Tag Archive for 'SMART Act'


New Policy for Exposure, Ingestion, and Implantation Claims

On August 19, 2014, Centers for Medicare and Medicaid Services (CMS) issued an alert regarding its revised policy on MSP recovery claims and MMSEA Section 111 reporting requirements with respect to liability insurance in cases involving exposure, ingestion, and implantation claims. CMS will not assert an MSP recovery claim or require MMSEA Section 111 reporting when all of the following criteria are met:

1. All exposure or ingestion ended or the implant was removed before December 5, 1980;
2. Exposure, ingestion, or an implant on or after December 5, 1980, has not been claimed in the most recently amended operative complaint (or comparable supplemental pleading) and/or specifically released; and
3. There is either no release for the exposure, ingestion, or an implant on or after December 5, 1980, or where there is such a release, it is a broad general release (rather than a specific release), which effectively releases exposure or ingestion on or after December 5, 1980. The rule also applies if the broad general release involves an implant.

Instead of relying on the allegations contained in the initial Complaint, CMS will now rely on the allegations in the latest complaint (or comparable supplemental pleading) to determine whether a particular case meets the above-listed criteria.

Additionally, the CMS alert addressed claims involving multiple defendants and their reporting obligations under MMSEA Section 111. In cases where a co-defendant’s exposure period occurs before December 5, 1980, all defendants are subject to MSP recovery claims and are required to report pursuant to MMSEA Section 111.  This policy appears to be unfair to entities whose exposure clearly occurred prior to December 5, 1980, and CMS will likely be pressured to revisit it.

Change in Reporting of Medicare Health Insurance Claim Numbers (HICNs) and Social Security Numbers (SSNs) for Non-Group Health Plan (NGHP) Responsible Reporting Entities (RREs)

In accordance with Section 204 of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act), CMS is modifying its existing requirements related to the submission of HICNs and SSNs when RREs report settlement, judgments, awards, or other payments. While CMS will no longer require RREs to submit the HICN or full SSNs, it “highly recommends” that they do so that it can accurately identify individuals as Medicare beneficiaries.  Effective January 5, 2015, where an RRE cannot obtain an individual’s HICN or full SSN, it may report the following data that will enable CMS to properly identify a Medicare beneficiary:

• Last five digits of SSN,
• First Initial,
• Surname,
• Date of Birth, and
• Gender.

If the RRE is unable to obtain or does not provide the HICN, full SSN, or any of the above-listed data, it must document its attempts to obtain this information. CMS advises that RREs may use the model language located in the Downloads section of the Mandatory Insurer Reporting (MIR) for NGHP page at http://go.cms.gov/mirnghp.

It is unclear whether CMS has met its obligations under the SMART Act, which requires CMS to modify the reporting requirements so that an RRE “is permitted but not required to access or report” SSNs or HICNs.  According to CMS’ alert, an RRE is still required to attempt to obtain a claimant’s SSN and/or HICN.


The Centers for Medicare and Medicaid Services (CMS) released a proposed rule on December 27, 2013, intended to implement provisions of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act). The proposed rule, if adopted, would give effect to a provision of the SMART Act requiring a right of appeal and an appeal process for liability insurance, no-fault insurance, and workers’ compensation plans when Medicare pursues a Medicare Secondary Payer (MSP) recovery claim directly from the insurance or workers’ compensation plan. Comments on the proposed rule must be submitted by 5 p.m. on February 25, 2014.

The proposed rule is the result of section 201 of the SMART Act, which requires Medicare to promulgate regulations establishing such a right of appeal and an appeal process with respect to any determination for which the Secretary is seeking reimbursement from an applicable plan. The appeal process must be available to the applicable plan, or an attorney, agent, or third-party administrator on behalf of the applicable plan.

Currently, if an MSP recovery demand is issued to the beneficiary as the identified debtor, the beneficiary has formal administrative appeal rights and the final determination by Medicare can be judicially reviewed. If, however, the recovery demand is issued to the applicable plan as the identified debtor, the applicable plan has no formal administrative appeal rights or judicial review available. The proposed rule seeks to change this by amending the definition of “initial determination,” granting applicable plans access to the multi-level appeal process that is currently available to beneficiaries and providers.

The proposed rule would amend the definition of initial determination to include a determination by Medicare that it has a direct right of recovery against an applicable plan. It would also consider the applicable plan a party to the initial determination and, therefore, privy to the appeal process whenever Medicare seeks recovery directly from the applicable plan. Medicare seeks recovery directly from the plan only where a recovery demand letter is issued to the plan and lists the plan as the identified debtor. The plan would then have access to the current appeal process, including a redetermination by the contractor issuing the recovery demand, reconsideration by a Qualified Independent Contractor, an Administrative Law Judge hearing, and a review by the Departmental Appeals Board’s Medicare Appeals Council.

Furthermore, where the applicable plan is considered a party to the initial determination, it will be the sole party to the initial determination. Under the current system, the beneficiary and medical service provider could also be considered parties to the initial determination. The proposed rule also includes notice requirements that parallel those of the beneficiary.

Although there has been interest in the field in creating an appeal process for workers’ compensation Medicare set-aside arrangement amounts, the proposed rule will not apply to such determinations.

The proposed rule is available at: https://www.federalregister.gov/articles/2013/12/27/2013-30661/medicare-program-right-of-appeal-for-medicare-secondary-payer-determination-relating-to-liability

SMART Act Interim Final Rule

In compliance with the deadlines of the SMART Act , the Centers for Medicare and Medicaid Services (CMS) released its interim final rule outlining the process for expanding Medicare’s Secondary Payer (MSP) Web portal. The interim final rule includes a timeline for developing a multifactor authentication solution to securely permit authorized users to access CMS’s MSP conditional payment amounts and claims information via the MSP Web portal. Authorized family members and representatives, as well as applicable plans, will now be granted access to the beneficiary’s Medicare Secondary Payer information, which will expedite the settlement process. The Act also requires CMS to update the portal to allow users to notify CMS that a case is nearing settlement, obtain time and date stamped final conditional payment summary forms and amounts prior to settlement, and ensure that disputes regarding claims included in the final conditional payment amount are resolved within 11 days of CMS’s receipt of the dispute through the portal.
A 60-day comment period is currently in effect, which will last until 5:00 p.m. on November 19, 2013. Comments can be made online at http://www.regulations.gov. Following the comment period, the regulations will become “effective” on November 19, 2013.  However, CMS has indicated it will implement all systems and process changes no later than January 1, 2016. The delay in implementation has received criticism from insurers and other payers who believe that two years is too long to wait for the benefits of the Act to take effect.

Security Features and Timeline
CMS intends to implement a multifactor authentication no later than January 1, 2016, to provide increased security to the Web portal. After the authentication is implemented, claim-specific information such as diagnosis codes, provider names, and dates of service will be available to all authorized users via the Web portal. However, until the authentication is developed and incorporated, the beneficiary will remain the only entity with access to all the claims information while all other authorized users will only have access to the total conditional payment amount. Thus, attorneys or plans that intend to dispute claims included in the conditional payment amount will need to continue addressing those disputes in the same manner used now.

Obtaining a Final Conditional Payment Amount through the Web Portal
The first step in obtaining a final conditional payment amount is for the beneficiary or the beneficiary’s attorney to notify the appropriate Medicare contractor that a liability insurance, no-fault insurance, or workers’ compensation claim has been filed. This initial notification will still need to be provided outside of the Web portal to the appropriate Medicare contractor. After receiving such notification, Medicare will have 65 days to post its initial claims compilation on the Web portal. The SMART Act allows CMS to extend its response time by 30 days if it determines additional time is needed. The rule indicates such an extension might be necessary where a CMS contractor is required to review the systematic filtering of claims for a case and adjust those filters manually to ensure the proper claims are included. The Act also allows CMS to further extend the time period in exceptional circumstances; however, CMS is restricted to classifying no more than 1 percent of claims as exhibiting exceptional circumstances. The rule defines exceptional circumstances as events such as system failures due to extreme adverse weather, a security breach of the network, terror threats, strikes and similar labor actions, or other unlikely events.

At any time after Medicare posts its initial claims compilation, the beneficiary may notify CMS once, and only once, through the Web portal that he or she is within 120 days of settlement of the claim. Thus, based on the timelines, notification must be provided at least 185 days prior to an expected settlement.

The beneficiary may refresh the claims as often as he or she prefers after the initial 120-day settlement notification has been provided. If the beneficiary believes improper claims have been included in the claims compilation, a claim may be disputed once, and only once, and additional support of the dispute may be required. Disputes submitted through the Web portal shall be resolved within 11 days of receipt of the dispute. While only one appeal is offered through this process, the traditional appeals process for disputing claims included in the final demand letter will remain intact. However, requiring parties to move forward with settlement despite unresolved claim disputes will undoubtedly leave some ambiguity in the settlement process. After all disputes are addressed, the beneficiary must request and receive confirmation of a claims refresh via the Web portal before he or she will be able to obtain a final conditional payment amount. The rule provides that CMS will provide confirmation of the completion through the Web portal no later than 5 business days after the request is initiated. Note that this requires an additional action by an authorized user, and also adds at least an additional 5 days to the settlement timeline.

After receiving the confirmation that the claims refresh has been performed, the beneficiary may download a time and date stamped final conditional payment amount. For the final conditional payment amount to be valid, settlement must be reached within 3 days of the time and date stamp. The rule is silent as to whether parties will be able to re-download a final conditional payment amount with an updated time and date stamp should settlement not be reached within the three day time frame. If additional final conditional payment amounts are not available, parties may be forced to undergo the traditional MSP recovery process.

Following the settlement, the beneficiary will have 30 days to provide settlement information, such as the date and total amount of the settlement, as well as attorney fees and additional costs incurred by the beneficiary in obtaining the settlement, or else the final conditional payment amount will expire. While the rule acknowledges that providing this information within 30 days may at times prove challenging, it does not provide an alternative solution. Once the settlement information is received, a pro rata reduction will be applied to the final conditional payment amount and a final MSP recovery demand letter will be issued. CMS hopes to implement a method for submitting settlement information via the Web portal.

Ideally, the MSP web portal will serve as a useful tool for parties to use to assist in a settlement with a Medicare beneficiary.  If the proposed CMS process works as expected, the parties will know Medicare’s final conditional payment amount before any settlement proceeds are paid.  This will provide defendants and insurers with the opportunity to pay Medicare directly and avoid a potential future Medicare recovery action.

Click here for more information about the SMART Act Interim Final Rule.


On January 10, 2013, President Obama signed the Strengthening Medicare and Repaying Taxpayers Act (SMART Act) into law. A timeline of the effective dates of the SMART Act’s key provisions is as follows:

Effective immediately, the civil penalties for non-compliance with mandatory insurance reporting requirements would be discretionary and “up to” $1,000.00 for each day of non-compliance with respect to each claimant.

Within 60 days, the Secretary of the U.S. Department of Health and Human Services (“Secretary”) must solicit proposals for safe harbor situations (practices for which sanctions will not be imposed) where good faith efforts are made to identify a Medicare beneficiary in order to comply with the mandatory reporting requirements.

Effective July 10, 2013 (six months after its enactment), a three-year statute of limitations will apply to MSP recovery actions, which is triggered upon receipt of the Section 111 report.

The Secretary has nine months, or until September 10, 2013, to issue final regulations that establish a process by which parties notify Medicare of a reasonably expected settlement and request and receive a demand letter from Medicare setting forth the total reimbursement amount due to Medicare. The Secretary is also required to maintain a website which allows Beneficiaries to access information about claims and services paid by Medicare. Parties are required to provide CMS with 120 days’ notice before a reasonably expected settlement. The Secretary will have 65 days from the receipt of this notice to provide the Medicare reimbursement amount, a period which can be extended by 30 days by the Secretary. After this time has expired, the parties can rely on the reimbursement amount obtained from the website and rely on it as long as the settlement occurs within 120 days of the notice and 3 business days from the last download of the reimbursement amount from the website.

Effective January 1, 2014, certain liability claims will be exempt from reporting and reimbursement if the claim fails below the annual threshold as calculated by the Secretary.

Within 18 months, the Secretary must 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).


On January 10, 2013, President Obama signed the Strengthening Medicare and Repaying Taxpayers Act (SMART Act) into law.  The SMART Act is expected to make the Medicare Secondary Payer system more efficient.