Editorial Note on Part 431
Editorial Note: Nomenclature changes to part 431 appear at 75 FR 48852, Aug. 11, 2010.

§ 431.812 Review procedures. ( a ) *General requirements.* Each State is required to conduct a MEQC pilot during the 2 years between required PERM cycles in accordance with the approved pilot planning document specified in § 431.814, as well as other instructions established by CMS. The agency and personnel responsible for the development, direction, implementation, and evaluation of the MEQC reviews and associated activities, must be functionally and physically separate from the State agencies and personnel that are responsible for Medicaid and CHIP policy and operations, including eligibility determinations.
( b ) *Active case reviews.* ( 1 ) The State must review all active cases selected from the universe of cases, as established in the State's approved MEQC pilot planning document, under § 431.814 to determine if the cases were eligible for services, as well as to identify deficiencies in processing subject to corrective actions.
( 2 ) The State must select and review, at a minimum, 400 active cases in total from the Medicaid and CHIP universe. ( i ) The State must review at least 200 Medicaid cases.
( ii ) The State will identify in the pilot planning document at § 431.814 the sample size per program.
( iii ) The State may sample more than 400 cases.
( 3 ) The State may propose to focus the active case reviews on recent changes to eligibility policies and processes, areas where the state suspects vulnerabilities, or proven error prone areas. ( i ) Unless otherwise directed by CMS, the State must propose its active case review approach in the pilot planning document described at § 431.814 or perform a comprehensive review.
( ii ) When the State has a PERM eligibility improper payment rate that exceeds the 3 percent national standard for two consecutive PERM cycles, the State must follow CMS direction for its active case reviews. CMS guidance will be provided to any state meeting this criteria.
( c ) *Negative case reviews.* ( 1 ) As established in the State's approved MEQC pilot planning document under § 431.814, the State must review negative cases selected from the State's universe of cases that are denied or terminated in the review month to determine if the denial, or termination, was correct, as well as to identify deficiencies in processing subject to corrective actions.
( 2 ) The State must review, at a minimum, 200 negative cases from Medicaid and 200 negative cases from CHIP. ( i ) The State may sample more than 200 cases from Medicaid and/or more than 200 cases from CHIP.
( ii ) [Reserved]
( d ) *Error definition.* ( 1 ) An active case error is an error resulting from the State's improper application of Federal rules and the State's documented policies and procedures that causes a beneficiary to be determined eligible when he or she is ineligible for Medicaid or CHIP, causes a beneficiary to be determined eligible for the incorrect type of assistance, or when a determination did not occur timely or cannot be verified.
( 2 ) Negative case errors are errors, based on the State's documented policies and procedures, resulting from either of the following: ( i ) Applications for Medicaid or CHIP that are improperly denied by the State.
( ii ) Existing cases that are improperly terminated from Medicaid or CHIP by the State.
( e ) *Active case payment reviews.* In accordance with instructions established by CMS, the State must also conduct payment reviews to identify payments for active case errors, as well as identify the individual's understated or overstated liability, and report payment findings as specified in § 431.816.
[82 FR 31183, July 5, 2017]