17 Jan Congress gets “SMART”
Congress Gets SMART: What the SMART Act Means for Workers’ Compensation and Liability Professionals
By Geoffrey C. Hudson – CEO, Axiom National
On January 10, 2013, President Barack Obama signed the Strengthening Medicare and Repaying Taxpayers (SMART) Act of 2011. Though overshadowed by Congressional debate over the “fiscal cliff,” the SMART Act includes many important provisions that fix problems created by the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA). The Congressional Budget Office (CBO) estimates that the SMART Act will reduce Medicare spending by $45 million over the next decade.
Most importantly for workers’ compensation and liability claims professionals, the SMART Act modifies Medicare Secondary Payer (MSP) rules. These modifications should lead to more cost-effective and efficient resolutions of claims. While not a perfect bill, the SMART Act modifies some of the more cumbersome rules that delayed or prevented effective settlements in the past. I have outlined below some of the most important modifications to the MMSEA rules, as well as new rules and policies created by the SMART Act.
How the SMART Act Changes Old Law
Final Conditional Payment Amount Prior to Settlement
Old Law: Parties to a potential settlement – the claimant, defendant(s), and CMS – operated in a position of ignorance as to the exact amount of appropriate Medicare repayment. This ignorance made settlement negotiations difficult, creating a prolonged and expensive claims settlement process.
New Law: The SMART Act calls for the establishment of an electronic portal to notify the parties to a settlement, before settlement, how much is owed in order to properly resolve any Medicare conditional payment obligations. §201, SMART Act.
Conditional Payment Appeals Process
Old Law: For any party that wished to dispute a Medicare finding that a certain payment constituted a conditional payment, requiring reimbursement, the appeals process was at best confusing and slow. In fact, CMS was under no obligation to reply and faced no consequences or penalty for failure to respond.
New Law: A claimant may contest payments identified as conditional payments by providing documentation and a proposal to resolve the dispute. Within eleven days of receipt, CMS must determine whether there is a “reasonable basis” to include or exclude the payment in the overall conditional payment amount. If CMS fails to complete its review within 11 business days, then CMS must accept the removal of the items. §201, SMART Act.
Threshold for Recovery
Old Law: There is no requirement for CMS to seek conditional payment recovery where the Total Payment to Claimant (TPOC) obligation is less than $300.
New Law: The Secretary of Health and Human Services (HHS) will create a new threshold amount for exemption from conditional payment reimbursement, so that the expected recovery amount is greater than the cost to recover. §202, SMART Act.
§111 Penalty Modification
Old Law: Companies that reported settlements involving Medicare beneficiaries to CMS either late or erroneously were subject to automatic fines of $1,000 per-day, per-claim.
New Law: Such penalties are now discretionary, not automatic. HHS is directed to create “safe harbors” for companies that report in good faith, despite being late or in error. §203, SMART Act.
No SSN or HICN
Old Law: Claims professionals and settlement parties use claimants’ Social Security numbers (SSNs) or Health Insurance Claim Numbers (“Medicare numbers”) to access claimant health records. This situation has obvious and troubling privacy implications.
New Law: Within 18 months, the Secretary of HHS is to change §111 of Mandatory Insurance Reporting to make use of SSNs and Medicare numbers optional rather than required. Medicare beneficiaries are understandably reluctant to provide this information – given the high incidence of identity theft. The SMART Act protects beneficiaries’ sensitive personal information while also reducing professionals’ liability exposure in the event of subsequent beneficiary identity theft. §204, SMART Act.
Three-Year Statute of Limitations
Old Law: Unclear law and inconsistent court rulings left settlement parties without a clear answer on the scope of the statute of limitations for the government to bring an action seeking conditional payment.
New Law: The SMART Act codifies a 2010 U.S. District Court decision – U.S. v. Stricker – which held that the government must file a complaint within three years of receiving notice that a judgment or settlement has been reached. §205, SMART Act.
Full Text of H.R. 1845: http://www.gpo.gov/fdsys/pkg/BILLS-112hr1845rds/pdf/BILLS-112hr1845rds.pdf
Geoffrey C. Hudson is the Chief Executive Officer of Axiom National, a Medicare compliance solutions consultancy based in Tampa, Florida. For more information, please visit www.axiomnational.com, or call 1-888-826-6496.