Payment error rate measurement (PERM) audit and improvement requirements

(a) Biennial PERM audit requirement Beginning with fiscal year 2027, the Administrator shall conduct payment error rate measurement (PERM) audits of each State Medicaid program on a biennial basis. (b) PERM error rate reduction plan requirement Beginning with fiscal year 2027, any State with an overall PERM error rate exceeding 15 percent in a PERM audit conducted with respect to the State in the previous fiscal year shall publish a plan, in coordination with, and subject to the approval of, the Administrator, for how the State will reduce its PERM error rate below 15 percent in the current fiscal year. (c) Notification; identification of sources of improper payments (1) Notification Not later than 6 months after the date of enactment of this Act, the Administrator shall notify the contractor conducting PERM audits of the Administrator's intent to modify contracts to require PERM audits not less than once every other year in each State. (2) Identification of sources of improper payments The Administrator shall direct the contractor conducting PERM audits of State Medicaid programs to identify areas known to be sources of improper payments under such programs to identify program areas or components known to be sources of high risk for improper payments under such programs. (d) State Medicaid director letter Not later than 12 months after the date of enactment of this Act, the Administrator shall issue a State Medicaid Director letter regarding State requirements under Federal law and regulations regarding avoiding and responding to improper payments under State Medicaid programs. (e) State improper payment mitigation plans (1) In general Not later than January 1, 2026, each State Medicaid program shall submit to the Administrator a plan, which shall include specific actions and timeframes for taking such actions and achieving specified results, for mitigating improper payments under such program. (2) Publication of State plans The Administrator shall make State plans submitted under paragraph (1) available to the public. (f) Definitions In this section: (1) Administrator The term Administrator means the Administrator of the Centers for Medicare & Medicaid Services. (2) State The term State has the meaning given such term for purposes of title XIX of the Social Security Act (42 U.S.C. 1396 et seq.). (3) State Medicaid program The term State Medicaid program means a State plan under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), and includes any waiver of such a plan.