Medicare Secondary Payment Bill Moves Forward; Enjoys Wide Support

A House panel today reported out legislation that would streamline enforcement of the Medicare Secondary Payment program.

The legislation, H.R. 1063, is the SMART Act, or The Strengthening Medicare and Repaying Taxpayers Act.

The bill would clarify industry-reporting requirements under legislation enacted in 2007, which requires reimbursement to Medicare for payments made to people who are also paid later through workers’ compensation or liability claims.

It also sets a three-year limitation period on the government’s ability to bring a claim for repayment.

The bill was passed by voice vote by the House Energy and Commerce Committee. Its next stop is the House Ways and Means Committee for “sequential referral” to a committee with “concurrent jurisdiction.”

Given that both the House and Senate will recess Friday until after the November election, final action is unlikely before late fall.

However, prospects for the bill’s passage by the end of the year brightened, since the bill has gained the support of the insurance industry, employers, and plaintiff lawyers. It was also rewritten prior to last week’s markup before a subcommittee to satisfy both Democrats and Republicans.

The bill is designed to fix problems in the original legislation, the Medicare Secondary Payment Act, enacted in 2007.

As expressed by Rep. Fred Upton, R-Mich., chairman of the committee, the legislation deals with the fact that many injury claims cannot be settled in a timely or conclusive manner because the Centers for Medicare and Medicaid Services must be reimbursed for payments it has made for medical services to auto-accident victims or those covered by workers’ compensation insurance.

Upton explains that, under current law, CMS is not required to—and therefore does not—provide the amounts either due or that must be set aside to cover future payments so that parties can resolve their Medicare obligations during settlement.

“As a result, party settlements are often delayed or settlement amounts placed in escrow until CMS can deliver a final amount—a process that can take years,” he said.

Melissa Shelk, vice president for federal affairs for the American Insurance Association, says the bill will help improve and speed up claims settlements for Medicare beneficiaries while continuing to appropriately reimburse the Medicare trust fund. 

“We remain hopeful that this legislation will be given further congressional consideration that will ultimately lead to its adoption this year,” Shelk adds.

David Farber, a lawyer for the Medicare Advocacy Recovery Coalition (MARC), notes that the bill won unanimous support, and that Upton has “framed the bill as a sensible solution to perplexing MSP problems.”

Improvements in the handling of MSP claims imposed by the legislation include:

Declaring that the claimant (or applicable plan) may request at any time, but only once beginning 120 days before the reasonably expected date of a settlement or award, a statement from the Secretary of Health and Human Services (HHS) for the conditional reimbursement amount due the Medicare program.

Requiring HHS to set up a process whereby parties to a settlement can secure a final conditional payment amount to be repaid to the Medicare Trust Fund within 95 days of such notice.

Directing HHS to promulgate regulations for a right-of-appeal for final payment amounts.

Barring HHS from seeking payment of claims below the cost of recouping such payment (threshold to be determined by the Secretary).

Making discretionary the current civil monetary penalty for an applicable plan’s noncompliance.

Establishing safe harbors from the MSP reporting requirements.



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