Addressing some delays that have impeded Medicare and civil justice recoveries for injured seniors and disabled people, President Barack Obama has signed into law the Strengthening Medicare and Repaying Taxpayers (SMART) Act. The act addresses administrative delays by the Centers for Medicare and Medicaid Services (CMS), which had prevented injured people from receiving secondary payer compensation until Medicare was reimbursed for its costs. Through the streamlined process created in the act, the Medicare Secondary Payer system will be promptly reimbursed for medical costs that are the responsibility of a third party, usually an insurance company, during the course of civil litigation. The new procedures are expected to reduce recovery delays that in some cases had lasted for years.
“Before the SMART Act, resolving Medicare’s recovery claim was a nightmare. It could take years to get Medicare’s claim resolved,” said Linda Magruder of Louisville, Ky., who represents plaintiffs in personal injury cases and insurance subrogation claims. “As the U.S. population ages, Medicare becomes the primary health care coverage for more Americans and thus becomes a party in more personal injury matters with its own claims for recovery,” she added.
Magruder explained that the slow recovery process for Medicare claims had caused a conundrum for plaintiff lawyers representing clients who had secondary recoveries as a result of civil litigation. “There was always a chicken versus egg situation because a personal injury attorney could not settle a case without knowing the final amount of Medicare’s claim, and Medicare would not give the final amount of its claim until the attorney settled the case,” she said.
The act addresses the delayed reimbursement issue with several key provisions. It requires that CMS maintain a secure portal for patients to access claims and reimbursement status, and it imposes deadlines for CMS to process the payments. For instance, Medicare beneficiaries must report a potential settlement no more than 120 days in advance and, once notified, CMS has 65 days to ensure that its Web portal is current.
The act also provides an expedited mechanism for Medicare beneficiaries to report discrepancies in CMS data, adjusts penalty provisions against insurance companies for reporting errors, and imposes stricter privacy safeguards by eliminating the use of medical claim and Social Security numbers. Another mandate is that CMS establish a break-even point for Medicare recoveries when the recovery cost and value of the claim are equal—the point at which the cost to recover a Medicare claim equals the value of the Medicare claim. It also applies a three-year limit for CMS to seek repayments from beneficiaries, a provision plaintiff attorneys see as providing more certainty and finality in the reimbursement process.
Attorney Michael D’Amico of Watertown, Conn., expressed optimism that the SMART Act will resolve some of the problems plaintiff lawyers and their injured clients have routinely encountered. “We all have experienced the long and frustrating delays in getting any conditional payment amounts from CMS, let alone an accurate amount—and then the added delay in waiting for the almost never-to-be-received final demand letter,” said D’Amico. “These delays have left injured claimants waiting months and at times more than a year for final disbursement of funds. In some cases, insurance carriers have refused to issue the settlement check at all … until the final demand amount has been received.”
Magruder added that the new law will help expedite settlement efforts with tortfeasors. “All of these provisions will make it easier for a personal injury attorney to resolve Medicare’s recovery claim, which in turn makes it easier for attorneys to accept Medicare beneficiaries’ personal injury cases. The SMART Act is one of the most significant pieces of pro-civil-justice legislation to be passed in years,” she said.