Berman & Simmons Helps Pass SMART Act: Greater Certainty in Medicare Repayments

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Resolving Medicare lien repayment obligations in personal injury and workers compensation cases will be faster and easier in the future due to extensive efforts over the past three years by a broad coalition of injury victims, civil justice advocates, and business groups from across the United States. Working together, they drafted and promoted passage of a bill known as the “SMART Act” (Strengthening Medicare and Repaying Taxpayers Act).

Berman & Simmons attorneys and representatives of the Maine Trial Lawyers Association contributed to this process by meeting with Representative Chellie Pingree and Representative Mike Michaud and members of their staff. Seeing the benefit to Maine people in the Act, Representatives Pingree and Michaud both became co-sponsors and strong allies in the effort to get the bill through Congress. The SMART Act was signed into law by President Obama on January 10, 2013.The law provides injured people and insurance companies with more certainty as they attempt to finalize injury settlements.

CMS to build a website
One feature of the SMART Act moves CMS (Centers for Medicare & Medicaid Services) from paper-based communications and into the digital age. The Act provides that CMS will build a website through which it will provide quick, secure online access to reliable information about final conditional payment amounts. The website should eliminate the historical problems associated with obtaining this information through a series of phone calls and letters.

Under the new law, parties will be allowed to “notify” CMS of an expected settlement or judgment up to 120 days before the “reasonably expected date” of settlement or judgment. CMS will then post a “statement of reimbursement amount” available on its new website and update that statement within 15 days of any additional “conditional payment.” Both the plaintiff and the defendant will be able to rely on CMS’s posted “statement” as the final conditional payment amount, reducing uncertainty that, in the past, has slowed and complicated negotiations in injury cases involving Medicare beneficiaries.

Improving the process for disputing conditional payment claims
A Medicare beneficiary will, as in the past, have the opportunity to contest CMS’s claimed conditional payments on the basis that they are not related to the accident which is the subject of the case. The traditional dispute resolution process has been slow and unpredictable. The SMART Act outlines a new procedure by which CMS must respond or resolve any dispute within 11 days or be deemed to have consented to the resolution proposed by the injured person. Future regulations will define this process further, and outline how appeals from CMS decisions will be handled.

Minimum threshold for reimbursement claims
By November 2014, CMS must establish and publish a minimum threshold amount for claimed conditional payments. Below the threshold, no reimbursement will be required. The new threshold is expected to be greater than the current conditional payment threshold of $300.00.

Mandatory civil penalties now discretionary
The SMART Act puts an end to the mandatory civil penalties and requires CMS to identify “specific practices” that are acceptable and practices that may result in sanctions or which may, on a discretionary basis, result in sanctions. The purpose of this change is to eliminate the “fear factor” often raised by insurance companies as a basis for holding up liability settlements until they receive written conditional payment information or final demand letters from CMS.

Three year statute of limitations
Under the new law, the statute of limitations within which the United States may file suit to recover a disputed conditional payment is “3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment…”

The SMART Act will help injured Maine people and make the legal system more efficient. The historically long waiting periods should decrease substantially, the uncertainty of Medicare data before settlement or trial should be eliminated, and the process of negotiating with Medicare should become easier. The SMART Act brings reliability, certainty, and accountability to the process of making fair reimbursement to Medicare for its accident-related payments.

Berman & Simmons attorneys fight for injured people, and we are proud to have volunteered so many hours of attorney time to passage of the SMART Act. Vigorous advocacy in the Maine Legislature and in Congress can make the world a safer place and bring fairness to insurance practices. These efforts are part of our mission to obtain justice for our clients and for all of the people of Maine.