On December 31, 2012, Congress sent the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act to President Obama for his signature. The Act had strong bipartisan support, and passed both houses almost unanimously. The Act consists of what had originally been two separate bills combined for passage: H.R. 1845 and H.R. 1063.
H.R. 1063, known as SMART, consists of five substantive sections, all of which are intended to strengthen and protect Medicare beneficiaries by improving and updating the efficiency of the Medicare Secondary Payer recovery process. In a case in which the injured claimant is a Medicare beneficiary, Medicare must be reimbursed for benefits previously paid. Reimbursement is required when a defendant or its insurance company “is, or should be, aware that Medicare has made a conditional payment.” [42 CFR § 411.24(h)]. Ultimately, Medicare has stated that when a claimant is 65-years old or older, an insurer “has reason to know” of Medicare’s interest, and is then required to determine Medicare’s right to reimbursement, if any.
Medicare is considered a “secondary payer” because Medicare is only required to pay for services after the “primary payer” has satisfied its obligations. The resolution of any case involving a Medicare beneficiary creates Medicare’s right for reimbursement. When a beneficiary receives funds from a settlement, Medicare should be repaid before said funds are distributed. If it has not been repaid, Medicare has the right to recover double the amount of benefits it paid.
This then begs the question: “How does one settle a case without knowing exactly the amount Medicare wants and is entitled to receive?” SMART intends to answer just this question.
Below is a synopsis of SMART, including each of the five substantive sections of the Act:
Section 201 – [Determination of Reimbursement Amount through the Centers for Medicare & Medicaid Services (CMS) Website to Improve Program Efficiency] Often considered the most important section of the Act, Section 201 applies to both liability and worker’s compensation claims. Section 201 establishes a new process for determining the amount of Medicare’s conditional reimbursement payment before resolution of a beneficiaries’ liability claims.
This section also details the process by which parties may request a demand letter from Medicare that is effective for a period of time before disposition of the case. Parties must provide CMS with 120-day notice of a reasonably expected settlement date. CMS has 65 days to produce a demand letter, but can extend this timeframe to 95 days. The time after the 65-95 day period, and before the end of the 120 day time limit, is known as the “Protected Period.”
If the Plaintiff downloads a Medicare claims statement from Medicare’s website during this “Protected Period,” and does so within 3 business days before the date of settlement, judgment, award or other payment, the downloaded amount will be considered the “final conditional amount.”
Finally, this section provides a mechanism for a non-appeal reduction of this “final conditional amount.”
Section 202 – [Thresholds] This section becomes effective 1/1/2014, and creates a minimum threshold for both Mandatory Insurer Reporting and Conditional Payment Reimbursement. In other words, there is no obligation to repay Medicare under 42 U.S.C. §1395y(b)(2)(B)(ii) or to report under 42 U.S.C. §1395y(b)(8) if a claim falls below the annual threshold amount as set by the HHS Secretary. The Secretary sets this limit each November.
Section 203 – [Reporting Requirements] Section 203 alters the penalty for non-compliance. This Section also requires Medicare, within 60 days of enactment, to solicit proposals for safe harbor situations, and propose final safe harbor regulations for good faith efforts when a Medicare beneficiary cannot be identified.
Section 204 – [Use of SSNs and other Sensitive Information in Reporting] This section allows insurance companies responsible for electronic reporting to report without requiring them to use a Medicare beneficiary’s Social Security number and/or Health Care ID Number. This means that insurance carriers no longer bear the burden of protecting such sensitive information.
Section 205 – [Statute of Limitations] Creates a Statute of Limitations for conditional payment recovery of three years.
The Act is supposed to promote efficiency, and clarify the methods used in obtaining information from Medicare as it relates to payments made by them. The hope is that for injured workers, there will be fewer delays in resolving their claims, and for workers compensation attorneys and insurance companies, the process for obtaining information will be simplified as Medicare cannot pursue claims for reimbursement after specific time limits. However, only time will tell whether this legislation is truly SMART.
By Bradley M. Arlen, Esq.