Provider Notice issued 01/09/15

Payment Error Rate Measurement (PERM) Audit

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, which measures improper payments within each state’s Medicaid and Children’s Health Insurance Program (CHIP) program. Each state is required to participate in PERM every three (3) years.

This notice serves as a reminder that all services for which charges are made to the Illinois Department of Healthcare and Family Services (the Department) are subject to audit. Audits are an important and necessary part the Department’s monitoring of health care facilities and services, as required by the federal and State law. Audit findings against a provider will result in the recovery of resulting overpayments. Audit findings against a provider may also result in sanctions or other penalties, including but not limited to: (1) termination or suspension of the provider’s eligibility to participate as a Medicaid and/or CHIP provider; (2) suspension or denial of the provider’s payments; and (3) civil monetary penalties.

Additionally, this notice serves as a reminder of the Department’s established policies specific to the following errors identified in the FFY 2012 PERM review: (1) missing documentation; (2) insufficient documentation; (3) procedure coding errors; (4) medically unnecessary services; and (5) services rendered by excluded providers.

Missing Documentation: Maintenance of Records

PERM errors included instances of providers not submitting sufficient documentation to support the service billed. HFS policy requires providers 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.

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, Illinois Healthy Women, 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.

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

Insufficient Documentation: Maintenance of Records

PERM errors included instances of providers not submitting sufficient documentation to support the service billed. Department policy requires providers 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.

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, Illinois Healthy Women, 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.

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

Procedure Coding Errors: Billing for Services Provided

PERM errors identified instances of incorrect coding attributable to billing for the wrong procedure code, admission date or provider number. Department policy states that a practitioner may charge only for services personally provided, or which are provided under direct supervision in the practitioner’s offices by ancillary licensed or certified staff, e.g., laboratory tests done by a technician in the practitioner’s employ.

Medically Unnecessary Services: Billing for Services that are not Medically Necessary

PERM errors identified instances of billing for medically unnecessary services. The medical necessity of services billed must be properly documented in order to receive payment.

Services Rendered by Excluded Providers

The Department’s Office of Inspector General identified instances of billing for services rendered by individuals who have been excluded by the federal Department of Health and Human Services from participation in federally funded health care programs. No payment will be made by Medicare, Medicaid or any of the other federal health care programs for any item or service furnished by an excluded individual. Additionally, such billings may result in the imposition of sanctions and other penalties. Providers must routinely check the federal government’s List of Excluded Individuals and Entities (LEIE), in order to ensure that new hires and current employees are not on the excluded list.