SMART Act Passes Congress

Our good friend Dan Anders with Medallocators is pleased to report legislation which will have a significant impact on Medicare conditional payment resolution as well as other Medicare Secondary Payer processes passed Congress on December 21.  The SMART Act, or The Strengthening Medicare and Repaying Taxpayers Act, was championed by the Medicare Advocacy Recovery Coalition for which MedAllocators is a member.  It is expected President Obama will soon sign the bill into law.   The following is a summary of the current status of the law and how the SMART Act changes this law.  Also outlined are the original SMART Act proposals that did not end up in the final bill.

Determination of Final Conditional Payment Demand Prior to Settlement

Current:  The Final Demand from CMS/MSPRC can only be obtained post-settlement with the exception of certain liability settlements of $25,000 or less which can choose to utilize the Centers for Medicare and Medicaid Services (CMS) provided option to Self-Calculate Conditional Payment Amount Prior to Settlement.

SMART Act Change:  120 days or less prior to the expected settlement date (liability or workers’ compensation) CMS, or more likely through a CMS contractor, may be advised of the anticipated settlement.  Once CMS has been advised of the anticipated settlement it has up to 65 days, or 95 days if it utilizes the 30 day extension option, to provide a “Statement of Reimbursement.”  Once this statement is provided the parties can rely upon it as long as their final settlement occurs within 3 days of its receipt.  Further, CMS would have to provide this information on a website which would be easily downloadable to authorized representatives.   It is assumed another statement would need to be downloaded if the settlement does not occur within 3 days.   The SMART Act also forces CMS to keep the information on the website up-to-date as it states CMS must list a new payment on the website within 15 days after it occurs.    CMS (Technically the Secretary of Health and Human Services) must issue final regulations and procedures to put this process into effect nine months after the enactment of the SMART Act.  As such, we are likely to see some process put into place before the end of 2013.

Challenging Payments on the Statement of Reimbursement

Current:  Today, MedAllocators submits challenges to items on the Conditional Payment Letter usually on the basis that they are unrelated to the claimed injury.  CMS is under no deadline to respond and risks no penalty for not responding.

SMART Act Change:  Within 11 business days of receipt of a challenge to the statement of reimbursement CMS must determine whether there is a reasonable basis to remove the items.  If CMS fails to complete its review within 11 business days then CMS must accept the removal of the items.

Thresholds for Medicare Conditional Payment Recovery

Current:  CMS voluntarily does not seek conditional payment recovery for physical trauma based liability settlements of $300 or less.

SMART Act Change:  CMS would be required to annually set a threshold under which it would not seek to recover on liability claims as well as alleged physical trauma based workers’ compensation and no-fault claims (Claims involving alleged ingestion, implantation or exposure are excluded).  The threshold would be equal to the estimated cost Medicare incurs to recover conditional payments in a case.  This provision goes into effect 1/1/2014.

Reporting Penalties Clarified

Current:  The Section 111 Mandatory Insurer Reporting provisions state an RRE that fails to properly report “shall be subject to a civil money penalty of $1,000 for each day of noncompliance for each individual for which the information under such subparagraph should have been submitted.”

SMART Act Change:  Changes the provision to “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.”  Also added is a requirement for CMS to issue regulations on how these sanctions will and will not be imposed.  CMS must start the process of issuing regulations within 60 days after the enactment of the SMART Act.  The penalty could not be enforced until the regulations are final.

Optional Use of Social Security/HICNs for Section 111 Reporting

Current:  The SSN/HICN of the claimant must be used for Section 111 reporting

SMART Act Change:  CMS has 18 months from the date the SMART Act is enacted to determine a method by which the RRE would have the option of not providing a SSN/HICN to comply with Section 111 reporting responsibilities.  The Act allows CMS another 12 months if needed.

Statute of Limitations on Medicare Conditional Payment Recovery

Current:  The law is unclear on what statute of limitations is applicable to Medicare conditional payment recovery.

SMART Act Change:  The federal government has 3 years after it is notified through Section 111 reporting to file a complaint seeking recovery of conditional payments.  This provision goes into effect 6 months from when the SMART Act is enacted.

Right of Appeal for Carriers

Current:  If CMS seeks to recover from an insurance plan the Medicare Secondary Payer Act does not include a provision for the insurance plan to seek an appeal as only the Medicare beneficiary has such a right.

SMART Act Change:  CMS would be required to create regulations creating such a right of appeal for the carrier.

Original SMART Act Proposals Not in the Final Legislation

  • Mandatory minimum recovery threshold covering all claims for Medicare recovery.  The final legislation contains an exception for ingestion, implantation or exposure claims in workers’ compensation and no-fault.
  • More stringent timeline for finalizing conditional payments prior to settlement.  This was modified to give CMS more breathing room.
  • Use of SSN/HICN numbers as part of Section 111 Reporting eliminated.  The Act instead gives CMS up to 2 ½ years to come up with an alternative process to the use of SSN/HICNs, but even if CMS adopts such a process the Responsible Reporting Entity would still have the option of using the SSN/HICNs.
  • CMS loses its recovery right if it fails to provide the requested information in the required timeframes.  The final version of the SMART Act only requires CMS to not have more than 1% of repayment obligations falling outside of required timeframes as a result of a failure of its claims payment posting system.
  • Insurance carrier right of appeal to not only CMS, but also to the federal courts.  The Act instead leaves it up to CMS to lay out an appeals process.
  • The $1,000 per day penalty for failure to properly report under Section 111 is subject to a 3 year statute of limitations based upon when the information should have been reported.  The proposal was removed meaning there is no such statute of limitations on the Section 111 penalty.

Most of the SMART Act provisions will take several months and in some cases years to implement by CMS.  Upon the SMART Act being signed into law we expect CMS to begin the process of issuing, and in some cases proposing, rules and regulations to implement the SMART Act.  We at MedAllocators will continue to keep you apprised as to developments in the coming months.

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