By Ralph Choate | PERM Insights & Perspectives
Medicaid leaders should test whether an independent reviewer can receive a complete, historically accurate evidence packet within the deadline that governs the request. A record stored somewhere in the organization does not establish that the right reviewer can retrieve it, connect it to the right decision, and confirm when it was submitted.
The Texas proposal makes the response process consequential
Texas published proposed 1 TAC §371.1725 on October 23, 2026. It implements the managed-care expansion of the Recovery Audit Contractor (RAC) program under Texas House Bill 142, enacted in 2025. This is Texas legislation, not the federal H.R. 1 law. The proposal was filed October 9; its earliest possible adoption date is November 22. It is not an effective final rule. [1, 2]
Under subsection (c), requested records would be due within the requested period or 30 calendar days after receipt, whichever is later. Failure to produce them timely could lead to a preliminary technical denial with a final complete-records deadline, followed by a final technical denial and recovery. Subsection (f)(2) limits a final technical-denial appeal to whether the provider received the preliminary notice or timely submitted the records. [1]
For an operations leader, that narrow procedural question is a reason to test the entire response process. The team may need to establish not only what the evidence supports, but also which notice arrived, how it was routed, which files were included, and what the recipient actually received. These are recommended controls, not findings that Texas organizations currently lack them.
Know which decision or payment is under review
The federal Payment Error Rate Measurement (PERM) program and a Texas RAC review do not examine the same payment flow. The Centers for Medicare & Medicaid Services (CMS) PERM Manual, April 2025 edition, excludes claims paid by managed care organizations (MCOs) to providers from the PERM managed-care universe. That component reviews state-to-plan payments; eligibility review separately examines the relevant state determination. [3]
The Texas proposal therefore supplies an adjacent operating example. Its deadlines, appeal routes and recovery provisions should not be imported into federal PERM procedures or other states.
State eligibility determination: What supported the decision under the rules and facts for the reviewed period?
State payment to a managed care plan: Did enrollment, contract terms and the applicable rate support the payment?
Managed care plan payment to a provider: Did the claim and supporting records justify payment under the applicable review authority?
Three steps for evidence response readiness
1. Establish the request and its governing clock
Give each request an accountable owner. Preserve the original notice and the evidence of receipt, identify the review program and reviewed period, and document how the due date was calculated. Link each requested item to a custodian and an escalation path. A shared mailbox without an assigned owner is not a response process.
Treat conflicting dates or unclear authority as an issue requiring resolution. An internal retrieval target may be useful, but it cannot replace the actual rule or request. Preserve the basis for any extension or exception. Do not copy a deadline from an unrelated audit program.
2. Verify the packet and its delivery
Build a manifest that matches each requested item to the relevant person, action, period and source. Have a reviewer who did not assemble the packet test whether it is complete and usable. Record missing items explicitly. An accessible file can still contain the wrong period, an incomplete export, or a current policy substituted for the historical version.
Retain the exact submitted version and transmission evidence. An upload attempt, a successful transfer and confirmation that a complete packet was received are different events. Test each separately. If a platform does not confirm completeness, preserve its receipt and document the separate completeness review rather than claim the platform confirmed more than it did.
When evidence cannot be retrieved, investigate the cause before asking the member or provider to recreate it. Missing indexing, wrong-case association, access restrictions and a failed export call for different repairs from an unperformed verification. Correct the actual failure without treating a missing artifact as proof of ineligibility or fraud. CMS emphasizes that PERM rates are not fraud rates. [4]
3. Preserve the historical decision while correcting the processKeep the original determination, later evidence recovery, new verification, corrective action and review disposition as separate events. A current correction must not silently rewrite the earlier record.
Where a state uses a CMS-approved temporary mitigation, the response packet should also preserve the applicable approval, conditions, effective dates, and evidence that the decision followed that authorized process. The October 21 CMS mitigation checklist describes potential strategies, subject to applicable authority and approval; it does not establish blanket PERM protection. This is a federal eligibility-control consideration, separate from the Texas RAC proposal. [5]
CMS distinguishes recovering the original verification documentation from the eligibility review contractor’s independent verification process. That process uses information available to the state at the time of the determination. Recovering the original documentation may overturn a finding; independent verification may establish eligibility while the procedural error remains and is categorized as technically improper. A later repair does not automatically establish that an earlier payment was proper. [3]
After an authorized repair, test the failure again. Can another reviewer reproduce the history without the original worker? Does a subsequent export preserve the same associations and versions? If the defect recurs after a system update or renewal, keep that result visible rather than reporting only that the first ticket closed.
What leaders should ask to see
A useful readiness exercise starts with a bounded set of synthetic or separately authorized historical cases and a defined request. Record the elapsed time, missing evidence, manual work, delivery failures and independent reconstruction result. State the test conditions and limits before interpreting the result.
The management report should distinguish a complete packet from a valid underlying decision, and a repaired process from a resolved historical finding. No single completion percentage answers all three questions.
For PERM preparation, the practical goal is a reproducible path from the governing rule and historical evidence to the decision under review, followed by a verifiable response to the reviewer. Texas provides a timely reason to examine that path. The proof still has to come from the organization’s own controlled testing.
Sources
October 23, 2026; background and purpose, subsections (c), (e) and (f), and filing/adoption information. Proposed, not adopted.
89th Legislature, Regular Session, 2025; §5 amending Government Code §544.0504; §9 effective September 1, 2025.
April 2025 edition; printed pp. 29, 66–67 and 71–74. Scope, managed-care data-processing review, eligibility review and independent verification.
Program purpose, components and the distinction between improper-payment measurement and fraud.5 CMS, Proposed State Mitigation and Optional Strategies checklist, p. 1, circulated with the October 21, 2026 state-director email. Primary document reviewed November 2, 2026; a public CMS posting of this exact checklist was not located.
Analysis for operational education, not legal advice. Texas proposal status and CMS sources reviewed October 24, 2026; mitigation context added November 2, 2026.