PERM Update

1
PERM Update

• NAMPI Conference
• August 27, 2008

2
Panel Members

• Kevin Jones State of Ohio
• Douglas Nock CMS
• Eppie Deitz State of Illinois
• Jan Inglish State of California
• Tom Welch State of California

3
Agenda

• PERM TAG
• CMS Update
• FFY06 Lessons Learned/Best Practices
• FFY07 Lessons Learned/Best Practices
• Question and Answer

4
PERM TAG Membership

• Chair - Chuck Duarte Nevada
• Region 1 (West)
• Regions 2 (Midwest)
• Region 3 (South)
• Region 4 (Northeast)
• CMS
• NASMD/APHSA

5
Working Groups EstablishedBy PERM TAG

• Difference Resolution Process
• Chair Kevin Jones Ohio
• Error Rate Reduction Committee
• Chair Jan Inglish California
• PERM Eligibility Review/MEQC Integration
• Chair - Bruce Truitt - Texas

6
Items TAG Currently Addressing

• Modifications to the MR1 and MR2 letters
• CMS-64 Reporting
• Pre-cycle timelines
• Unique claim identifier
• Beneficiary claims paid as an administrative claim

7
State Contacts

• States identified to NASMD a POC
• Medicaid
• SCHIP
• POC Updates
• Contact LPhësha M Williams _at_ LWilliams_at_aphsa.org
  
• TAG uses state PERM POC to distribute information
  please be sure to keep current

8
Progress Update Future
Payment Error Rate Measurement (PERM)

• Presented by
• Doug Nock, Director, Division of Analysis
  Evaluation
• Program Integrity Group
• Office of Financial Management
• Centers for Medicare Medicaid Services

9
Agenda

• Background/Overview
• Status of Measurement Operations
• High Level Findings from FY 2006 Measurement
• Current Issues
• Process Improvements
• Future Vision
• Q A

10
PERM Overview

• CMS developed the PERM program to comply with the
  Improper Payments Information Act of 2002 (IPIA).
  PERM measures improper payments in Medicaid and
  the State Childrens Health Insurance Program
  (SCHIP).
• CMS uses a 17-state rotation for PERM. Each state
  is reviewed once every three years. This rotation
  allows states to plan for the reviews as they
  know in advance when they will be measured.
• PERM uses a national contracting strategy to
  estimate improper payments in Medicaid and SCHIP,
  including a statistical contractor (SC),
  documentation/database contractor (DDC), and
  review contractor (RC).

11
PERM Cycle Timeframes
9/05
9/07
7/08
11/09
9/06
11/08
9/09
9/08
9/10
11/10
Preliminary
Final Calculated
Final Published
38 months
FY 2006
Final Calculated
Final Published
FY 2007
26 months
Final Calculated
Final Published
FY 2008
26 months
Final Calculated
Final Published
Pre-Cycle
FY 2009
28 months
12
PERM Cycle Updates

• FY 2006 FY 2007
• Reported FY 2006 preliminary Medicaid
  fee-for-service (FFS) error rate of 18.5 in the
  FY 2007 Performance and Accountability Report
  (PAR) or its equivalent
• Preliminary rate based on Quarter 1 and Quarter 2
  of FY 2006
• Measurement process is complete for FY 2006 and
  FY 2007, annual error rates to be calculated and
  reported in the FY 2008 PAR or its equivalent
• Annual error rate measurement report and
  analysis in progress
• State Corrective Action Plans/National Error Rate
  Reduction Plan December 2008

13
Error Rate Rollout

• The following dates represent the general
  timeframes associated with the rollout of PERM
  error rates
• Late summer
• CMS calculates state and national error rates
• Fall
• Internal clearance process begins
• CMS reports state error rates on the review
  contractors website for each states information
• National error rates reported in the PAR or its
  equivalent

14
Cycle Updates Continued

• FY 2008
• Quarter 1-Quarter 3 FFS and managed care universe
  data due as of 7/15 the following represent the
  number of complete universes to date
• 46 of Quarter 1
• 25 of Quarter 2
• 20 of Quarter 3
• Medical record request process and data
  processing reviews underway
• States performing eligibility case and payment
  reviews
• Next Steps Complete FY 2008 measurement
• FY 2009
• Cycle kicked off in late July
• Eligibility sampling plans due August 1
• Intake calls to begin in September
• Pre-cycle in progress

15
FY 2006 High Level Findings

• Medical Review
• No Documentation
• Insufficient Documentation
• Policy Violation
• Data Processing
• Pricing Error
• Logic Edit Error
• Third Party Liability Error

16
FY 2006 Findings Continued

• Comparisons
• States with highest error rates had significant
  insufficient documentation errors, more than 5
  times the rate of lower error rate states
• Overall cost per error is significantly higher
  (300) among smaller-sized states compared to
  larger states
• The larger the state, the more hospital service
  errors occurred
• The smaller the state, the more long term care
  errors occurred
• The average cost per error for both hospital and
  long term care services were greater than 1,500
  regardless of state size
• All other service types ranged in costs less than
  500 per error

17
CAP Focus Large States
18
CAP Focus Medium States
19
CAP Focus Small States
20
Current Issues

• PERM contractor changes
• Statistical contractor Lewin to Livanta
• Transition-Lewin is performing the following
  activities for FY 2008, which will transfer to
  Livanta for FY 2009
• Universe Data Collection
• Eligibility
• Implementing state corrective action plans
  (CAP)/internal management
• Finalizing outstanding PERM policies and
  procedures

21
Process Improvements

• The following process improvements implemented in
  the past year are a result of collaboration
  between CMS and the states
• Operational Improvements
• PERM Final Rule published in August 2007
• Negative case eligibility reviews under PERM can
  be used to satisfy the MEQC requirements for
  negative case action pilots (see 42 CFR 431.812)
• Finalized difference resolution process, which
  includes the ability to dispute insufficient
  documentation errors
• Unique PERM ID for each sampling unit used across
  contractors

22
Process Improvements Continued

• Website improvements
• New PERM 101 documents available on CMS PERM
  website at http//www.cms.hhs.gov/PERM/03_permproc
  ess.asp to assist states in educating
  stakeholders
• Improved contractor website capabilities secure
  website allows states to track the status of
  medical record requests
• Communication
• Cycle Managers
• Monthly cycle calls with affected states
• Quarterly face-to-face meetings between CMS and
  PERM contractors
• Expanded Technical Advisory Group (TAG) capacity
  by establishing the Error Rate Reduction
  Subcommittee, Eligibility TAG (MEQC/PERM), and
  the Difference Resolution Committee
• Increased involvement from CMSO
• Quarterly senior leadership meetings
• Monthly meetings with CMSO ARAs
• Ad hoc workgroups on future corrective actions at
  a national level

23
PERM Pre-Cycle

• For FY 2009, CMS is implementing a pre-cycle
  timeframe
• Phase One (August/September) Orientation calls
  and visits with state Medicaid/SCHIP program
  staff
• Phase Two (September/October) Intake calls with
  state Medicaid/SCHIP PERM staff to explain PERM
  data submission requirements
• Phase Three (October/December) Test Data
• Voluntary participation of up to 9 states
• States to create test data files and send to
• contractors to quality control and review in
• advance of first quarter data submission

24
Proposed Process Improvements

• The following process improvements have been
  proposed in the past year
• Sampling and reviewing at the claim level
• Creation of a forum for states to discuss
  state-specific PERM issues and best practices
• Standardizing requirements for state provider
  appeals on recovery decisions
• Consolidation of PERM contractor websites
• PERM conferences/focused trainings
• Lessons learned from Lewin interviews

25
Corrective Actions

• Collaboration and open communication-keys to
  success
• CMS released Corrective Action Plan (CAP)
  guidance through a State Health Official letter
  in October 2007, which can be found at the
  following link http//www.cms.hhs.gov/PERM/Downl
  oads/Corrective_Action_Plan.pdf
• Hired staff to serve as State Liaison Officers

26
CAP Contact Information
27
Future Vision

• Provider Education Contractor
• Electronic Health Records Demo
• Minimum Data Set
• Decreased Operational Timeline
• Current environment 26 month cycle
• FY 2012 18 month operational cycle
• FY 2015 Annual measurement for all states

28
Payment Error Rate Measurement (PERM)Lessons
Learned for FFY 2006

• Illinois Department of Healthcare and Family
  ServicesOffice of Inspector General

29
Data and Policy Collection

• What worked best included
• Core staff assigned to identify policy and data
• Lessons learned included
• Setting up a file to track each sampled service

30
Medical Record Collection

• What worked best included
• Translating the federal PERM letter for our
  providers
• Determining the right provider contact
• Initial contact with the providers by audit staff
• Subsequent follow up with providers
• Facilitate record collection with providers
  utilizing field staff

31
Medical Record Collection (Cont.)

• Lessons learned included
• Not to rely solely on providers to respond to a
  letter
• Review medical records to determine if the
  providers complied with the record request
• Some larger providers (Walgreens) established
  PERM contacts

32
Data Processing Review

• What worked best included
• Program and policy staff being readily available
  to assist contractors with questions
• Lessons learned included
• Contractors needed assistance in navigating
  systems and understanding Illinois data

33
Medical Record Review

• What worked best included
• Establish review group consisting of policy,
  program, audit, peer review, and clinical staff
• Clearly state response (minimize wording)
• Keep policy on hand to support dispute

34
Medical Record Review (Cont.)

• Lesson learned included
• Have policy on hand and readily accessible
• There are discrepancies in how Medical Necessity
  policies are applied
• There are discrepancies in how LTC policies are
  applied
• Some errors required a clinical evaluation and
  response

35
Recoveries

• Lessons learned included
• Notify provider as soon as an error is finalized
• Provider will appeal higher dollar errors

36

• Contact
• Eppie Dietz, Chief
• Bureau of Information Technology
• Office of Inspector General
• Illinois Department of Healthcare and Family
  Services
• 404 N. 5th Street
• Springfield, IL 62702
• voice 217/782-9841
• fax [phone]
• email Eppie.Dietz_at_illinois.gov

37
The California ExperienceLessons Learned Best
Practices California Department of Health Care
Services

• Jan Inglish, N.P., Chief
• Audits Investigations, Medical Review Branch
• Tom Welch, Chief
• Medi-Cal Eligibility Division

38
The Beginning of PERM in California
39
The PERM Claim Review Process

• Sample
• All sample claim data had to be verified by all
  agencies who are part of the Medi-Cal program.
• Multiple agency involvement
• California Department of Health Care Services
  (DHCS)
• Electronic Data Systems (EDS)
• Medi-Cal Dental Program (Denti-Cal)
• California Department of Mental Health (DMH)
• California Department of Social Services (DSS)
• California Department of Developmental Services
  (DDS)

40
The PERM Claim Review Process

• Sample
• Multiple Fiscal Intermediary Involvement
• Electronic Data Systems (EDS)
• Delta Dental Services
• Providers contacted by both DHCS and the CMS
  contractor
• Verification of mailing address and contact
  information
• Dual submission of claim documentation
• DHCS nurse review of claim documentation
• DHCS doctor, DMH psychiatrist, Denti-Cal dentist,
  or DSS representative reviewed/refuted each claim
  found to be in error by the Review Contractor.
• Only billing providers were contacted and
  requested to submit documentation. To truly
  measure fraud and abuse and medical necessity,
  the prescribing providers should have been
  contacted, as well.

41
Californias Workload Hours Expended for PERMAs
of August 10, 2008
42
The California Experience

• Both Livanta and DHCS called each provider to
  verify contact and mailing information.
• Providers were required to submit all
  documentation to both CMS and DHCS
• Initial review of documentation by DHCS nursing
  staff
• Error review
• Multiple agency involvement
• Dispute prepared by a doctor, pharmacist,
  psychiatrist or dentist.

43
Californias Fall From Grace

• The universe was pulled from the DHCS PAID CLAIMS
  Encounter System (PCES)
• The PCES is used by DHCS to collect claim records
  from all agencies who are part of the Medi-Cal
  program.
• While the PCES is a good source to pull the
  universe, the PCES is not the system of record
  and does not store adequate data needed for the
  system of record to identify and populate the
  sample claim data.
• California received its sample last, on March 3,
  2008
• Due to the delay in populating the sample, the
  PERM Documentation/Database Contractor (DDC)
  requested documentation based upon the unverified
  data.
• Providers were requested to submit documentation
  based upon erroneous data.
• The verified data was submitted to the DDC in
  batches.
• Rather than repopulating their system with the
  verified data, the DDC wrote over the old data.
  
• No reconciliation was made between the sample and
  the verified data once it was submitted.

44
The Overall Impact of PERM

• The Error Rate Is Underestimated
• PERM focuses on the billing provider and does not
  include a review of the prescribing provider.
• The Error Rate Is Overestimated
• Documentation was either not submitted or not
  reviewed
• Pitfall Of All Error Rate Studies
• The errors not related to medical necessity are
  counted as if the claim should not have been
  paid. However, proof that the service was
  medically necessary would discount this error.
• The Medi-Cal Payment Error Study (MPES) 2006
• 1,147 claims in the sample
• Errors for medical necessity accounted for 2.51
  of the overall payment error rate of 7.27
• 1 claim out of 1,147 in the sample was deemed an
  error because the document could not be obtained
  from a closed pharmacy.

45
Eligibility Reviews

• Overview
• Similarities between MEQC and PERM
• Sample process developed in advance with minimal
  changes after the eligibility plan was approved
  in May 2007.
• Samples are month specific and sequential.
• Samples are limited to persons in receipt of
  Medicaid benefits during the sample month.

46
Eligibility Reviews

• Overview
• Differences between MEQC and PERM

• Actual field work did not commence until June
  2007, which required staff to complete two months
  of reviews for each month throughout the balance
  of the PERM review period.

47
Eligibility Reviews

• Results
• Active Case Reviews
• 504 active cases were reviewed
• 3 Cases resulted in total ineligibility with
  payment errors
• 1 Case resulted in total ineligibility without
  payment error
• 1 Understated Share of Cost for an otherwise
  eligible beneficiary with payment error.
• 1 Overstated Share of Cost for an otherwise
  eligible beneficiary without payment error.
• The initial active case error rate was 0.8.
• The active payment error rate was 3.9.
• Cases with identifiable findings were the result
  of erroneous data entries by CWD staff or
  misunderstanding in eligibility procedures.

48
Eligibility Reviews

• Results
• Negative Case Reviews
• 204 negative cases were reviewed
• 17 Cases with Negative actions correct but
  invalid Notice of Action compliance
• 2 Cases with Negative actions incorrect
  regardless of Notice of Action compliance
• 3 Cases with Negative action correct, but notices
  not timely
• The initial negative case error rate was 10.88.
• Although the termination and denial actions were
  correct in almost 99 of the cases (202 out of
  204) reviewed, there were some problems in notice
  issuances.
• The majority of problems occurred in Termination
  Actions or due to CWD staff not responding to
  automated system alerts and not understanding
  processing procedures.
• There was no case in which beneficiaries received
  benefits erroneously and only 2 cases in which
  benefits were erroneously withheld.

49
Eligibility Reviews

• Data Sampling
• PERM Design
• February 2007 through June 2007
• Developed the process to extract the sample.
• Extracted and formatted the sample data.
• April 2007 through June 2007
• Developed the process with the CMS contractors.
• July 2007 through March 2008
• Developed the process to extract and send the
  data universe, which included trends, formatting,
  and validation.
• Additional programs were written to analyze this
  data.
• Prior training or review of the contractors
  database was not permitted.

50
Error Rate Reduction Committee

• Met for the first time on March 4, 2008
• 30 states volunteered as members.
• Committee members provided short and long term
  recommendations regarding
• How to reduce the error rate
• Develop a PERM Standard Operating Procedure (SOP)
  manual.
• Specific timeframes States are allowed to submit
  late documentation.
• All letters from the DDC should be addressed to
  the billing provider.
• Maintain this manual in one location.

51
Error Rate Reduction Committee

• Committee members provided short and long term
  recommendations regarding
• Develop one website for use by the Contractors
  and States and include search capability.
• Hold three cycle calls per month on a weekly
  basis. Dedicate one hour per call for specific
  topics, such as eligibility, data processing
  review, medical review, etc.
• Provide an option for those states with available
  resources to request documentation directly from
  the provider and forward the documentation to the
  DDC. Include language in the contract that
  compensation will be provided to the DDC for
  requesting documentation from providers only in
  those instances where the State does not
  undertake this responsibility. Where the State
  undertakes this responsibility, develop a process
  to compensate the State. All information
  disseminated to State Medicaid directors
  regarding PERM should also be provided to State
  PERM managers.

52
Error Rate Reduction Committee

• Committee members provided short and long term
  recommendations regarding
• How to make the Corrective Action Plan tool more
  effective
• How to improve the eligibility process

53

• Questions