On March 14, 2011, Congressman Tim Murphy (R-PA) and Congressman Ron Kind (D-WI) introduced H.R. 1063, The Strengthening Medicare and Repaying Taxpayers Act (SMART Act), into the U.S. House of Representatives.  A year ago, Pat Murphy introduced, H.R. 4796, the Medicare Secondary Payer Enhancement Act of 2010 (MSP Enhancement Act), which proposed similar changes to the MSP Act.  See Proposed Changes to the Medicare Secondary Payer Act.  Both bills share a similar goal: making the process of determining the Medicare reimbursement amount more efficient so that parties know the amount of the reimbursement before settlement. 

Under the SMART Act, the Secretary of the U.S. Department of Health and Human Services would have 65 days from the receipt of a request to provide the Medicare reimbursement amount.  Under the proposed changes in the MSP Enhancement Act, if the Secretary failed to respond to the initial request for the reimbursement amount, the applicable plan would automatically not be liable for or obligated to make the reimbursement payment.  Under the proposed changes in the SMART Act, after the Secretary’s initial failure to respond to the request for the reimbursement amount, the applicable plan must provide an additional notice to the Secretary of its failure to respond.  The Secretary would have 30 days from the additional notice to provide the reimbursement payment before the applicable would not be liable for or obligated to reimburse the reimbursement payment, except where the Secretary’s failure to respond was justified due to exceptional circumstances.  The enactment of the SMART Act would help facilitate settlements because parties would know the amount owed to Medicare during their settlement negotiations. 

Similar to the MSP Enhancement Act’s proposed changes, the SMART Act’s amendments include: (1) a three-year statute of limitations for MSP recovery actions from receipt of the Section 111 report; (2) discretionary penalties instead of mandatory penalties; and (3) the development of safe harbor provisions for meeting the mandatory reporting requirements (i.e., good faith efforts to identify a beneficiary).  Unlike the MSP Enhancement Act, the SMART Act does not provide a mechanism for parties to voluntarily submit a “conditional payment calculation” and reimbursement payment to CMS and wait 70 days for CMS to contest the amount and to provide a final demand for the balance of the remaining amount owed. 

Some of the SMART Act’s amendments would benefit all parties involved.  For example, the bill would also establish a minimum threshold that would exempt small claims from the MSP reporting requirements, ensuring that the government does not spend more collecting on small claims than it will ultimately recover.  Additionally, CMS would be required to implement a reporting process so that responsible reporting entities do not have to access or report social security numbers or health identification claim numbers (HICN).  It is anticipated that CMS will use part of the Medicare beneficiary’s social security number or HICN, instead of the entire number.