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The SMART Act Simplified: What do I need to know and how will it impact my claims handling?

By , February 5, 2013 10:07 am

The SMART Act reforms certain aspects of the MSP and the MMSEA. While the SMART Act does not directly broach how to protect Medicare’s interests with regard to any future medical component, it does directly reform components of the conditional payment reimbursement process and MIR under the MMSEA.

Conditional payments are allowed under the MSP when the primary payer does not make payment promptly. However, Medicare makes the payment “conditioned” upon reimbursement by the primary payer. Essentially, these are payments made by Medicare that the primary payer is responsible for, and as a result, Medicare is owed the right to reimbursement. If Medicare conditional payments are not reimbursed, Medicare has the right to sue for double damages. Due to this priority right to recover, Medicare conditional payments are sometimes referred to as a “super lien.”

Under the MMSEA, liability insurance (including self-insurance), no-fault insurance, and workers’ compensation insurance or plans are required to report the assumption of ongoing responsibility for medical treatment as well as settlements, judgments, and awards with Medicare beneficiaries. A graduated scale for the requirement to report these claims has been implemented based on the settlement amount. The purpose behind MIR is to enable the CMS to have visibility into settlements occurring with Medicare beneficiaries as well as a record of cases where ongoing responsibility exists, which is important for proper coordination of benefits. Awareness of these requirements is important since there is the potential for a $1000 per day/per claim penalty for the failure to report.

Note that President Obama signed the SMART Act into law on January 10, 2013; therefore, when the “enactment date” is referred to, it shall mean the aforementioned date.  The SMART Act was passed attached to Medicare IVIG access bill in H.R. 1845. For a full copy of H.R. 1845, please click here.

The following section will address some of the issues that the SMART Act seeks to resolve with regard to conditional payments and MIR. The SMART Act can be broken down into 5 major components. While addressing each component, we will also answer frequently asked questions for each topic.

1)      New Conditional Payment Resolution Process

Parties entering settlements with Medicare beneficiaries have been all too familiar with long wait times when trying to finalize conditional payment amounts with CMS, as well as being unable to receive a final demand until after settlement.

There is good news on the horizon. In 9 months from the SMART Act’s enactment date (on or about October 10, 2013), CMS will be implementing a new process to provide a final conditional payment amount prior to settlement. It will be available online, and there will be stricter timelines for when CMS must provide the demand amount.

This is how it will work: anytime 120 days prior to a settlement, judgment, or award, you notify CMS of your expected settlement date and amount. During this time, conditional payment information will be available on a “website.” Payments made by CMS must be posted to the website no later than 15 days from the payment date.

Within 65 days from the time CMS receives notice, a “statement of reimbursement amount” will be available for download- which can be considered the final demand, as long as you are in the “protected period.”  The “protected period” means 65 days after CMS has received notice of your settlement, judgment, or award; however, CMS can extend the 65 day period for a an additional 30 days only under exceptional circumstances, and exceptional circumstances cannot be more than 1 percent of cases. CMS will provide this in a format where the final demand is time and date stamped and settlement must occur within 3 business days of downloading the statement or it will no longer be valid as a final demand.

If you want to dispute the conditional payment amount, you should provide CMS with a proposed resolution amount along with an explanation of the reason for the adjustment. CMS then has an 11 business day window in which they can do the following in response to the proposed resolution:

a)      Not respond within 11 days of the proposed resolution. In that case, the proposed resolution is deemed accepted by CMS.

b)      CMS can respond within 11 business days and state that they disagree with the proposed resolution.

c)      Another option is for CMS to respond within the 11 business day period and propose an “alternate discrepancy resolution.”

In addition to the dispute process just described, CMS will also need to promulgate regulations around creating a formal appeals process.

 FAQs:

Q. Which website is being referred to? Is it the current MSPRC portal?

A. The SMART Act does not specify if this website will be an enhanced version of the current MSPRC portal, or if it will be a new website. However, it does state that the website will be a form of “successor technology.” We are hopeful that the website will provide more enhanced functionality than the current MSPRC portal, which has some limitations, such as requiring you to have a case number before being able to use the portal for a particular case.

Q. What is considered official notification to CMS of a settlement, judgment, or award under this section? 

A. How notice is to be made under this section is not clear. Currently, CMS is notified of settlements through calls to the COBC, as well as through MIR under the MMSEA. Therefore, it is not clear if either or both of these types of notifications will suffice as “adequate notice.” The SMART Act also does not specify if a separate notification will need to be made through this website.

Q. Isn’t requiring settlement to occur within 3 business days of downloading the final demand a bit fast? 

A. Yes, it is fast. However, it does seem that if the parties do not end up settling within 3 business days, that they can simply re-download a new time and dated stamped “statement of reimbursement amount” when settlement is about to occur.

Q. What is the “alternate discrepancy resolution” that CMS can propose if they do not agree with your proposed dispute on the conditional payment amount?

A. The SMART Act does not describe this at all. One could guess that this will be an informal, non-binding method to resolve the dispute. If the parties cannot agree, then the new appeals process will likely provide a different avenue and a more formal administrative appeal if you are not satisfied with the result during the informal dispute process.

2)      Threshold for Exemption from Conditional Payment Reimbursement and Reporting

Finding it frustrating to deal with conditional payments and MIR on nominal, nuisance value cases that you just want to close out quickly? Not only has the industry been voicing this concern, but CMS has also been under scrutiny for conditional payment collections on these cases. It has come to light that in some cases, it actually costs more for CMS to recover a conditional payment than the amount they paid “conditionally.”

The SMART Act requires the DHHS to calculate and publish a single threshold amount for settlements, judgments, awards, or other payments in which they will not seek reimbursement of conditional payments and you will not have any MIR obligations. They will publish this amount by November 15th each year, and this will begin in the year 2014. The threshold amount will be the amount where CMS can demonstrate that their costs of recovering the conditional payments equal the collections.

 FAQs:

Q. Does this threshold also apply to MSAs or to the consideration of Medicare’s interests in regard to future medicals? 

A. No, it only applies to conditional payments and MIR.

Q. What will the threshold be? Do any thresholds currently exist for conditional payments?

A. Currently, liability settlements under $300 are exempted from reimbursement of conditional payments to CMS. It is unclear what the new threshold will be; however, many have commented that this threshold is much too low.

3)      Discretionary Fines for noncompliance with MIR

The threat of a $1000 per day/per claim fine for noncompliance can be pretty scary when one error in a quarterly report can result in a $90,000 penalty! It also seemed rather arbitrary that the fine was mandatory and there were no formal rules/guidelines as to when CMS could and could not impose fines.

The SMART Act strikes the portion of the MMSEA law that states that a RRE “shall be subject. . .” In its place, the language now says “may be subject.” This replacement language essentially makes fines for noncompliance with MIR discretionary instead of mandatory.

But first, within 60 days of the enactment date of the SMART Act, CMS must solicit comments from the industry in the Federal Register which practices should be considered an event subject to sanctions. After considering the public comments, we will see some finalized rules regarding which practices by an RRE would be subject to sanctions.

FAQs:

Q. What will the industry consider to be practices that are subject to sanctions? Will the main standard be “good faith” efforts on behalf of the RRE?

A. The commentary from the industry as to what actions should be subject to sanctions will certainly be interesting. One would think that CMS would carve out an exception to being sanctioned if the RRE could document good faith efforts to report the claim(s). Additionally, CMS may implement some more specific practices that would be subject to sanctions. For example, CMS has repeatedly stated that sending bad data with errors is not considered compliance. If an RRE was notified by CMS that the data contained errors, and over a period of time it is demonstrated that the RRE did not attempt to correct the data, that may be a practice subject to sanctions.

Q. CMS recently announced its plans to audit group health plans (GHPs) for compliance with MIR. Are non group health plans (NGHPs) next to be audited? Has CMS ever issued fines? 

A. To our knowledge, CMS has not yet issued any fines for noncompliance with MIR for NGHPs. However, CMS recently rolled out a work plan to audit GHPs for compliance with MIR in 2013. It would seem that NGHPs will likely be audited next and that parties not in compliance would be subject to fines. Therefore, fines are likely to be issued in the near future.

 4)      Use of SSNs/HICNs in MIR

Many RREs, particularly those that deal with liability claims, have voiced concern over the difficulty to obtain a Medicare beneficiary’s SSN. Without an SSN, an RRE cannot report the case under MIR. The SMART Act makes reporting SSNs optional.

However, it is very important to note that CMS has been given an extended period of time to implement this. They have 18 months after the enactment date to publish rules to implement this, and they can file extensions for up to 1 year if certain criteria are met.

 FAQs:

Q. How will CMS be able to identify beneficiaries without these identifiers?  

A. It has been estimated that CMS will need to come up with some kind of new unique identifier and likely overhaul current systems to implement this.  

Q. Since this may take a few years to be implemented, what can RREs do in the meantime while SSNs are still required to be reported in those situations where it is unable to obtain a beneficiary’s SSN?  

A. CMS has provided the industry with a method to document and demonstrate good faith efforts to obtain SSNs. Additionally, there has been some recent case law where a carrier refused to tender a settlement due to the beneficiary not providing their SSN. In those cases, the courts sided with the RREs and required the beneficiaries to provide their SSN so that the RRE could be in compliance with the MMSEA and not subject to fines. If needed, RREs can document their good faith efforts to obtain SSNs and/or bring the matter to court if the beneficiary refuses to provide their SSN.

5)      New Statute of Limitations for Conditional Payments

Previously, the statute of limitations for CMS to recover conditional payments was unclear. The SMART Act provides that if CMS is given notice of the settlement, judgment, award or other payment, then they may not seek recovery of that conditional payment any later than 3 years after notice is given. This is scheduled to take effect 6 months after the SMART Act’s enactment date.

 FAQs:

Q. Isn’t a final demand from CMS “final?” Why would you be concerned with a statute of limitations if you reimbursed a final demand from CMS?  

A. Technically, the term “final demand” is a misnomer. CMS still has the right to discover, research and recover conditional payments owed even after a final demand is paid. This new statute of limitations will give a clear timeline of when CMS can recover conditional payments as long as you notify CMS of your settlement, judgment, or award. Now, 3 years after notice is given, you will be in the clear.

PMSI will keep you updated on any developments in regard to the SMART Act. For questions on the SMART Act and how PMSI can assist, please contact Heather Schwartz, Esq., MSCC, CHPE, CLMP, CMSP at Heather.Schwartz@pmsisettlement.com.

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Application of the New SMART Act Webinar

By , January 16, 2013 10:43 am

With the SMART Act signed by President Obama and becoming law on January 10, 2013, numerous changes are on the horizon with regard to conditional payment reimbursement and Mandatory Insurer Reporting (MIR). Please join us for a complimentary webinar which will address the SMART Act and the impact it will have on workers’ compensation and liability claims.  

Highlights from the webinar will include the details and application of the SMART Act in reference to:  

  • Being able to obtain a Final Conditional Payment Demand Prior to Settlement
  • Not having to report or reimburse Medicare for settlements under a certain monetary threshold
  • Changes in the application of fines for noncompliance with MIR and the reporting of SSNs/HICNs
  • A new statute of limitations/time limit wherein CMS cannot recover conditional payments

Heather Schwartz, Esq., MSCC, CHPE, CLMP, CMSP will offer her expertise in reference to the SMART Act on Thursday, January 24, 2013 from 2 PM -3 PM EDT.  Click here to register now!

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SMART Act Passed by the U.S. House; Now Moves on to the Senate

By , December 20, 2012 4:38 pm

The SMART Act was passed by the U.S. House of Representatives yesterday, December 19, 2012 and was attached onto H.R. 1845, a Medicare IVIG Access Bill. H.R. 1845 will now move onto the Senate where it will be reviewed.

The SMART Act was initially introduced by the Medicare Advocacy Recovery Coalition (MARC), a group which advocates for the improvement of the MSP Program for beneficiaries and affected companies. PMSI is a supporter of MARC.

The SMART Act specifically seeks to streamline the MSP process by easing burdens on CMS as well as the insurance industry. Some of the initiatives of the SMART Act include requiring CMS to provide a final conditional payment demand prior to finalizing settlement, setting a monetary threshold in which the MSP would not apply, carving out safe harbors for the MMSEA Section 111 penalties, as well as setting a statute of limitations for CMS to recover conditional payments at 3 years.

For a copy of the MARC release regarding the House passage of the SMART Act, please click here. For a copy of H.R. 1845 as passed by the House, click here.

PMSI applauds the House’s actions yesterday and is very hopeful that the Senate takes action to enable the full passage of this Bill. We will continue to follow the SMART Act and remain in support of it as it progresses through the legislative process.

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2012 Elections: How Will it Affect CMS, MSAs, and the MSP?

By , October 24, 2012 1:06 pm

With the upcoming Presidential elections on November 6, 2012, the industry has been wondering what changes, if any, the election results would have on CMS, MSAs, and the MSP.

Additionally, with the Patient Protection and Affordable Care Act (PPACA), also commonly known as Obamacare1, being recently upheld in the U.S. Supreme Court as constitutional, one might wonder what the effect will be on the DHHS and CMS. Obamacare has been referred to as one of the largest changes to the U.S. healthcare system since the founding of Medicare and Medicaid almost five decades ago2. Regardless of one’s political affiliation, one cannot deny that the implementation of Obamacare would seemingly tie up resources at both the DHHS and CMS while implementing these changes.

The current, and arguably most impactful, activities surrounding MSAs and MSP reform are the following: 1) a new contractor, Provider Resources Inc., reviewing WCMSAs since July 2, 2012 (click here for prior blog on the new contractor); 2) an ANPRM which proposes formalized rules regarding MSP obligations and future medicals (comment period closed on August 14, 2012; for more information on the ANPRM click here for our prior blog); and 3) two pieces of legislation which propose reform of the MSP: The SMART Act and the Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2012 (click here for prior blog regarding these Acts).

 Let’s look at each one more closely.

 1)     New WCMSA Contractor

There are mixed results and opinions on the new contractor. While turnaround time for WCMSAs submitted since July 2, 2012 has greatly improved, many have seen vast differences in the way the new contractor has been pricing and reviewing WCMSAs as compared to the prior contractor. All are hopeful that as the new contractor settles in, they will provide reasonable and predictable allocations of WCMSAs. Until Provider Resources, Inc. or CMS provides more predictability to the industry through concrete guidelines and consistency in the review process, WCMSA counter-highs may be inevitable.

  1. If Barack Obama is re-elected: Since Provider Resources, Inc. was chosen under his administration, it is unlikely we will see a change in vendors. Additionally, they are just “getting their feet wet” and arguably would need time before their abilities can be judged.
  2. If Mitt Romney is elected: The Statement of Work appears to be issued for one year periods3 and any changes to the contactor would have to come at the expiration of their Statement of Work period. Regardless, it is likely that the election of Mitt Romney would mean that a new DHHS Secretary would be elected. With Kathleen Sebelius no longer in office, a change in governmental contractors is always a possibility.  It is unclear whether Mitt Romney would change WCMSA contractors. However, if Provider Resources appears to be doing a good job after an expected “learning curve” period, it would not make sense to change them.

2)     ANPRM

  1. If Barack Obama is re-elected: As the ANPRM was issued under his administration, a re-election of Barack Obama would likely help it move along more quickly. The officials at DHHS and CMS currently reviewing commentary received from the public would retain their jobs and could respond and provide finalized rules more quickly. While the focus on implementing Obamacare will still be the top priority of these agencies, one can anticipate that the rule making process will continue.
  2. If Mitt Romney is elected: Kathleen Sebelius would undoubtedly be replaced, which would mean that between November and January 1st, she along with the rest of DHHS would likely focus its efforts on transitioning to a new Secretary. The rule making process would predictably stall during this time. After January 1, the new Secretary of DHHS may be focusing his/her efforts on dismantling Obamacare. Although many have opined that it would be difficult for this to be done4, any focus on the ANPRM could possibly be dismantled or significantly delayed altogether. Regardless, Mitt Romney has proffered that, “[h]is goal is for Medicare to offer every senior affordable options that provide coverage and service at least as good as what today’s seniors receive.”5 Due to the fact that Romney has stated that he is dedicated to preserving the Medicare trust fund and coverage for beneficiaries, it is likely that some form of the ANPRM or other proposed rulemaking would eventually re-surface which would aim to protect Medicare beneficiaries as well as the Medicare Trust Fund.

3)     SMART Act and other WCMSA Legislation

This legislation may not only be impacted by the Presidential election, but also may change due to the composition of the legislature.  Assuming the composition of the House and Senate remain relatively unchanged, the fact that the SMART Act has bi-partisan support should help it to continue to move through the Legislature.

  1. If Barack Obama is re-elected: The SMART Act recently passed the House Energy and Commerce Subcommittee on Health on September 11, 2012 and is planned to head to the full Energy and Commerce Committee for a vote before floor consideration in the House. If Obama stays in office, it is likely that we will eventually see both the SMART Act and the WCMSA legislation tied onto another piece of healthcare legislation with a better chance of passing if Obama stays in office.
  2. If Mitt Romney is elected: Mitt Romney has frequently commented that he will dismantle Obamacare on day one. Many political experts believe that if Romney is elected, his best chances of dismantling Obamacare would be if the Republican Party could win control of both the House and Senate, and in which case he would need to stave off filibusters and repeal the Act.6 Clearly Mitt Romney would try to focus Congress’ efforts on dismantling Obamacare and both pieces of MSP reform legislation may lose priority.  One could anticipate that just as the passage of Obamacare was a contentious task, any attempt to dismantle it will be equally contentious.  If such efforts were successful, the bi-partisan support that the SMART Act currently receives might be at risk, for purely political reasons. It seems that the potential outcome of both pieces of MSP reform would be more dependent upon the make-up of both Houses of Congress after the election, rather than who is elected as President.

Wherever the future of our state of political affairs ends up, we are hopeful that those affected by the MSP, the insurance industry as well as Medicare beneficiaries alike, will ultimately have a fair system of MSP enforcement that not only protects the Medicare Trust Fund, but also provides clear, equitable and consistent guidelines for settlements and consideration of Medicare’s interests. We trust that the future will be bright and our elected officials will ultimately continue to pursue improvements to the system.

We want to hear from you- what do you hope to get out of the 2012 Elections and where do you see the future of MSP reform going?

This blog is not intended to be an endorsement for any political party, platform, or affiliation.

1. [http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act]
2. [ http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act]
3. [https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=5b5f6bb5088ed00ffe7c2b5c643ed74d&_cview=0]
4. [http://news.yahoo.com/romneys-pledge-repeal-obamacare-elected-165418907.html]
5. [http://www.mittromney.com/issues/medicare?gclid=CI2Bk7vhl7MCFRRbnAodgBwA9w]
6. [http://news.yahoo.com/romneys-pledge-repeal-obamacare-elected-165418907.html]

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