HHS Secretary Response to Senate Letter on Medicaid PERM Rates

In response to a letter from Senator Cornyn (R-TX) asking for CMS information on Medicaid's improper payment rates (PERM) for 2007 and 2008, Secretary Sebilius released a letter February 25th detailing state-by-state Medicaid PERM rates for those years. Cornyn had raised the issue because “CMS had reported Medicaid's improper payment rates average between 8.7 percent and 10.5 percent among the states, which is substantial considering the combined federal/state spending on Medicaid reached approximately $438 billion in 2009.” Sebelius reported a national Medicaid error rate of 9.6 percent in its FY 2009 Agency Financial Report. The error rate was based on a weighted average of the states that were measured in FY 2007 and FY 2008.

In her letter, Secretary Sebelius said that that “CMS uses a 17-state rotation so that each state is reviewed once every three years. FY 2007 was the first year in which states were fully measured in each component of the PERM measurement. Therefore, we are only providing information about state rates for FY 2007 and FY 2008; the remaining states will be measured during the FY 2009 rotation.” She reported that for all the states sampled in FY 2007, the average rate was 10.5% with Rhode Island having the largest PERM rate of all sampled states, at 21%--followed by California at 16% and Georgia at 12 %. The combined rate for all sampled states in FY 2008 was 9%--with the top three PERM rates belonging to Oregon at 21%, Washington, D.oiC. at 20%; and Indiana at 17%.