CMS Proposal on SMART Act Stirs Concern

A rule proposed by the Centers for Medicare and Medicaid Services contradicts the intent of a recently passed law aimed at requiring CMS to tell insurers how much of a claims settlement involving federal health insurance recipients must be given to CMS.

The insurers and other interested parties are also concerned that CMS is presenting them with a fait accompli, meaning immediate implementation of the rule, rather than a full notice and comment process, interested parties including insurers, are saying in comment letters.

The comment letters are due Tuesday.

Of deepest concern, however, is the fact the interim final rule--which means it goes into effect immediately--more than doubles the statutory 120-day period CMS is given under the new law to provide to insurers the portion of the final settlement that insurers will have to give to CMS rather than the claimant.

Under the interim final rule, CMS will be given 245 days to process claims submitted by the insurers and other third-party payers, as well as lawyers involved in settlements.

The comment letters also voiced concern that, contrary to the intent of the law, the proposal doesn’t reflect the fact that when a deal is reached, all parties have certainty within a reasonable period of time.

The regulatory process was mandated by passage in January, after years of effort, of the SMART Act, or The Strengthening Medicare and Repaying Taxpayers Act.

It deals with mandates for providing timely information to CMS on settlements of lawsuits involving no-fault auto-insurance claims, workers’ compensation claims, and payments under liability insurance, such as auto accidents.

Among those submitting comment letters are the American Insurance Association, the Risk and Insurance Management Society (RIMS) and the Medicare Advocacy Recovery Coalition (MARC), which includes self-insured employers. RIMS members include a number of municipalities, public school systems, etc.

In addition to the proposed extension of the settlement timetable, RIMS also objects to the CMS’ decision to use an IFR rather than the regular notice and comment process, as well as the new regulation’s preservation of the CMS’ right to future medical claim recoveries, said John Phelps, RIMS president. 

The RIMS letter urged CMS to rescind its IFR and to re-issue a new proposed rule through the regular comment process.

“In addition to conforming to the requirements of the SMART Act, the CMS proposal also must work within the context of how settlements actually occur, and should promote, rather than delay the settlement of claims…The potential that settling parties would have to wait over half a year to conclude their settlement because of a lengthy MSP process will lead many settlements to breakdown,” Phelps concluded.

The MARC Coalition said the fully-implemented web portal SMART was designed as a key component to this legislation, "as it was meant to allow all parties to know the final conditional payment amount owed prior to settlement," says Michele L. Adams, chair, in a letter. 

However, the interim final rule designed to implement the SMART Act “is flawed” because it creates a settlement process that is in “direct contradiction to Congress’ clear instruction, exceeds and misconstrues the SMART Act, and fails to address needed regulatory issues,” Adams says.

“For all the reasons set forth above, the MARC Coalition urges CMS to withdraw the IFR and reissue a proposed rule upon which all stakeholders can comment,” Adams said.

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