CMS-301 Supporting Statement Part A

Supporting Statement for the Certification of Medicaid
Eligibility Quality Control Payment Error Rates and Supporting
Regulations Contained in 42 CFR 431.816
CMS-301
A.

Background

MEQC is operated by the State Title XIX agency to monitor and
improve the administration of its Medicaid system. The MEQC
system is based on monthly State reviews of Medicaid and
Medicaid expansion under Title XXI cases by States performing
the traditional sampling process identified through
statistically reliable statewide samples of cases selected from
the eligibility files. These reviews are conducted to determine
whether or not the sampled cases meet applicable State Title XIX
or XXI eligibility requirements when applicable. The reviews
are also used to assess beneficiary liability, if any, and to
determine the amounts paid to provide Medicaid services for
these cases.
In the MEQC system, sampling is the only practical method of
validating eligibility of the total caseload and determining the
dollar value of eligibility liability errors. Any attempt to
make such validations and determinations by reviewing every case
would be an enormous and unwieldy undertaking. During each 6month review period States are required to collect data on
eligibility payment error dollars and paid claims dollars for
each case in the sample. States must also identify cases for
which a review cannot be conducted. At the conclusion of the 6month review period, States must complete the Payment Error Rate
form which contains aggregate data on sample size, number of
sampled cases dropped, and number of sampled cases listed in
error. These data, along with the calculated eligibility
payment error rate and lower limit are certified by the State
Medicaid Director (or designee) and submitted to the Regional
Office.
Under the MEQC program, States can operate the traditional MEQC
sample-and-review program or States can elect to study targeted
areas of eligibility or program administration that are errorprone or that will help to prevent or reduce erroneous or
misspent funds. These alternative MEQC programs are called MEQC

pilots. Some States operate alternative MEQC programs as part
of their research and demonstration waivers under Section 1115
of the Social Security Act. The majority of States operate some
form of alternative MEQC program. However, since the number of
States that conduct traditional MEQC programs and alternative
MEQC programs can fluctuate at any time, we have assessed the
burden and costs associated with submitting the Payment Error
Rate form as if all States were reporting this information.
A letter to the Associate Regional Administrators dated October
2, 2003 from the Director of Finance, Systems and Budget Group
at CMS, implemented a summary form that can be filled out in
addition to or in lieu of the original CMS 301 form that only
contained the error rates. The summary form allows States to
write a discussion of the type of review, e.g. traditional or
pilot study and detailed findings for cases found to be in
error.
The Children’s Health Insurance Program Reauthorization Act
(CHIPRA) was enacted February 4, 2009. Sections 203 and 601 of
the CHIPRA relate to MEQC.
Section 203 of the CHIPRA establishes an error rate measurement
with respect to the enrollment of children under the express
lane eligibility option. The law directs States not to include
children enrolled using the express lane eligibility option in
data or samples used for purposes of complying with the MEQC
requirements.
Section 601 of the CHIPRA, among other things, requires a new
final rule for the Payment Error Rate Measurement (PERM) program
and aims to harmonize the PERM and MEQC programs and provides
States with the option to apply PERM data resulting from its
eligibility reviews for meeting MEQC requirements and vice
versa, with certain conditions.
B.

Justification

1.

Need and Legal Basis

The authority for requiring the submission of this information
is Section 1903(u) of the Social Security Act, which requires
that States operate their MEQC programs in accordance with
policies, sampling methodologies, review procedures, and

reporting forms and requirements specified in MEQC manuals
issued by CMS unless CMS has approved an alternate method of
administering all or part of the program, e.g. pilot studies.
The requirements of the MEQC program are detailed in 42 CFR
431.800 through 431.865.
The collection of information is also necessary to implement
provisions from the Children’s Health Insurance Program
Reauthorization Act of 2009 (CHIPRA) (Pub. L. 111-3) with regard
to the Medicaid Eligibility Quality Control (MEQC) and Payment
Error Rate Measurement (PERM) programs.
2.

Information Users

State agencies are required to submit the Payment Error Rate
form to their respective CMS Regional Offices. Regional Office
staff will review these forms for completeness and will forward
these forms to the Central Office for compilation of error rate
charts for projected quarterly withholdings and/or fiscal
disallowances.
3.

Use of Information Technology

Most States’ Payment Error Rate forms are computer generated.
Therefore, there is a significant reduction in State effort.
4.

Duplication of Similar Information

The Payment Error Rate form is unique to the MEQC program and no
duplication exists.
5.

Small Businesses

The collection of information does not involve small businesses
or other small entities.
6.

Less Frequent Collection

Failure to acquire this certification form will prevent the
Regional Office from effectively monitoring State MEQC payment
error rates.
7.

Special Circumstances

None.

8.

Federal Register Notice/Outside Consultation

The 60-day FR notice published on ____________________.
The MEQC program is discussed at regional and national meetings
of the American Public Health Services Association and other
related groups.
9.

Payments/Gifts to Respondents

There is no provision for any payment or gifts to respondents
associated with this reporting requirement.
10.

Confidentiality

Confidentiality has been assured in accordance with Section
1902(a) (7) of the Social Security Act.
11.

Sensitive Questions

No questions of a sensitive nature are asked.
12.

Burden Estimate (Hours and Wages)

The reporting burden is estimated at 146 hours annually for each
State. There are a maximum of 51 jurisdictions reporting on a
6-month basis. The total annual reporting burden is 7,446
hours. The maximum number of cases sampled by a State for MEQC
is 1,750 and the maximum number of respondents is 51.
1,750 cases x 51 jurisdictions = 89,250 cases annually
1,750 cases per State x 5 minutes to report each case = 8,750
minutes, or approximately 146 hours
146 hours x 51 States = 7,446 annual hours
The annual record keeping burden associated with this data
collection is 9,000 hours. States agree to maintain the sampled
case records for a minimum of 3 years for audit purposes.
The total annual estimated State costs are $710,302.74. For
this estimate, we assume the average State pay is at a GS-12/1
rate of $28.45 per hour. We also assume States require fringe
and overhead cost for conducting the reviews. The fully loaded
rate of pay is estimated at $43.19.

7446 hours + 9,000 hours x $43.19 = $710,302.74.
13.

Capital Costs

There are no capital costs associated with these information
collection requirements.
14.

Cost to Federal Government

As of 2009 2.5 FTEs (assumes that 2,080 hours equals one FTE)
are devoted nationwide (i.e. .25 FTEs per CMS Regional Office)
to MEQC activities. MEQC Regional Office staff review State
sample selection lists to ensure the sample is statistically
valid and that there is no bias in the sample. The CMS Regional
Office staff also collect and review summary findings and error
rates. Assuming that MEQC activities is one-quarter of FTE
efforts and assuming the 2009 GS 12/1 hourly rate, the Federal
cost is $36,985 (520 hours x salary = $14,794 x 2.5 FTEs).
15.

Changes to Burden

We’re assuming that burden has decreased over time for States as
the traditional MEQC process has become more streamline and
findings become available on a monthly basis. The data is
compiled and held until the end of each 6 month period and
reported on the Payment Error Rate form.
Burden will further be adjusted for States that elect to
substitute PERM eligibility data to meet the traditional MEQC
requirement. States would submit PERM summary findings data in
the MEQC Payment Error Rate form format and submit it to their
respective CMS Regional Office. The estimate for PERM reporting
burden is discussed under an already approved OMB control
number: 0938-0994. We are adding 98 hours to this burden
estimate to provide additional time to reformat the PERM summary
data into the MEQC format.
16.

Publication and Tabulation Dates

There are no plans to publish this information collection.
17.

Expiration Date

CMS is not seeking approval to show expiration date for OMB
approval.

18.

Certification Statement

There are no statistical aspects of the certification form.