A Review of the SMART Act

The Centers for Medicare & Medicaid Services (CMS) has issued a final rule related to the Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act). The rule establishes a formal appeals process for applicable plans in situations where Medicare is seeking secondary payer reimbursements. Under the new rule, which became effective April 28, 2015, applicable plans – liability insurance (including self-insurance), no-fault insurance and worker’s compensation plans – now have a formal appeals process similar to the existing process afforded to direct beneficiaries who have been identified as the debtor in secondary payer situations.

The SMART Act was passed into law by President Obama on January 10, 2013, as a mechanism to modify and improve upon Medicare’s Secondary Payer (MSP) requirements. Those provisions of the Social Security Act were enacted in 1980 to establish Medicare as a secondary payer to certain primary plans if payment has not been made or cannot reasonably be expected to be made to the beneficiary by a primary plan. In those cases, Medicare may make a “conditional payment” with the expectation it will be repaid when the beneficiary receives a settlement, judgment, award or other payment. Conditional payments are for items or services that are later determined to be the financial responsibility of a health plan.

On February 27, 2015, CMS issued a final rule implementing provisions of the SMART Act that establish a right of appeal and formal MSP appeals process for applicable plans, for situations where the Secretary seeks to recover payments from applicable plans. The final rule establishes a formal multilevel appeals process for applicable plans where recovery is pursued directly, including a redetermination by the contractor issuing the recovery demand. This process could go as far as an administrative law judge (ALJ) hearing. CMS hopes to resolve applicable plan appeals at lower levels prior to being escalated to the ALJ hearing. In addition, the beneficiary is not party to the appeal, but the law does require CMS to provide notice to the beneficiary of a plan’s intent to appeal.

In addition to the new appeals rule, other areas of improvement to the Medicare Secondary Payer provisions provided by the SMART Act include:

  1. Expanding the Medicare Secondary Payer Recovery Portal. Specific functionality required by the SMART Act will be available no later than January 1, 2016. Those requirements include developing a more secure authentication solution to securely permit authorized users to access conditional payment amounts and detailed claims information. It also will permit users to notify Medicare that a case is approaching settlement, to obtain time and date stamped final conditional payment summary forms and amounts before reaching settlement and ensure that relatedness disputes and any other discrepancies are addressed within 11 business days of receipt of dispute documentation. For more information, click here.
  2. The law requires CMS to publish an annual threshold for recovery to not spend more on collections than a claim is likely to yield, in November of each year. The current threshold for a liability settlement is $1,000. Cases that settle below this threshold are exempt from both reporting and repayment requirements.
  3. Elimination of the requirement to use an individual’s social security number or health identification claim numbers when reporting. This provision took effect January 5, 2015. For more information, click here.
  4. The establishment of a three year statute of limitations for Medicare Secondary Payer actions.

Some helpful resources:

The Centers will continue to monitor any additional updates related to CMS. Should you have any questions about how this could affect your practice or your clients, please contact us online here or call (877) 766-5331.

This information is not intended to take the place of legal advice on any particular matter. Consult with your lawyer and tax advisor for any specific questions regarding these changes.