In January 2013, Congress passed the Strengthening Medicare and Repaying Taxpayers Act (“SMART Act”), which amends the Medicare Secondary Payer Act (“MSP Act”). The purpose of the SMART Act is to clarify and simplify portions of the MSP Act. The SMART Act applies to non-group health plans such as workers’ compensation and liability insurance including self-insurance. The key provisions of the SMART Act are as follows:
Medicare Lien Determinations. Under the MSP Act, Medicare has the statutory right to reimbursement for its past payment of the medical costs of injuries to a Medicare beneficiary from any third parties who caused the injury. When Medicare is entitled to reimbursement for its past payment of medical costs, people commonly say that Medicare has a “lien” on any future settlement proceeds that a Medicare beneficiary might receive from responsible third parties. If the beneficiary is involved in litigation, the SMART Act requires CMS, at the request of the parties, to make a final determination of the amount of its lien and post the determination on a secure website. As long as the settlement is finalized within 120 days of the date on which CMS issues its determination of the Medicare lien, the parties can rely upon the determination as being final.
Appeal Rights. In the past, there was no clear method for Medicare beneficiaries to contest the amount of Medicare liens on their settlement proceeds. The SMART Act requires CMS to promulgate regulations to put in place a method for Medicare beneficiaries and non-group health plans to contest CMS’s determinations of the amounts of Medicare liens.
Statute of Limitations. The SMART Act requires that CMS file suit for recovery of a Medicare lien within three years of the date on which CMS receives notice of a settlement, judgment or award to a Medicare beneficiary.
Small Claims Exception. The SMART Act requires CMS to annually calculate and publish a threshold amount under which settlements will be exempt from any Medicare recovery activities.
Responsible Reporting Entities. CMS requires non-group health plans to be Responsible Reporting Entities (“RREs”). RREs are required to determine whether a claimant is a Medicare beneficiary, and if so, report any settlements to CMS via an electronic system. RREs that fail to report settlements in a timely manner were liable for a monetary penalty of $1000 per day for non-compliance under the MSP Act. The SMART Act softens the statutory penalties by making them discretionary and requires CMS to promulgate regulations to define good faith efforts by an RRE to identify a beneficiary, which will not result in any penalties if the Medicare beneficiary is not correctly identified.