity of their Medicaid programs. For example, PERM provides overall error rates but the information delivered to Members of Congress does not classify whether these errors are due to incorrect eligibility determinations or claim payments rather than “insufficient documentation” by individuals or providers. These misperceptions about error rates arise at least in part because the federal cut-off date for submission of documentation is often inconsistent with a state’s own Medicaid policy. States report that sufficient documentation is frequently obtained within the state-established timeframes, but federal policy does not afford flexibility to revise the error determination. As a result error rates in some states may be misleading or inflated.

“Similar to other federal audit programs, states spend extensive time and resources working with CMS and its contractors to ensure they appropriately apply state specific policies and programs. However, we are not aware that the extensive time and resources that Medicaid programs and providers have dedicated to the PERM process have produced any positive return to states and the federal government. As such, the National Association of Medicaid Directors calls on Congress and the Centers for Medicare and Medicaid Services to study whether the PERM project has generated any appreciable return as well as the effectiveness of PERM in conjunction with other federal audit programs.

“State Medicaid directors face more than programmatic hurdles in their race to bend, shape and re-tool their programs. We look forward to working with Congress, the Administration, and other stakeholders to address not only the potential barriers to improved program integrity in Medicaid, but the need to encourage, support and inform innovation on a scale equal to Medicaid’s critical role as the nation’s health care safety net.”

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[i] On January 13, the Centers for Medicare & Medicaid Services (CMS) responded to requests from two congressional committees for state-by-state Payment Error Rate Measurement (PERM) rates.  

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