Medicare Secondary Payment Fix Signed into Law

Legislation aimed at streamlining repayment of funds to Medicare when the program pays claims later covered by private insurers has finally been enacted into law.

President Obama Thursday signed into law H.R. 1845, which contained the SMART Act, or The Strengthening Medicare and Repaying Taxpayers Act. Passage of the bill culminates an effort launched in 2008 by insurance companies and other third-party payers to clarify the Medicare Secondary Payer Act.

The underlying legislation provided for a study on issues relating to access to intravenous immune globulin (IVIG) for Medicare beneficiaries.

Key to getting the bill enacted was a determination by the Congressional Budget Office in November that the Medicare Secondary Payer clarification would save $45 million over 10 years for the federal budget.

When a bipartisan group coalesced around support for the IVIG pilot program, which was projected to cost $40 million over 10 years, the SMART Act became the glue that sealed the deal, according to industry lobbyists and congressional staffers.

MSP was originally a bill added to other legislation in 2007 whose purpose was to speed up the process of returning money to Medicare for medical claims for which the Medicare beneficiaries were later reimbursed by third parties.

But that law created its own problems.

Rep. Tim Murphy, R-Pa., one of the bill's original sponsors, described the plight of one of his constituents: “Four years ago, Lorraine Babich of Washington County suffered severe injuries in a terrible car accident. After coming to a settlement with the insurer, Babich, 73, was unable to get a straight answer from the Centers for Medicare and Medicaid Services about the amount of her medical bills, which had to be repaid to Medicare.”

Murphy said that as a result of unnecessary bureaucratic hurdles, “Lorraine waited years to get the proper settlement due to her. Unfortunately, Lorraine's heartbreaking story isn't an isolated case because there are thousands of senior citizens just like her who continue to await settlements, see their Social Security checks garnished, and Medicare coverage denied through no fault of their own,” Murphy said.

“With the SMART Act now signed into law, Lorraine and thousands of other senior citizens will no longer needlessly suffer due to bureaucratic red tape.”

Tom Litjen, vice president of federal government relations for the Property Casualty Insurers Association of America, said the bill signing “is a major victory for beneficiaries and taxpayers, as well as for the property/casualty insurance industry.”

He said the legislation will bring “much needed clarification in the Medicare Secondary Payer system reporting requirements and will improve the efficiency of the system by eliminating the costly delays in settling claims and providing funds to the beneficiaries in a more timely manner.”

Melissa Shelk, vice president of federal affairs at the American Insurance Association, said the bill “will lead to the more efficient and faster settlement of claims which will benefit beneficiaries, employers, insurers and the Centers for Medicare and Medicaid Services.”

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, said that signing of the SMART Act will help create a clear set of rules to help ensure swift settlements of claims and reduce waste and fraud costs for the Medicare Trust. Grande noted that the bill had strong bipartisan support.