President Obama signs the SMART Act Into Law

The SMART Act will modify the process through which the Medicare program is reimbursed when another payer (for example, a liability insurer) is responsible for a beneficiary’s medical costs.

As reported by Medivest Benefits Advisors, President Obama signed the Strengthening Medicare and Repaying Taxpayers (Smart) Act into law as part of H.R. 1845, on January 10, 2013. This bill represents one of the most significant changes in the Medicare Secondary Payer (MSP) conditional payment recovery process since the MSP Statue was enacted in 1981.

The SMART bill is the result of over four years of effort from the Medicare Advocacy Recovery (MARC) Coalition, which represents virtually every group of stakeholders impacted by the Medicare Secondary Payer (MSP) statute. The Congressional Budget Office estimated that the SMART Act would save Medicare $45 million from 2013-2022 by making it easier for payers to reimburse Medicare.

The Smart Act amends the Medicare Secondary Payer Statue by adding a new clause at the end of the existing statute that provides for the following:

  • Section 201 – Expedited Repayment, Web Portal and Right of Appeal. This section requires CMS to maintain and make available a timely updated website so settling parties can determine how much is owed to CMS for conditional payments, during the settlement process. It also requires CMS to provide a timely appeals process and to promulgate related regulations, if the settling parties believe there is a discrepancy in the conditional payment statement.
  • Section 202 – Threshold. Establishes that an actuarial single threshold amount be set for exemption from conditional payment reimbursement, where the expected recovery amount is less than the cost to recover.
  • Section 203 – Section 111 Penalties. Makes the $1,000 per day Mandatory Insurer Reporting (MIR) non-reporting penalty prevision discretionary by changing the statutory language from “shall be subject” to “may be subject to”. Also, this section requires CMS to publish formal regulations specifying situations where the penalty will not be imposed due to good faith efforts to comply.
  • Section 204 – Social Security Number. Directs CMS to modify the MIR reporting requirements so that reporting of social security numbers are not required.
  • Section 205 – Statute of Limitations. Creates a three-year statute of limitations for conditional payment recovery actions brought by the government.

The changes made to the  provisions for penalties should come as a relief to carriers, patients, and their lawyers and doctors who were previously under threat of stiff penalties in any case of mis-reporting or under-reporting to CMS.  Changing the language to “may be subject to (penalties)” allows for penalties to be ordered in cases of fraud or misrepresentation but does not require penalties in cases where mistakes are made.