While the claims industry awaits guidance from CMS on future medical expenses on liability claims, some much needed help was provided to claims professionals when the Saving Medicare and Repaying Taxpayers, or Smart Act was signed into law. While there have been a number of articles listing the various sections, few, if any, have gone into any detail on exactly why the Smart Act will improve the resolution of claims where the claimant is a Medicare beneficiary.
Title I of the Smart Act provides for a study on issues relating to access to intravenous immune globulin for Medicare beneficiaries and has no impact on the claims resolution process. Title II of the Smart Act, Strengthening Medicare Secondary Payer Rules, is comprised of five sections aimed at improving the efficiency of complying with the requirement to reimburse Medicare when a claim is settled.
Section 201 requires that a password protected website be created for making current medical information available to either the Medicare beneficiary or the plan (e.g., self-insureds and insurers). More importantly, the website must be updated with current information no later than 15 days after payment has been made. The information is supposed to segregate the settlement-related medical treatment. The most significant part of this section is that the parties can download a statement of reimbursement from the website, and if such download occurs within three business days of a settlement, award or judgment, the downloaded information can be relied upon as the final conditional amount that must be repaid to Medicare. There is also a provision to make timely adjustments for discrepancies, either adding or removing claims. Under this provision, parties can submit proposals for adjustments and the Secretary is required to make a determination on the proposal within 11 days of the submittal. If the Secretary does not respond within the 11-day period, the submittal is deemed accepted. The Secretary must implement these provisions within nine months after the date of enactment.
This is by far the most welcome portion of the Smart Act, and once implemented, will effectively remove the uncertainty and delays in determining conditional payment and final payment amounts that have stalled or undone settlements. Adjusters and attorneys can now accurately and quickly determine final conditional payment amounts and avoid the months or years of uncertainty that the current system entails.
Section 202 provides that not later than November 15 of each year, the Secretary must calculate and publish a single threshold amount for settlements, judgments, awards or other payments for obligations arising from liability insurance (including self-insurance), under which it will not require reimbursement.
It is likely this threshold will be very low, near the current $300 safe harbor, and is not expected to do much in the way of improving the settlement process, but does provide a measure of relief in screening out a number of low value or nuisance claims.
Section 203 changes the $1,000 mandatory insurer reporting penalty from the Medicare, Medicaid, SCHIP Extension Act (Section 111) to a penalty of up to $1,000 for each day of non-reporting. The Secretary must solicit proposals within 60 days of enactment for the specification of practices for which sanctions will not be imposed. After considering public comments, final rules shall be issued.
This provision is a welcome addition and will help alleviate the fear of multi-million dollar penalties on a few claims that were honestly missed. This allows for a “good faith” exception to the onerous non-reporting penalty, and the solicitation for proposals should create clearer rules around compliance and penalty avoidance.
Section 204 states that within 18 months of enactment, an applicable plan is permitted, but not required, to access or report to the Secretary a beneficiary’s social security account number or health identification claim number.
This section will help avoid expensive and needless litigation over the issue of requiring that a claimant provide their social security number. Cases such as Hackley v. Garofano, Wilson v. State Farm and Seger v. Tank Connection demonstrate the need for this provision and the lengths and expense that parties are willing to go to in order to comply with Section 111 of the Medicare, Medicaid, SCHIP Extension Act.
Section 205 establishes a three year statute of limitations in which an action can be brought by the United States with respect to payment owed. The statute of limitation runs from the date of the receipt of notice of a settlement, judgment, award, or other payment made, and becomes effective six months after the date of enactment.
Ever since U.S. v. Stricker, the issue over the statute of limitations has been hotly debated; no plaintiff attorney wants a six year statute of limitations hanging over their head, and this provision ends the question of a six versus three year statute of limitations. Nonetheless, three years is still a significant amount of time to worry about Medicare compliance and speaks to the need for both insurers and attorneys to make sure they have a proper Medicare compliance plan in place, covering not only conditional payments and liens, but whether any future medical exposure exists within the settlement.
John McCulloch is a settlement consultant with EPS Settlements Group, a national structured settlement brokerage and a technical analyst for Providio MediSolutions, a Medicare compliance company. His office is located in Chicago. He can be reached at 630-864-8420 or by email at email@example.com.
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