New Law to Help Sponsors Understand their Payment Liability and Ease Reporting Burdens

January 2, 2013 – New Law to Help Sponsors Understand their Payment Liability and Ease Reporting Burdens

In the flurry of the Congress’ lame duck session, legislation has just been agreed to, H.R. 1063/S. 1718 (the SMART Act) that will improve the claims settlement process groups undertake, as well as the reporting requirements of such actions, under the Medicare Secondary Payer program. SIIA has been an official proponent of the legislation since its inception and has worked alongside a coalition of interested-parties to support its passage.

In order to permit the Centers for Medicare and Medicaid Services (CMS) to better enforce the MSP rules, Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) was enacted and contained new mandatory reporting requirements for insurers (including self-insured group health plans and workers’ compensation plans). The purpose of these new rules was to enable CMS to ensure that it has the necessary information to determine when Medicare’s financial responsibility is secondary, and therefore Medicare payments may be reduced or, if already paid, recouped.

Under the current MSP system, Medicare beneficiaries and third parties have significant problems settling claims, as they cannot determine the amount owed to Medicare in a timely manner – thus increasing liabilities and costs and delaying settlements. Further, the current system causes places an unreasonable burden, both legally and administratively, on plan-sponsors.

The SMART Act makes the following changes to the MSP reporting system:
• Requires Medicare to release a statement to the plan describing exactly what the obligation of the plan is
• Enables Plans to a legal right of appeal
• Creates a $5,000 threshold – plans would not be required to pay sums owed that are less than that amount
• No longer requires plans to submit SSNs
• Medicare would only have 3 years to notify a plan of its payment obligation
• Provides the government with enforcement discretion and ensures proportional penalties and develop safe harbors for meeting reporting requirements
• Imposes a $30 per claim processing fee for each expedited voluntary payment
The legislation will be signed into law by the President in the next few days.

For any questions on the new law, please contact SIIA’s Director of Government Relations, Jay Fahrer at 202-463-8162 or