Notice to Regional Center Providers of the Upcoming Review Year (RY) 2023 Payment Error Rate Measurement (PERM) Cycle

The California Department of Health Care Services (DHCS), through the Department of Developmental Services, wishes to notify all California Medi-Cal providers of the start of the RY 2023 PERM (indicating the year of the audit conclusion) by the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS). The purpose of PERM is to identify erroneous payments made in Medicaid and the Children’s Health Insurance Program (CHIP) in all 50 states and report improper payment estimates to Congress.

During PERM RY 2023, Medicaid and CHIP Medi-Cal claims will be randomly selected for Medical Reviews for the fiscal year beginning July 1, 2021 and ending June 30, 2022. Your cooperation will help ensure that the payment measurement rate for PERM reviews are accurate and that California retains its much-needed federal match monies for the Medi-Cal program, which includes Home and Community-Based Services.

CMS Review contractors will contact regional centers to gather all necessary information to conduct the audit; however, in some cases, the contractors may reach out to providers directly.

What if one of my claims is selected for the PERM review?

If one of your claims is selected for the PERM, you will receive a notification letter from DHCS letting you know you have been selected, and the CMS Review Contractor, NCI Information Systems, Inc. will be contacting you for medical records. If you receive a notification to provide medical records, this is in reference to the consumer file which contains all of their evaluations, IPPs, service records, etc. The letter from DHCS will not contain consumer-specific information. The Review Contractor will contact you via telephone to verify your contact information, verify consumer name, and arrange to send you an official request letter on CMS letterhead detailing what information is needed. DHCS anticipates its notification letters will be sent out for the first quarter of sampled claims in late 2021. The Review Contractor may begin contacting quarter one providers in late 2021 or early 2022. A total of four quarters of claims will be selected for review during the PERM cycle so it is possible you may receive multiple requests at different times during the PERM process.

Am I obligated to submit records for the PERM review?

Yes. One of the types of error findings that comprises the majority of errors is providers failing to respond to requests for medical records. Another error finding cited most frequently is submission of insufficient documentation.

To reduce error findings in PERM reviews and ensure that providers are in compliance with state and federal regulations, DHCS would like to remind providers of the following:

  • Title 22 of the California Code of Regulations, section 51476, states that, “each provider shall keep, maintain, and have readily retrievable, such records as are necessary to fully disclose the type and extent of services provided to a Medi-Cal beneficiary.” This includes medical records, orders, treatment authorization requests, and the time and date of service for each beneficiary.
  • Under sections 1902(a)(27) and 2107 (b)(1) of the Social Security Act, CMS and their representatives have the authority to collect all documentation to support a Medicaid claim.
  • DHCS requires all enrolled providers to report changes to any information previously submitted as part of the provider enrollment application package, which includes the business address or phone number, within 35 days of the date of change.
  • Failure to respond to requests for medical records may result in suspension from the Medi-Cal program as per Welfare and Institutions (W&I) Code section 14124.2(b)(1) and section 14124.2.

Not only do error findings affect California’s PERM rate, but claims cited with error findings at the conclusion of the medical review are also considered improperly paid. Therefore, in accordance with W&I Code section 14172.5, DHCS is authorized to recoup these payments. Providers that receive a demand for recovery of claim payments are urged to remit the demand amount as soon as possible.


Where can I find out more about PERM and my responsibility to participate?

You can find more information about PERM on the DHCS website:

You can find information about provider-specific responsibility on the CMS PERM website:


You may contact a member of the DHCS PERM Team with your questions at: