H.R. 1063, the SMART ACT of 2011, Introduced to amend Medicare Secondary Payer Statute

On March 15, 2011, H.R. 1063, the Strengthening Medicare and Repaying Taxpayers Act of 2011 (SMART ACT) was introduced in the 112th Congress by Congressman Tim Murphy (R-PA) and Congressman Ron Kind (D-WI). This bill is supported by the Medicare Advisory Recovery Coalition (MARC) and is very similar to H.R. 4797 introduced on March 9, 2010.

MARC states that this legislation will, “significantly improve the efficiency of the current Medicare Secondary Payer (MSP) system and speed repayment of amounts owed from Medicare beneficiary claims directly to the Medicare Trust Fund”.

In summary, this bill proposes the following amendments to the Conditional Payments section (42 U.S.C 1395y(b)(2)(B)), the Mandatory Insurer Reporting section (42 U.S.C 1395y(b)(8)), and adds a new section (42 U.S.C 1395y(b)(9)) to the Medicare Secondary Payer Statue:

Section 2 – Expediting Secretarial Determination Of Reimbursement Amount To Improve Program Efficiency

  • First request within 120 days – A claimant or applicable plan can make a request for conditional payment statement within 120 days of a reasonably expected settlement.
  • Response within 65 days – The Secretary* must respond to the request within 65 days of first request.
  • 2nd Request – If the Secretary fails to respond to the first request a second request for conditional payment can be made.
  • Failure to respond within 30 days – If the Secretary doesn’t respond to the second request within 30 days, the responsible parties are not liable to reimburse the Secretary for the conditional payment (with some exceptions to be determined later by regulation)
  • If settlement doesn’t occur – within 120 days, the Secretary is exempt from the time requirements above.
  • Appeal process – The Secretary shall issue regulations establishing a right of an appeals process for the Secretary’s determination of a Conditional Payment amount.

Section 3 – Fiscal Efficiency And Revenue Neutrality

  • Minimum dollar threshold – The Secretary will establish a minimum threshold dollar amount, below which, conditional payment reimbursement and Mandatory Insurer reporting will not be required.
  • Ongoing responsibility for medicals (ORM) – For purposes of computing the minimum dollar threshold and conditional payment reimbursement the payment is defined as only the cumulative value medical payments made and the purchase price of any structured annuity.

Section 4 – Reporting Requirement Safe Harbors

  • $1,000 per day penalty – Changes the terminology used to define MIR violation fines from “shall be subject” to “may be subject”.
  • Good faith exceptions – after enactment of this bill the Secretary must publish “good faith” exceptions to the $1,000 non-reporting penalty after soliciting proposals and public comment.

Section 5 – Use Of Social Security Numbers And Other Identifying Information In Reporting.

  • SSNs not required – Within one year the Secretary shall modify the MIR reporting requirements so that an applicable plan is not required to report a claimant’s social security number.

Section 6 – Statute Of Limitations

  • A 3 year statute of limitations – will apply for conditional payment and MIR actions

*The term “Secretary” in this bill and the current statute refers to the Secretary of the US Department of Health and Human Services (HHS), which oversees its Division of Medicare and Medicaid Services (CMS), which oversees the federal Medicare health insurance program

To view the bill text for H. R. 1063, click here.