US Congress Passes the Strengthening Medicare Secondary Payer Rules Act: Will it Help?

By Jason D. Lazarus, J.D., LL.M., MSCC, CSSC

On December the 19^th the Strengthening Medicare Secondary Payer Rules Act was passed by the House.   The Senate passed the Act on December the 21^st.  It is on its way to President Obama to sign.  The SMART Act will modify some of the current processes related to Medicare conditional payment recovery.  While there are some significant improvements, it falls short of fixing all flaws in the MSP system when it comes to conditional payments.  The good news is that it creates a 3 year Statute of Limitations for recovery actions relating to conditional payments.  The mediocre news is that while it streamlines the process for obtaining conditional payment amounts it no longer has the enforcement provision originally proposed that would have stripped Medicare of the right to pursue recovery if they failed to timely provide the information.  Below is a summary of the changes the bill makes to the Medicare Secondary Payer Act.

Bill Summary:

• Requires CMS to issue a “potentially” final demand before settlement, judgment or award
• Establish a right of appeal regarding conditional payments for insurance companies and self insureds
• Create a 3 year SOL
• Discontinue the use of the full SSN for mandatory insurer reporting
• Make fines permissive for defendants/insurers who don’t comply with the mandatory reporting

Bill Details:

Either party, 120 days before the reasonably expected date of settlement, judgment, award or other payment, notify the Secretary of the impending resolution of the case.

The Secretary shall maintain a website portal that will provide access to information regarding items and services paid for by Medicare related to the notice.  It must be updated timely but not later than 15 days after the date a payment is made.  The website must include provider or supplier name, diagnosis codes, date of service and conditional payment amounts.  It must also identify claims and payments that are related to a potential settlement, judgment, award or other payment.  There has to be a secure method for electronic communications.  Lastly, the website must permit a download of a statement of reimbursement amounts being claimed by Medicare.

Obtaining the statement of reimbursement, if done within the prescribed periods of time, shall constitute the final conditional demand amount.  There is a protected period which is 65 days from the notice, which can be extended by another 30 days.  If settlement occurs during this period and the statement was downloaded within 3 business days of settlement then it shall constitute the final demand.

If there are discrepancies in the statement of reimbursement amount, the Secretary must provide a timely process to resolve such discrepancies.  The discrepancies must be resolved by the Secretary within 11 days after receiving documentation of the discrepancies or the Secretary loses the right to dispute those discrepancies.

A right to appeal and appeals process must be created by the Secretary through the promulgation of regulations.  However the appeal rights would be limited to the applicable plan (so only for defendants/insurers) and only relate to the subsections of the SMART Act.

There are two provisions relating to Mandatory Insurer Reporting.  The first makes assessment of fines for non-compliance with the reporting requirement discretionary versus mandatory.  The second gives the Secretary 18 months to eliminate the use of the Medicare beneficiary’s Social Security number for the reporting process.

Lastly, the SMART Act provides for a 3 year Statute of Limitations on recovery actions by the government.  The 3 years runs from receipt of notice of settlement, judgment, award or other payment.

To see a copy of the text of the Act, click HERE

Below is a statement issued by the AAJ after the passage on the 21^st:

Dear Colleague,

With the help and hard work of the AAJ Public Affairs team, the U.S. House and Senate have passed a bill that will bring certainty to the Medicare Secondary Payment (MSP) reimbursement process! This legislation is a huge victory for your clients on Medicare. It will simplify their lives—and your practices.

The version of the SMART Act that passed mandates a three-year statute of limitations on the Centers for Medicare & Medicaid Services (CMS) so that the agency cannot ask for additional money from clients or their attorneys after the statute expires.

In addition, the bill will simplify the current online portal process for calculating MSP reimbursement. An improved online process will help you resolve your Medicare Secondary Payer claims faster and easier. While the SMART Act offers great improvements, AAJ knows there is still more work to be done. We will continue working to improve the MSP process.

Much of the time at the end of this Congressional session has been consumed by the “fiscal cliff” negotiations. Lawmakers have resisted passing any legislation that deviated from this discussion. AAJ Public Affairs staff Sarah Rooney, Kate deGravelles, and Sue Steinman provided exceptional counsel to ensure that this legislation passed.

AAJ knows how many of you continuously struggled with CMS to receive timely, final reimbursement numbers. Many of you worked with AAJ Public Affairs to advocate for this legislation, and now, after more than two years, we have an accomplishment that will make a difference for lawyers all across the country.

Thank you for your support as an AAJ member. We could not have done this without you. When you stand with us it makes a tremendous difference in our ability to achieve positive advocacy results.

Best Regards and Happy Holidays,