President Signs New Medicare Reimbursement and Reporting Law

January 16, 2013
Legal Updates

On January 10, 2013 President Obama signed into law the Strengthening Medicare and Repaying Taxpayers Act of 2012 ("SMART Act"). When finally implemented, the SMART Act should streamline settlement negotiations and provide more certainty to settlements involving Medicare beneficiaries.

The SMART Act will significantly modify Medicare's Secondary Payer requirements to be more efficient, workable, and user friendly. Claimants, insurers and self-insureds should be able to obtain information about payments to which Medicare claims it is entitled to reimbursement through a secure website and will be entitled to rely on that information when claims are paid (so long as proper notice is given). Additionally, entities required to report payments to Medicare beneficiaries will likely be given some reprieve from the harsh penalties for noncompliance with Section 111's reporting requirements when good faith efforts are made to report a potential third-party claim.

Key elements of the SMART Act include:

(1) Medicare must provide claimants, insurers and self-insureds with access to a secure website that contains information relating to payments made by Medicare which may be subject to reimbursement from any potential settlement, judgment, award, or other payment.

(2) Claimants, insurers and self-insureds may give notice to Medicare of a potential settlement, judgment, award, or other payment within 120 days of the potential settlement, judgment, award, or other payment. Medicare then has 65 days to provide its reimbursement amount. If proper notice is provided , the claimant and insureds and self-insureds that have obtained consent of the claimant then may rely on the last statement of reimbursement amount downloaded from the Medicare website so long as the statement was downloaded within three business days before the date of the settlement, judgment, award, or other payment. The amount downloaded is then considered the "final conditional amount" subject to recovery by Medicare.

(3) Claimants who believe there is a discrepancy in the final conditional payment amount may provide documentation to Medicare explaining the discrepancy. Medicare then must respond to the discrepancy within 11 days. However, this discrepancy process does not take the place of a formal appeals process and the Act requires Medicare to promulgate regulations establishing an appeals process.

(4) Medicare must establish thresholds for both conditional payments and Section 111 reporting. The thresholds are designed to prevent Medicare from expending more money in collection efforts than it stands to receive on a given claim. The thresholds are to be established on November 15th of each year beginning in 2014.

(5) Section 111's per diem failure to report penalty is now discretionary, as Medicare "may" subject a claim to "a civil penalty of up to $1,000 for each day of noncompliance." Additionally, Medicare must give notice of proposed regulations in which sanctions will not be imposed for non-reporting including when good faith efforts to report have been undertaken.

(6) Within 18 months of the enactment of the Act, Medicare must modify Section 111's reporting requirements so that social security account numbers and health identification claim numbers are not required.

(7) A three year statute of limitations for Medicare Secondary Payer actions is established.

In order to take full advantage of the law, it will be important to notify Medicare in advance of settlement conferences and mediations, to obtain consents from claimants to access information on the amounts claimed by Medicare, and to download the final conditional payment amount within three days of any settlement conference or mediation.

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