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By Brevy Care Team · Last verified May 12, 2026

When the Georgia Department of Community Health approves a Medicaid application, terminates a beneficiary's coverage, calculates income for a renewal, or pays a managed care capitation payment, a federal accountability framework watches in the background to measure whether the determination and payment were correct. That framework consists of two complementary programs. The first is the Payment Error Rate Measurement (PERM) program, which the federal Centers for Medicare and Medicaid Services operates on a rotating three-year cycle across every state. The second is the Medicaid Eligibility Quality Control (MEQC) program, which Georgia operates as a state-run pilot quality control program in the two years of each cycle when CMS is not conducting PERM in the state. Together, PERM and MEQC ensure that Georgia's eligibility infrastructure, payment systems, and verification procedures are continuously subject to measured accuracy standards. This guide translates the framework so families, advocates, and eligibility staff can understand how the federal accuracy measurement systems shape day-to-day Medicaid operations across the Division of Family and Children Services, the Georgia Gateway eligibility system, and Georgia's Care Management Organizations (CMOs). :::

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Key takeaways

  • Section 1903(u) of the Social Security Act establishes the federal authority for measuring Medicaid payment and eligibility accuracy. The Payment Integrity Information Act (PIIA) and predecessor federal improper payments laws shape the current measurement framework.
  • The Payment Error Rate Measurement (PERM) program audits each state on a rotating three-year cycle across three components: fee-for-service payment accuracy, managed care payment accuracy, and eligibility determination accuracy.
  • The Medicaid Eligibility Quality Control (MEQC) program under 42 CFR 431.800 requires states to operate a pilot quality control program during the two off-cycle years between PERM cycles, focused on areas of state-specific concern.
  • Active case review samples active Medicaid beneficiaries to verify eligibility was correctly determined. Negative case review samples denied or terminated applications to verify denials were correctly determined.
  • Errors identified through PERM trigger corrective action plans (CAPs) that translate into operational changes at the Division of Family and Children Services (DFCS), the Georgia Gateway eligibility system, and DCH eligibility policy.
  • Verification requirements under 42 CFR 435.940-960 establish the standards against which eligibility determinations are measured, including electronic verification of income, citizenship, and immigration status.
  • DCH's Office of Audits and Compliance and Office of Program Integrity coordinate Georgia's PERM and MEQC operations with DFCS county-level eligibility staff.
  • CMS Region IV (Atlanta) schedules Georgia's PERM cycle, reviews MEQC pilot designs, oversees corrective action plans, and provides technical assistance.
  • PERM measures both state-specific and national error rates. National error rates inform federal policy and corrective action requirements; state rates above tolerance can trigger heightened oversight.
  • For families, PERM and MEQC are usually invisible during normal eligibility processing, but corrective action plans developed in response to PERM findings reshape how renewals, verifications, and disputed cases are handled in practice. :::

What this framework is and why it matters

Federal Medicaid law does not simply require states to determine eligibility and pay claims. It requires that states do so accurately, consistently, and in compliance with federal standards. Without a federal accountability mechanism, states could vary widely in how rigorously they conduct eligibility verification, how accurately they pay claims and capitation, and how systematically they correct errors when they occur.

The PERM and MEQC framework is that federal accountability mechanism. Together, the two programs constitute the systematic federal measurement system that quantifies eligibility and payment accuracy across all 50 states and the District of Columbia on a continuous basis.

For Georgia, the framework matters in three concrete ways. First, the framework establishes the federal accuracy standards against which the Department of Community Health, the Division of Family and Children Services, and the Georgia Gateway eligibility system must operate. Second, the framework produces specific findings that trigger corrective action plans reshaping operational eligibility procedures. Third, the framework creates public-facing data on state error rates that informs federal policy and state advocacy.

For families, the framework is usually invisible during normal interactions with Medicaid. A family applying for coverage at gateway.ga.gov or working with a DFCS eligibility worker does not directly interact with PERM or MEQC. But the federal accuracy measurements shape every aspect of how that interaction is conducted: what verification is required, how income is calculated, what documentation is accepted, how disputed determinations are handled, and how renewals are processed.

For advocates and policy stakeholders, the framework provides data and accountability mechanisms that inform advocacy for both improved accessibility and improved accuracy. The tension between accessibility (reducing burden on families) and accuracy (preventing erroneous determinations) is a continuous policy theme that PERM and MEQC data informs.

Historical context

MEQC predecessor

A version of Medicaid Eligibility Quality Control existed long before PERM. Under the original MEQC framework dating back to the 1970s and 1980s, states conducted ongoing eligibility quality control measurement with federal financial penalties tied to error rates above a defined tolerance. The original MEQC focused on eligibility accuracy and was an early version of the systematic accountability now expanded under PERM.

Establishment of PERM

Federal law required federal agencies to measure improper payments in programs susceptible to significant improper payments. CMS established the modern PERM framework in response to these requirements.

Subsequent legislation strengthened the framework over the years, culminating in the Payment Integrity Information Act (PIIA), which consolidated the federal improper payments framework.

PIIA continues to govern PERM measurement and federal reporting on improper payments.

Modern coexistence of PERM and MEQC

Under current rules, PERM and MEQC operate together. PERM runs on a three-year cycle for each state; MEQC operates in the off-cycle years. This ensures continuous quality control measurement in every state.

Federal statutory framework

Section 1903(u) SSA

Section 1903(u) of the Social Security Act establishes the federal authority for measuring and recouping improper Medicaid payments. The statute authorizes CMS to:

  • Establish methodology for measuring eligibility and payment accuracy
  • Calculate state-specific error rates
  • Disallow federal financial participation for improper payments above tolerance
  • Require corrective action plans for states with errors above tolerance

Section 1903(u) is the central statutory authority for PERM. The implementing regulations refine the framework operationally.

Proper and efficient administration

Federal law requires that state Medicaid programs operate with proper and efficient administration. PERM and MEQC are mechanisms by which this requirement is enforced for eligibility and payment accuracy.

Citizenship and immigration verification

Federal law establishes verification requirements for citizenship, identity, and immigration status. PERM reviews include compliance with these verification requirements.

ACA eligibility modernization

The Affordable Care Act established streamlined eligibility coordination requirements across Medicaid, CHIP, and the Marketplace, and modernization requirements for eligibility and enrollment systems. PERM methodology incorporates these requirements.

Federal regulations

42 CFR 431.800 (MEQC framework)

42 CFR 431.800 is the central regulation governing the Medicaid Eligibility Quality Control program. The regulation establishes:

  • States must operate MEQC review during off-cycle PERM years
  • Review methodology specifications including case selection and review elements
  • Reporting requirements to CMS
  • Pilot project authority allowing state-specific focus

42 CFR 431.804 (MEQC review requirements)

This regulation specifies the case review requirements under MEQC including:

  • Populations subject to review
  • Sample sizes
  • Review elements to be evaluated
  • Documentation requirements

42 CFR 431.806 (Active and negative case review)

42 CFR 431.806 defines the two key review methodologies:

Active case review. A sample of active Medicaid beneficiaries is reviewed to determine if eligibility was correctly determined at the time of initial determination and remains correct at the time of review. Active case review identifies cases where individuals are enrolled but should not be (over-enrollment errors).

Negative case review. A sample of denied or terminated applications is reviewed to determine if denial or termination was correctly determined. Negative case review identifies cases where eligible individuals were wrongly denied or terminated (under-enrollment errors).

Both methodologies are essential. Active case review focuses on the cost of over-enrollment to federal and state budgets. Negative case review focuses on the access impact of under-enrollment on eligible families.

42 CFR 431.808 (MEQC pilot project authority)

This regulation allows states to focus MEQC on areas of state-specific concern through pilot project design approved by CMS. Pilots permit:

  • Focused study of specific eligibility groups
  • Methodology innovations
  • Coordination with state-specific quality improvement initiatives

42 CFR 431.810 (MEQC reporting)

This regulation establishes reporting requirements for state MEQC submissions to CMS including:

  • Annual MEQC reports
  • Findings by error category
  • Corrective action recommendations
  • Coordination with PERM cycle reporting

42 CFR Part 431 Subpart Q (Procedure where CMS disallows funds)

If CMS disallows federal financial participation based on PERM findings, this subpart governs the procedural framework including notice, opportunity to be heard, and administrative appeals.

42 CFR 431.1004 (Eligibility Verification System)

This regulation requires states to maintain eligibility verification systems including electronic verification of:

  • Income (IRS, Social Security Administration)
  • Citizenship and identity (SSA)
  • Immigration status (Department of Homeland Security SAVE system)
  • Other federal data sources

PERM reviews include compliance with verification system requirements.

42 CFR 435.940-960 (Verification of eligibility)

42 CFR 435.940-960 establishes the substantive verification requirements for eligibility determinations, covering general verification standards, information sharing among federal and state agencies, income verification, use of information for verification, verification of non-financial information, and standardized documentation formats. PERM measures whether verification was conducted in accordance with these requirements.

CMS PERM rules and guidance

CMS PERM Final Rule

The PERM Final Rule has been updated multiple times since original promulgation, with refinements addressing measurement methodology, ACA alignment for Medicaid, CHIP, and Marketplace eligibility integration, coordination with the federal improper payments framework, and ongoing reporting improvements.

CMS PERM Manual

The PERM Manual provides operational guidance for PERM cycle implementation including:

  • Sample size requirements by state and component
  • Case selection methodology
  • Review element specifications by review type
  • Error classification standards
  • Findings disposition procedures
  • State-CMS coordination protocols

CMS MEQC Manual

The MEQC Manual provides operational guidance for state MEQC operations including:

  • Pilot project design requirements
  • Active and negative case review methodology
  • Reporting templates
  • Coordination with PERM cycle

CMS State Medicaid Director Letters

Various State Medicaid Director Letters provide additional guidance on PERM and MEQC operations including methodology updates, coordination with other program integrity activities, and lessons from prior PERM cycles.

PERM mechanics

Three-year cycle

Each state is on a three-year PERM cycle. In a given year, CMS conducts PERM in approximately one-third of states. For example, if Georgia is in PERM cycle year N:

  • Cycle year N: CMS conducts PERM in Georgia (full federal review)
  • Cycle years N+1 and N+2: Georgia operates MEQC (state-operated review)
  • Cycle year N+3: Next CMS PERM in Georgia

This rotation ensures that one-third of states are under PERM in any given year, with all states subject to MEQC in their off-cycle years.

Three components of PERM

PERM measures three components separately:

Fee-for-service (FFS) payment accuracy. A sample of Medicaid fee-for-service claims is reviewed for proper payment, including coverage, medical necessity, provider eligibility, recipient eligibility at the date of service, and payment amount accuracy.

Managed care payment accuracy. A sample of Medicaid managed care capitation payments is reviewed for proper payment, including the capitation amount, rate cell assignment accuracy, recipient eligibility and enrollment at the capitation date, and managed care plan eligibility.

Eligibility determination accuracy. A sample of eligibility determinations is reviewed for proper eligibility, income calculation, citizenship and immigration verification, and overall determination accuracy.

Sample size and methodology

Sample sizes are designed to produce statistically valid state-level error rates. The CMS PERM contractor (operating under CMS direction) draws samples from state data, requests case files and supporting documentation, conducts review against federal standards, and reports findings to CMS and the state.

Sample sizes vary by state size and PERM component. Larger states have larger samples; smaller states have proportionally smaller samples calibrated to produce statistically reliable rates.

Review elements for eligibility determinations

For eligibility determinations, PERM review checks:

  • Was the applicant categorically eligible (e.g., child, parent, pregnant, aged, blind, disabled)?
  • Was the household composition correctly determined?
  • Was income calculated correctly under MAGI rules (for MAGI-based eligibility groups) or non-MAGI rules (for aged, blind, disabled eligibility)?
  • Were assets correctly assessed for non-MAGI groups?
  • Was citizenship verified through the Social Security Administration?
  • Was immigration status verified through the DHS SAVE system for non-citizens?
  • Was the eligibility decision based on accurate, complete information?
  • Was the verification documentation maintained appropriately?

Review elements for FFS payments

For FFS payments, PERM review checks:

  • Were services covered under the Medicaid State Plan?
  • Were services medically necessary?
  • Was the provider eligible and properly enrolled?
  • Was the recipient eligible at the date of service?
  • Was the payment amount correct given the applicable fee schedule and coding?

Review elements for managed care payments

For managed care payments, PERM review checks:

  • Was the capitation amount correct given the rate cell assignment?
  • Was the recipient eligible and enrolled with the correct managed care plan at the capitation date?
  • Was the rate cell assignment correct based on the recipient's demographic and eligibility characteristics?
  • Was the managed care plan properly contracted and eligible to receive capitation?

Error classification

Errors are classified by type:

  • Eligibility errors. The recipient should not have been eligible at the time of determination or service.
  • Payment errors. The payment amount was incorrect (overpayment or underpayment).
  • Verification errors. Verification was not properly conducted (e.g., income not electronically verified when required, citizenship not verified through SSA).
  • Documentation errors. Insufficient documentation supports the decision (the determination may have been correct but the supporting documentation is inadequate).

Error rate calculation

State error rate is calculated as the dollar value of errors divided by the dollar value of payments reviewed. Both state-specific and national error rates are reported.

National PERM error rates inform federal policy and corrective action requirements. State rates above tolerance can trigger heightened oversight, mandatory corrective action plans, and (in rare cases) federal financial recovery actions.

MEQC mechanics

Pilot design

States design MEQC pilots focused on areas of state-specific concern. Pilots are submitted to CMS for approval and must operate within federal parameters defined by 42 CFR 431.800-810.

Examples of pilot focus areas that Georgia or other states might select:

  • MAGI eligibility for specific populations (children, parents, pregnant women)
  • Non-MAGI eligibility for aged, blind, and disabled populations
  • Verification compliance for specific eligibility groups
  • Ex parte renewal accuracy under 42 CFR 435.916
  • Specific eligibility programs (Katie Beckett, family planning waiver, breast and cervical cancer)

Active case review methodology

Active case review samples active Medicaid beneficiaries from a defined sampling frame (often the active enrollment file) and verifies that eligibility was correctly determined at the time of initial determination and remains correct at the time of review.

For each sampled case, the reviewer:

  • Pulls the case file from the eligibility system
  • Reviews the determination against federal eligibility rules
  • Verifies income calculation accuracy
  • Reviews citizenship and immigration verification
  • Documents findings

If errors are identified, the case is referred for corrective action including potential reverification, eligibility correction, or termination.

Negative case review methodology

Negative case review samples denied or terminated applications from a defined sampling frame (often the application denial or termination file) and verifies that the denial or termination was correctly determined.

For each sampled case, the reviewer:

  • Pulls the application or termination file
  • Reviews the denial or termination reason against federal eligibility rules
  • Determines whether the denial or termination was correctly applied
  • Documents findings

If errors are identified, the case is referred for corrective action including potential reinstatement of eligibility, restoration of coverage, and notification to the affected family.

Reporting

The state submits MEQC reports to CMS on specified timelines. Reports include:

  • Sample selection methodology
  • Findings by error category
  • Patterns or systemic issues identified
  • Corrective action recommendations

Corrective action plans

When PERM identifies errors above tolerance or systemic issues, CMS requires the state to develop and implement a corrective action plan (CAP).

CAP elements

A corrective action plan includes:

  • Root cause analysis of identified errors
  • Specific corrective actions to address each root cause
  • Implementation timeline with milestones
  • Measurement of CAP effectiveness
  • Reporting to CMS on CAP progress

Examples of corrective actions

Corrective actions typically address operational, technological, or policy root causes:

  • Updates to eligibility worker training to address common error patterns
  • Changes to Georgia Gateway system workflows to prevent recurring errors
  • Updated verification procedures to ensure compliance with federal standards
  • Enhanced supervisory review of complex or high-risk cases
  • Updated policy guidance to DFCS county offices clarifying federal requirements
  • System enhancements to integrate additional electronic verification sources

CAP effectiveness measurement

CMS measures CAP effectiveness by tracking error rates in subsequent PERM cycles. Persistent or worsening error rates trigger heightened oversight; sustained improvement reflects effective corrective action.

Financial implications

Federal financial participation

Section 1903(u) authorizes CMS to disallow federal financial participation for improper payments above tolerance. In practice, large recoveries are rare because:

  • States typically implement effective corrective action
  • Statistical sampling error rates rather than universal case-level reviews are the basis for measurement
  • CMS prefers improvement over punitive recovery

However, the possibility of disallowance creates strong incentive for accuracy.

State liability

When specific errors are identified through PERM, the state must:

  • Identify the specific improper payments
  • Reconcile the state and federal share
  • Potentially recoup from beneficiaries (in very limited circumstances, typically only for eligibility fraud) or from providers (more common for payment errors)

Reporting under PIIA

The Payment Integrity Information Act of 2019 requires federal agencies to report on improper payments in covered programs. CMS reports Medicaid improper payment rates to Congress and the public, providing transparency and accountability.

Georgia implementation

DCH coordination

The Department of Community Health coordinates PERM and MEQC operations including:

  • Sample selection coordination with CMS PERM contractor
  • Document production for federal review
  • Coordination with CMS PERM contractor throughout the review cycle
  • MEQC pilot design and operation
  • Corrective action plan development and implementation
  • Coordination with DFCS on findings and corrective action

DFCS eligibility operations

The Division of Family and Children Services (DFCS) within the Department of Human Services conducts most eligibility determinations at the county level. PERM and MEQC reviews evaluate:

  • DFCS county-level eligibility worker decision accuracy
  • Georgia Gateway system performance
  • Verification procedures at the county level
  • Documentation standards
  • Supervisory review effectiveness
  • Customer service interactions during application and renewal

DFCS operates eligibility offices in every Georgia county. Operational consistency across counties is a continuous focus for DCH and DFCS, and PERM findings can highlight inconsistencies that require corrective attention.

Georgia Gateway eligibility system

Georgia Gateway (gateway.ga.gov) is the integrated eligibility system used for Medicaid, SNAP, TANF, and other public programs in Georgia. PERM and MEQC reviews evaluate Gateway:

  • System logic for eligibility determinations
  • Electronic verification integration with federal data sources
  • Documentation systems and audit trails
  • User interface effectiveness for applicants and renewals
  • Worker interface effectiveness for eligibility staff
  • Data quality and reporting

Gateway is the central technology infrastructure underneath Georgia Medicaid eligibility, so Gateway system performance has direct implications for PERM accuracy.

DCH Office of Audits and Compliance

The Office of Audits and Compliance within DCH supports PERM and MEQC functions:

  • Internal audits of eligibility quality
  • Coordination with CMS PERM contractor during PERM cycle years
  • MEQC pilot operations during off-cycle years
  • Corrective action plan development and implementation
  • Coordination with DFCS on findings and remediation

DCH Office of Program Integrity

The Office of Program Integrity coordinates with PERM and MEQC on:

  • Fraud, waste, and abuse identification (distinct from but coordinated with PERM)
  • Program integrity audits
  • Provider screening and enrollment accuracy
  • Sanctions and recoveries

While PERM focuses on accuracy measurement and MEQC focuses on quality control, the Office of Program Integrity focuses on fraud and abuse, which are related but distinct concerns.

CMS Region IV oversight

CMS Region IV (based in Atlanta) oversees Georgia's PERM cycle:

  • Schedules Georgia's PERM cycle years within the national rotation
  • Coordinates with the PERM contractor for Georgia's review
  • Reviews MEQC pilot designs for federal approval
  • Reviews corrective action plans for federal approval
  • Provides technical assistance throughout the cycle

Region IV is the primary federal point of contact for Georgia's PERM and MEQC operations.

Coordination with other program integrity activities

PERM and MEQC complement but do not replace other program integrity activities:

Medicaid Integrity Program (MIP)

The federal Medicaid Integrity Program under Section 1936 of the Social Security Act conducts provider-focused program integrity audits separate from PERM. The MIP works through Medicaid Integrity Contractors (MICs) that audit providers, identify recoveries, and refer suspected fraud for prosecution.

Medicaid Fraud Control Units (MFCU)

MFCUs under Section 1903(q) investigate Medicaid provider fraud and abuse. The Georgia MFCU operates within the Attorney General's office and investigates allegations of provider fraud separate from PERM and MEQC's payment and eligibility accuracy focus.

State auditor reviews

The Georgia Auditor of Public Accounts conducts state-level audits of Medicaid program operations as part of broader state government auditing. These audits provide additional oversight separate from PERM and MEQC.

CMS Quality Improvement Organization (QIO)

QIOs conduct utilization review and quality improvement separate from PERM. The QIO for Georgia provides clinical quality oversight distinct from the eligibility and payment accuracy focus of PERM.

Encounter data validation

DCH validates managed care encounter data submitted by Georgia's Care Management Organizations (CMOs). Encounter data validation supports PERM managed care payment accuracy measurement but is also independently important for capitation rate-setting and program integrity.

Practical implications for Georgia families

Eligibility quality control is usually invisible

In normal eligibility processing, PERM and MEQC operate behind the scenes. A family applying for Medicaid coverage at gateway.ga.gov or working with a DFCS eligibility worker does not directly experience PERM or MEQC. The family receives an eligibility determination based on the eligibility rules applied through standard processing.

Errors identified through PERM can affect specific families

When PERM identifies an eligibility error in a specific case, the state may:

  • Issue a corrected eligibility determination
  • Recover overpayments from providers in limited circumstances
  • Restore eligibility for erroneous denials
  • Provide notice to the affected family about the correction

Negative case review is particularly important for families who may have been wrongly denied or terminated. When MEQC identifies an erroneous denial, the family typically receives notice and an opportunity to be restored to eligibility.

Corrective action plans shape day-to-day eligibility operations

PERM findings translate into operational changes at DFCS, Gateway, and DCH that affect:

  • How verification is conducted (electronic vs paper)
  • How renewals are processed (ex parte vs renewal forms)
  • How disputed cases are handled (escalation and supervisory review)
  • How Gateway system logic operates (workflow rules and validation)
  • How worker training is delivered (focus areas and frequency)

These operational changes are usually invisible to individual families but cumulatively reshape the experience of applying for and maintaining Medicaid coverage in Georgia.

Verification requirements affect application experience

PERM measurement of verification compliance creates strong incentive for thorough verification. Families may experience:

  • Requests for documentation (income, identity, citizenship, immigration status)
  • Electronic verification when possible (typically invisible to the family but reducing burden)
  • Hand-offs between DFCS and other agencies (when DFCS verifies with SSA or DHS)
  • Time required for verification before eligibility can be approved

The balance between accuracy (preventing erroneous eligibility) and accessibility (minimizing burden on families) is a continuous policy theme.

Appeal rights remain available

Regardless of PERM and MEQC, families retain the right to appeal eligibility determinations through the fair hearing process under 42 CFR Part 431 Subpart E. Appeals are independent of PERM and MEQC but provide families with recourse when they disagree with eligibility decisions.

Pending policy debates

Burden vs accuracy tradeoff

Verification requirements designed to improve PERM accuracy can also create burden on families and eligibility workers. The balance between accuracy and accessibility is a continuous policy discussion at federal and state levels.

Ex parte renewal and PERM

Federal regulations under 42 CFR 435.916 require ex parte renewal when possible (using electronically available information rather than requiring families to submit renewal forms). PERM measures whether ex parte renewals were correctly conducted. The interaction between ex parte simplification (which reduces family burden) and PERM accuracy (which requires verification compliance) is an active policy area.

Managed care PERM methodology

PERM methodology for managed care payment accuracy has evolved as managed care has grown. The complexity of capitation accuracy measurement (which depends on rate cell assignment, enrollment timing, and managed care contract terms) is an ongoing methodological challenge.

Eligibility group complexity

Medicaid includes many eligibility groups (MAGI groups, non-MAGI ABD groups, Katie Beckett, family planning, breast and cervical cancer, Medicare Savings Programs, and others) with different income, asset, and categorical requirements. PERM methodology must accommodate this complexity, which creates ongoing methodology refinement needs.

Post-PHE unwinding lessons

The 2023-2024 unwinding of pandemic-era continuous coverage produced lessons about renewal accuracy and verification that PERM methodology and MEQC pilots are continuing to integrate. The unwinding stress-tested state eligibility infrastructure and revealed both strengths and weaknesses in Georgia's approach.

MAGI methodology refinement

The Modified Adjusted Gross Income (MAGI) methodology for non-disabled, non-elderly populations under ACA is complex, particularly for households with self-employment income, multiple income sources, or non-standard household structures. PERM measurement of MAGI accuracy reveals methodology refinement needs.

Worked examples

Example 1: DCH PERM cycle year for Georgia

Georgia is selected for PERM cycle year 2026 (illustrative). During this year:

Months 1-2 (Q1 2026). CMS PERM contractor coordinates with DCH on the cycle plan, sample selection methodology, and operational logistics.

Months 3-6 (Q2 2026). Sample is drawn from Georgia Medicaid data covering all three components (FFS, managed care, eligibility). The sample size is calibrated to produce statistically valid state-level error rates for each component.

Months 4-10. PERM contractor requests case files from DCH and DFCS. DCH and DFCS produce documentation for each sampled case including the eligibility application, verification documentation, system audit trails, and supporting documents.

Months 6-12. PERM contractor reviews each case against federal standards. Findings are tentatively classified into:

  • No error
  • Eligibility error
  • Payment error
  • Verification error
  • Documentation error

Months 11-15. Tentative findings are shared with Georgia. Georgia has opportunity to provide additional documentation, dispute findings, and seek clarification.

Month 15-18. Final findings are determined. Georgia's PERM error rate is calculated and reported.

Month 18+. If error rate exceeds tolerance, Georgia develops corrective action plan with CMS oversight.

Example 2: DFCS county eligibility worker reviewed under PERM

Sarah is a DFCS eligibility worker in Fulton County. During Georgia's PERM cycle year, several of her processed applications are selected for review.

Application 1: Tonia 28, family Medicaid. Tonia applied for Medicaid for herself and her two children. Sarah reviewed Tonia's application, verified income electronically through IRS data, confirmed citizenship through SSA, and approved eligibility for Tonia and the children.

PERM review of this application checks:

  • Was the MAGI income calculation correct?
  • Was electronic verification properly conducted?
  • Was citizenship verified through SSA?
  • Was household composition correctly determined?
  • Were the eligibility decisions for Tonia and the children correctly determined?

The reviewer finds that Sarah properly verified income, citizenship, and household composition, and the eligibility decisions were correctly determined. No error.

Application 2: Marcus 52, ABD adult. Marcus applied for Medicaid as an aged-blind-disabled adult. Sarah reviewed his SSI award letter, his income, and his medical eligibility, and approved eligibility.

PERM review of this application checks:

  • Was the SSI award properly the basis for Medicaid categorical eligibility?
  • Was income calculated correctly under non-MAGI rules?
  • Were resources (assets) correctly assessed?
  • Was the eligibility decision correctly determined?

The reviewer finds that Sarah properly verified the SSI award and approved eligibility, but did not adequately document the resource assessment. This is classified as a documentation error. The eligibility determination is correct but documentation is inadequate.

Application 3: Jamil 8, Katie Beckett. Jamil's family applied for Katie Beckett Medicaid for Jamil based on his pediatric medical complexity. Sarah reviewed the medical documentation, verified Jamil's residency, and approved Katie Beckett eligibility.

PERM review checks:

  • Was Katie Beckett categorical eligibility correctly applied?
  • Was income calculation correct (Katie Beckett uses child-only income)?
  • Was medical eligibility correctly determined?

The reviewer finds the determination correct. No error.

The PERM review aggregates findings across all reviewed cases to calculate Georgia's eligibility error rate.

Example 3: MAGI eligibility verification error identified

Tasha is a 22-year-old single mother in rural southeast Georgia who applies for Medicaid for herself and her infant son. She works part-time at a retail job earning approximately $1,800 per month.

The DFCS eligibility worker processes Tasha's application:

  • Tasha's reported income: $1,800 monthly
  • IRS electronic verification: Returns Tasha's prior year income only ($21,600 annual, consistent with current employment)
  • The worker accepts the IRS data without further investigation
  • Eligibility is approved for both Tasha and the infant son

During PERM review:

  • The reviewer notes that Tasha's current monthly income of $1,800 multiplied by 12 = $21,600
  • However, Tasha's current employer is different from her prior year employer, and IRS data only reflects the prior year
  • Federal verification requirements under 42 CFR 435.948 require verification of current income, not just prior year income
  • The proper verification would have been to electronically verify current income through the SSA quarterly wage data, the National Directory of New Hires, or to request paystubs from Tasha

The reviewer classifies this as a verification error. The eligibility decision may have been correct (Tasha's income appears to be within MAGI limits for her household), but the verification was inadequate.

This verification error contributes to Georgia's PERM error rate. As part of corrective action, DCH may require:

  • Updated verification procedures requiring current income verification
  • Worker training on current vs prior year verification distinction
  • Gateway system updates to prompt workers to verify current income

Example 4: Active vs negative case review under MEQC

Georgia is in an MEQC year (off-cycle PERM year). DCH designs an MEQC pilot focused on ex parte renewal accuracy.

Active case review sample. DCH samples 200 cases where ex parte renewal was used to extend eligibility for another 12 months. Reviewers verify:

  • Was the recipient still eligible at the time of ex parte renewal?
  • Was the electronic verification used for ex parte renewal accurate?
  • Was the determination correctly extended for the renewal period?

Findings: 95% of cases were properly extended; 5% had issues including outdated electronic verification or undocumented eligibility changes.

Negative case review sample. DCH samples 200 cases where ex parte renewal failed (was attempted but the system could not auto-renew) and the case was sent to manual renewal, ultimately resulting in termination because the family did not return the renewal packet.

Reviewers verify:

  • Was ex parte renewal correctly attempted before manual renewal was required?
  • Was the manual renewal packet sent to the correct address?
  • Was the termination based on non-return of the packet correctly applied?

Findings: 88% of terminations were properly applied; 12% had issues including:

  • Ex parte renewal was not attempted when it could have been
  • Renewal packets were sent to outdated addresses
  • Terminations were applied before the appropriate due date

For the cases with errors, DCH coordinates corrective action including:

  • Reinstating eligibility for families wrongly terminated
  • Updating processes to ensure ex parte renewal is attempted when possible
  • Improving address validation before sending renewal packets

This MEQC pilot illustrates how state-focused quality control can identify and address specific operational issues that broader PERM review might not focus on.

Example 5: Corrective action plan implementation

Following Georgia's PERM cycle, the PERM contractor finds that Georgia's MAGI eligibility error rate is above the federal tolerance. CMS requires Georgia to develop a corrective action plan.

DCH conducts root cause analysis with the PERM contractor and identifies several factors:

  • Inconsistent application of current vs prior year income verification
  • Limited use of available electronic verification sources for self-employment income
  • Variable documentation practices across DFCS county offices
  • Gateway system workflow inconsistencies

DCH develops a corrective action plan including:

Action 1: Updated verification policy. DCH issues clarified verification policy emphasizing current income verification requirements, with specific guidance for common scenarios (new employment, self-employment, multiple income sources).

Action 2: Enhanced electronic verification. DCH works with Gateway technology partners to integrate additional electronic verification sources including more frequent SSA quarterly wage data and direct integration with the National Directory of New Hires for current income.

Action 3: Worker training. DCH coordinates with DFCS to deliver mandatory training for all eligibility workers on the updated verification policy and use of new electronic verification sources.

Action 4: Supervisory review. DCH requires DFCS to implement enhanced supervisory review of MAGI eligibility determinations for cases meeting risk criteria (e.g., new employment within last 60 days, self-employment income, mixed earned and unearned income).

Action 5: Quality monitoring. DCH coordinates with DFCS to establish ongoing quality monitoring including monthly review samples and quarterly reporting to track error rates between PERM cycles.

CMS reviews and approves the corrective action plan. DCH implements actions on the established timeline. CMS monitors implementation through quarterly reporting and the next PERM cycle measures effectiveness.

Example 6: Member impact when eligibility error is corrected

Maria is a 34-year-old single mother in Augusta whose application for family Medicaid was wrongly denied because the DFCS worker miscalculated her household income (incorrectly including her grandmother's income, when the grandmother was not in Maria's MAGI household).

Maria initially:

  • Receives a denial notice
  • Is unable to access Medicaid for herself or her two children
  • Pays out-of-pocket for some pediatric care
  • Foregoes her own primary care due to cost

Through MEQC negative case review, Maria's application is sampled. The reviewer determines that the denial was incorrect because the MAGI household calculation should have excluded the grandmother.

DCH coordinates with DFCS to:

  • Reinstate eligibility for Maria and her two children retroactively to the original application date
  • Provide notice to Maria of the eligibility correction
  • Coordinate with managed care plan enrollment for the family
  • Address any retroactive medical claims from the period when Maria thought she was uninsured

This negative case review correction provides direct benefit to Maria's family. It also informs DCH and DFCS about a pattern (MAGI household composition errors) that may require broader corrective action through worker training and Gateway system workflow updates.

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Frequently asked questions

What is PERM?

The Payment Error Rate Measurement (PERM) program is the federal CMS-operated program that audits each state's Medicaid and CHIP eligibility and payment accuracy on a rotating three-year cycle. PERM is established under Section 1903(u) of the Social Security Act and the Improper Payments laws including the Payment Integrity Information Act of 2019. PERM measures three components separately: fee-for-service payment accuracy, managed care payment accuracy, and eligibility determination accuracy.

What is MEQC?

The Medicaid Eligibility Quality Control (MEQC) program is the state-operated pilot quality control program that states must operate during the two off-cycle years between PERM cycles. MEQC is established under 42 CFR 431.800. States design MEQC pilots focused on areas of state-specific concern, with CMS approval. MEQC uses active case review (sampling active beneficiaries) and negative case review (sampling denied or terminated applications) to identify error patterns.

How often is Georgia subject to PERM?

Every three years. CMS rotates PERM across all 50 states and the District of Columbia, with approximately one-third of states under PERM in any given year. Georgia is on its rotation cycle; the specific cycle year is set by CMS Region IV.

What does PERM review?

PERM reviews three components: fee-for-service payment accuracy (whether claims were properly paid), managed care payment accuracy (whether capitation payments were properly made), and eligibility determination accuracy (whether eligibility was correctly determined). For each component, samples are drawn and reviewed against federal standards.

What are active and negative case reviews?

Active case review samples active Medicaid beneficiaries to determine if eligibility was correctly determined and remains correct. Active case review identifies over-enrollment errors (people receiving coverage who should not be eligible). Negative case review samples denied or terminated applications to determine if denials were correctly applied. Negative case review identifies under-enrollment errors (eligible people who were wrongly denied or terminated).

What is a corrective action plan?

When PERM identifies errors above federal tolerance or systemic issues, CMS requires the state to develop a corrective action plan (CAP). The CAP includes root cause analysis, specific corrective actions, implementation timeline, and effectiveness measurement. Corrective actions typically include worker training, system updates, policy clarification, and enhanced supervisory review.

Can my family be affected by PERM?

In most cases, no. PERM is a sampling and accuracy measurement program; most families never have their cases sampled. If your case is sampled, you would not typically be directly contacted because the review is based on documentation. However, if PERM or MEQC identifies an error affecting your eligibility, you may receive notice of correction.

What happens if Georgia's error rate is above tolerance?

CMS requires the state to develop and implement a corrective action plan. In rare cases, CMS may disallow federal financial participation for improper payments, requiring the state to bear the full cost. In practice, corrective action plans are the normal response; large recoveries are uncommon.

Who conducts PERM in Georgia?

The federal CMS PERM contractor (selected through federal procurement) conducts the actual case-by-case review. DCH coordinates with the PERM contractor, produces case files from DCH and DFCS, and works through findings disposition. CMS Region IV (Atlanta) provides federal oversight.

How does PERM differ from fraud, waste, and abuse investigation?

PERM measures accuracy of eligibility determinations and payments through sampling; fraud, waste, and abuse (FWA) investigation focuses on intentional misconduct or systematic abuse. PERM findings are often errors (incorrect application of rules), while FWA findings are often intentional misconduct. Both are important but distinct.

How does verification compliance fit into PERM?

PERM measures whether verification was properly conducted in accordance with federal verification requirements, including electronic verification of income (IRS, SSA), citizenship (SSA), and immigration status (DHS SAVE). PERM verification errors occur when required verification was not conducted or was conducted improperly.

How does ex parte renewal interact with PERM?

Federal regulations under 42 CFR 435.916 require ex parte renewal when possible. PERM measures whether ex parte renewals were correctly conducted, including whether the electronic verification was accurate at the time of renewal and whether the determination was properly extended. Ex parte renewal accuracy is a continuous area of focus for both PERM and MEQC.

What is the role of Georgia Gateway?

Georgia Gateway (gateway.ga.gov) is the integrated eligibility system used for Medicaid, SNAP, TANF, and other public programs. Gateway processes most eligibility determinations and maintains the system audit trails. PERM and MEQC reviews evaluate Gateway system performance including determination logic, electronic verification integration, and documentation systems.

What is the role of DFCS?

The Division of Family and Children Services (DFCS) within the Department of Human Services conducts most eligibility determinations at the county level. DFCS workers process applications and renewals using Georgia Gateway. PERM and MEQC reviews evaluate DFCS worker decisions, county-level operations, supervisory review effectiveness, and customer service.

What does the Office of Audits and Compliance do?

The DCH Office of Audits and Compliance supports PERM and MEQC functions including internal eligibility quality audits, coordination with the CMS PERM contractor, MEQC pilot operations, and corrective action plan development. The Office of Audits and Compliance is one of the central DCH functions for accountability and compliance.

PERM findings primarily affect state operations rather than individual eligibility determinations, so individual appeals to PERM findings are not typical. However, if a specific eligibility determination is corrected based on PERM or MEQC, the affected family retains the right to dispute the corrected determination through the fair hearing process under 42 CFR Part 431 Subpart E.

How does Section 1903(u) work?

Section 1903(u) of the Social Security Act authorizes CMS to measure improper Medicaid payments and to disallow federal financial participation for improper payments above tolerance. The implementing regulations (42 CFR 431.800-810 and the PERM Final Rule) establish operational details. Section 1903(u) is the central statutory authority for the PERM and MEQC framework.

What is the Payment Integrity Information Act?

The Payment Integrity Information Act (PIIA) consolidates the federal improper payments framework, replacing the prior IPIA, IPERA, and IPERIA frameworks. PIIA requires federal agencies to measure and report on improper payments in covered programs, including Medicaid. PIIA governs current PERM measurement and federal reporting requirements.

How can I learn what Georgia's error rate is?

CMS publishes Medicaid PERM error rates publicly. Annual Department of Health and Human Services reports on improper payments include Medicaid PERM rates. National rates are also reported. State-specific rates can be found through CMS publications and PIIA reporting.

Where can I get help if I think my Medicaid was wrongly denied?

Contact DFCS Customer Service or visit gateway.ga.gov to review your application. Request a fair hearing if you disagree with an eligibility determination. For legal assistance, contact the Georgia Legal Services Program. For general Medicaid coverage questions, contact DCH Member Services. Find personalized help at brevy.com. :::

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Contacts and resources

Final notes

The PERM and MEQC framework is one of the most important federal accountability mechanisms in the Medicaid program. By requiring continuous measurement of eligibility and payment accuracy across all states, the framework ensures that the systems determining who receives coverage and how providers are paid are held to measured federal standards.

For Georgia families, the framework is mostly invisible during normal eligibility processing. But the corrective action plans developed in response to PERM findings reshape how DFCS, Georgia Gateway, and DCH operate the eligibility infrastructure that determines whether millions of Georgia residents receive Medicaid coverage. Verification requirements designed to support PERM accuracy create the request-for-documentation experiences families have during applications and renewals. Operational changes in response to PERM findings affect how disputed cases are escalated, how supervisory review is conducted, and how worker training is delivered.

For advocates and policy stakeholders, the framework provides public data on state error rates that inform federal policy, state advocacy, and ongoing improvement efforts. The continuous tension between accessibility (reducing burden on families) and accuracy (preventing erroneous determinations) is informed by PERM and MEQC findings and remains a continuous policy theme.

Find personalized help navigating Georgia Medicaid eligibility quality control at brevy.com.

BC

Brevy Care Team

Expert eldercare guidance from Brevy's team of healthcare professionals and researchers.