Provider Notice issued 09/05/12

Medicaid and Children’s Health Insurance Program (CHIP) Payment Error Rate Measurement (PERM) Audit Record Requirements Reminder

The Improper Payments Information Act (IPIA) of 2002 (amended in 2010 by the Improper Payments Elimination and Recovery Act or IPERA) requires the heads of Federal agencies to annually review programs they administer and identify those that may be susceptible to significant improper payments, to estimate the amount of improper payments, to submit those estimates to Congress, and to submit a report on actions the agency is taking to reduce the improper payments. The Office of Management and Budget (OMB) has identified Medicaid and the Children's Health Insurance Program (CHIP) as programs at risk for significant improper payments. As a result, CMS developed the Payment Error Rate Measurement (PERM) program to comply with the IPIA and related guidance issued by OMB.

To comply with the Improper Payments Information Act of 2002, the federal Department of Health and Human Services, Center for Medicare and Medicaid Services (federal CMS) has implemented a Payment Error Rate Measurement (PERM) program. The PERM program measures improper payments in Medicaid and CHIP and produces error rates for each program. The error rates are based on reviews of the fee-for-service (FFS), managed care, and eligibility components of Medicaid and CHIP in the fiscal year (FY) under review. It is important to note the error rate is not a “fraud rate” but simply a measurement of payments made that did not meet statutory, regulatory or administrative requirements. FY 2008 was the first year in which CMS reported error rates for each component of the PERM program.

Each state is required to participate in PERM every three (3) years. The Illinois Department of Healthcare and Family Services (HFS) is participating in the PERM review this federal fiscal year.

Not every provider will be contacted to provide medical documentation; only those providers that provided services for the sample of FFS claims pulled.

Availability of Records

Federal CMS has hired a PERM Review Contractor to sample and review services paid by HFS within FFY 2012, which includes collection and review of medical records to determine whether a correct payment was made. After collection and review of a sample of the services paid by HFS, PERM auditors will note any concerns regarding incomplete documentation maintained in participant’s medical records.

The PERM Review Contractor for all FFS claims in the selected sample is A+ Government Solutions. If one of your services is randomly selected for review, a customer service representative (CSRs) from the Review Contractor will call your facility to establish a point of contact, explain the purpose of the call, and explain the right for CMS to collect medical records for audit purposes under HHS regulations at 45 C.F.R. 164.512(d), as a disclosure authorized to carry out health oversight activities. They will follow up with a written request for records, and you will have seventy-five (75) days to provide this documentation.

It is imperative that you provide this information. Failure to comply with this request will result in an erroneous payment finding and payment recovery.

As the PERM program continues, HFS is requesting your cooperation with submitting all requested documentation in a timely manner. All required records are to be made available for inspection, audit and copying (including photocopying) by authorized Department personnel or designees during normal business hours. Such personnel or designees may include, but are not limited to, the Department’s Office of Inspector General, representatives of the Medicaid Fraud Control Unit, law enforcement personnel, the Office of the Auditor General, and the federal Centers for Medicare and Medicaid Services (CMS). Such personnel or designees shall make all attempts to examine such records with minimal disruption to the professional activities of the provider.

The provider’s business and professional records for at least twelve (12) previous calendar months are to be maintained available for inspection without prior notice by authorized Department personnel or designee on the premises of the provider. Department personnel shall make requests in writing to inspect records more than twelve (12) months old at least two (2) days in advance of the date they must be produced.

The record requirements listed above are applicable to all providers. Providers are encouraged to refer to the appropriate Chapter 200 handbook for any additional provider specific requirements. Several Chapter 200 Handbooks are available on the Medical Providers Handbooks section of the department’s Web site. Copies of handbooks not available on the Web site may be requested from the Provider Participation Unit at 217-782-0538.

Provider Education and Outreach

The State of Illinois will be hosting two educational webinars, which you are invited to attend. The first will be held on September 25, 2012 at 2:00 EST. The second will be held on October 24, 2012 at 2:00 EST. Both will last approximately one hour, and will provide additional information about the PERM process. You can reference the Webinar invitations at: on the PERM Cycle 1 Provider Education Webinar/Conference Calls (pdf) from the federal Centers for Medicare and Medicaid Services Web site.

In addition, you will find information about the PERM program, including a “claim categories documentation guide” and a FAQ section, on the Providers page of the Payment Error Rate Measurement (PERM), section of the Centers for Medicare and Medicaid Services Web site.

Maintenance of Records

The following serves as a reminder of the record requirements established by the department.

Providers are to maintain the following records:

• Any and all business records which may indicate financial arrangements between the provider and other providers in the program or other entities, or which are necessary to determine compliance with federal and state requirements, including, but not limited to:

• business ledgers of all transactions;

• records of all payments received, including cash;

• records of all payments made, including cash;

• corporate papers, including stock record books and minute books;

• records of all arrangements and payments related in any way to the leasing of real estate or personal property, including any equipment;

• records of all accounts receivable and payable; and

• original signed billing certification forms for each voucher received.

• Any and all professional records which relate to the quality of care given by the provider or which document the care for which payment is claimed, including, but not limited to:

• medical records for applicants and participants in the Department’s Medical Programs (copies of claims alone will not meet this requirement), including a record of ancillary services ordered as a result of medical care rendered by the provider; and

• other professional records required to be maintained by applicable federal or state law or regulations.

The business and professional records required to be maintained are to be kept in accordance with accepted business and accounting practice and are to be legible.

Professional records documenting the history, diagnosis, treatment services, etc., of a Medical Assistance, Moms and Babies, All Kids, FamilyCare, Illinois Cares Rx, Veterans Care, Health Benefits for Workers with Disabilities, Transitional Assistance or State Family and Children Assistance patient are to be made available to other healthcare providers who are treating or serving the patient, without charge and in a timely manner, when authorized by the patient in writing.

Retention of Records

Business and professional records must be maintained for a period of not less than three (3) years from the date of service or as otherwise provided by applicable state law, whichever period is longer, except that:

• if an audit is initiated within the required retention period, the records must be retained until the audit is completed and every exception resolved, and

• original signed billing certifications for every voucher received are to be retained not less than three (3) years from the date of the voucher.

Questions regarding this notice may be directed to the Bureau of Comprehensive Health Services at 1-877-782-5565.

Theresa A. Eagleson, Administrator

Division of Medical Programs