FACT SHEET
FOR IMMEDIATE RELEASE
June 29, 2017
Contact: CMS Media Relations
(202) 690-6145 | CMS
Media Inquiries
Changes to the Payment
Error Rate Measurement and Medicaid Eligibility Quality Control Programs
(CMS-6068-F)
Today, June 29, 2017 the Centers for Medicare & Medicaid Services
(CMS) posted a final rule that will publish on July 5, 2017 to implement
changes to the Payment Error Rate Measurement (PERM) and Medicaid
Eligibility Quality Control (MEQC) programs to reflect changes to the way
states adjudicate eligibility for Medicaid and the Children’s Health
Insurance Program (CHIP) required by law, as well as to implement other
changes to the PERM and MEQC programs.
SUMMARY
The final rule implements policy and operational improvements to the
PERM and MEQC programs that will reduce state burden, improve program
integrity, and promote state accountability.
Changes to the PERM Program
The PERM program measures improper payments in the Medicaid program and
CHIP. The improper payment rates are based on reviews of the fee-for-service
(FFS), managed care, and eligibility components of Medicaid and CHIP. In
light of changes to the way states adjudicate eligibility for applicants
for Medicaid and CHIP under current law, CMS did not conduct the
eligibility measurement component of the PERM program for Fiscal Years
(FYs) 2015 through 2018 in order to update the eligibility component
measurement methodology and related PERM program regulation. During this
time, the 2014 national eligibility improper payment rate was used as a proxy
rate, and all states conducted a pilot program with rapid feedback for
improvement (known as the Medicaid and CHIP Eligibility Review Pilots) to
maintain oversight of state eligibility determinations. CMS made changes to
the eligibility measurement component of the PERM program in this final
rule, and the eligibility measurement component will resume as of the
effective date of the final rule for reporting in 2019.
Changes to the PERM program in the final rule include:
·
Review Period: ThePERM program will review Medicaid and CHIP payments
made by states July through June of a given year. Under previous
regulations, the PERM program reviewed payments made in a Federal FY
(October through September).
·
Eligibility Review Responsibility: A federal contractor will
conduct PERM eligibility reviews with support from each state. Under
previous regulations, states were required to conduct eligibility reviews
and report the results to CMS. This will help reduce state burden.
·
Eligibility Universe: The PERM program will
conduct eligibility reviews (in addition to medical and data processing
reviews) on FFS and managed care payments sampled for the PERM program. The
eligibility review will be conducted on the beneficiary associated with the
sampled claim. Under previous regulations, states created separate
universes of eligible individuals that were sampled for eligibility review.
·
Federal Improper Payments: Improper payments will
be cited if the federal share amount is incorrect (even if the total
computable amount is correct). Under previous regulations, improper
payments were only cited on the total computable amount (i.e., federal
share + state share).
·
Sample Sizes: A national sample size will be calculated to meet
national Medicaid and CHIP improper payment rate precision requirements.
The national sample size will then be distributed across
states to maximize precision at the state level, and state-specific sample
sizes will be based on factors such as each state’s expenditures and
previous improper payment rate. Under the previous rule, state-specific
sample sizes were calculated based on the state’s previous improper payment
rate and state level precision and combined to total the national sample
size.
·
Corrective Action: States will continue to
implement Corrective Action Plans (CAPs) for all errors and deficiencies;
however, there will be more stringent requirements added for states that
have consecutive PERM eligibility improper payment rates over the 3%
threshold established under section 1903(u) of the Social Security Act (the
Act).
·
Payment Reductions/Disallowances: Potential payment
reductions/disallowances under section 1903(u) of the Act will be
applicable for eligibility reviews conducted during PERM years in cases
where a state’s eligibility improper payment rate exceeds the 3% threshold.
CMS will only pursue disallowances if a state does not demonstrate a good
faith effort to meet the threshold, which is defined as meeting PERM CAP
and MEQC pilot requirements.
Changes to the MEQC Program
The MEQC program is a separate eligibility review program set forth in
section 1903(u) of the Social Security Act (the Act) and requires states to
report to the Secretary the ratio of States’ erroneous excess payments for
medical assistance under the state plan to total expenditures for medical
assistance. States review Medicaid cases to determine whether the
sampled cases meet applicable Medicaid eligibility requirements. Section
1903(u) of the Act also sets a 3% threshold for eligibility-related
improper payments in any fiscal year and generally requires the Secretary
to withhold payments to states with respect to the amount of improper
payments that exceed the threshold. Similar to the PERM program, states did
not operate the MEQC program for FYs 2015 through 2018 so that CMS could
update the MEQC methodology and related regulation. Through this final
rule, CMS has restructured the MEQC program into a tool that more effectively
compliments the PERM program and will help states lower their eligibility
improper payment rates. The MEQC program will resume as of the effective
date of the final rule.
Changes to the MEQC program include:
- The MEQC program has
been restructured into a pilot program that states conduct during
their off-years from the PERM program to ensure continuous oversight
of both Medicaid and CHIP state eligibility determinations.
- States have
flexibility to design their MEQC active case pilots to best meet each state’s
unique needs. However, should a state have consecutive PERM
eligibility improper payment rates over the 3% threshold under section
1903(u) of the Act, CMS will provide direction for active case
reviews.
- States are required
to review a number of items not fully reviewed through the PERM
program (e.g., negative cases).
- States must submit
corrective actions for identified errors.
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