Medicare Liens and the SMART Act

HomeGovernment Benefits PlanningMedicare Liens and the SMART Act

“This bill is called the SMART Act for a reason: it is a practical solution to help streamline a system that is currently denying seniors benefits they are entitled to while costing taxpayers millions of dollars every year.” – American Association for Justice (AAJ) President Gary M. Paul.

Every plaintiff attorney who has negotiated a Medicare lien with CMS relating to a personal injury or wrongful death settlement is familiar with the frustration that inevitably accompanies this process.  From our perspective as attorneys who help our clients through this process, the following are the main benefits of the “Strengthening Medicare and Repaying Taxpayers Act” (SMART Act) for plaintiffs and plaintiff attorneys:

  • It allows plaintiffs to determine the Medicare conditional payment amount before settlement;
  • It eliminates the requirement to provide Social Security and health identification numbers to defendants/insurers;
  • It extends the right to appeal or challenge CMS determination amounts;
  • It exempts certain low-dollar settlements from MSP compliance; and
  • It establishes a three-year statute of limitations for all MSP claims.

In our experience with the Medicare lien resolution process, the first two bullets above are the most important potential benefits the SMART Act will provide to plaintiffs and plaintiff attorneys, as more fully detailed below:

The SMART Act allows plaintiffs the ability to determine the Medicare conditional payment amount before settlement.

Under the current CMS guidelines, Medicare’s final conditional payment amount (the amount of the Medicare lien) generally cannot be obtained until after the case settles and the MSPRC receives the executed settlement agreement.  This essentially forces plaintiffs to settle with only an estimate of what the final Medicare lien may be. Additionally, the MSPRC can often take several months to provide CMS’s final figure, which often leads to delays in disbursing the settlement funds to clients.

The SMART Act would change the process by allowing plaintiffs to obtain CMS’s final conditional Medicare lien figure before a settlement, judgment, or award.  This particular change is perhaps the most important for plaintiff attorneys as it will allow more certainty as plaintiff attorneys negotiate settlements, and the Medicare lien resolution process will not bog down the release of settlement funds to plaintiffs once the case has settled.

This change also underscores the importance for plaintiff attorneys to review their internal processes regarding how they handle Medicare lien reimbursement.  Given the new procedures of the SMART Act, there is even more reason to start the process of resolving Medicare’s conditional lien early in personal injury cases. Starting the process early in the case allows for more control and clarity later in the case, allows for more certainty when negotiating or mediating the case, and helps ensure that the Medicare lien will not hold up the settlement process once the case settles.

The SMART ACT eliminates the requirement to provide Social Security and health identification numbers to defendants/insurers. Under the current system, Responsible Reporting Entities are required to determine a claimant’s eligibility for Medicare by using a “Query System” developed by CMS.  The problem for many plaintiffs, however, is that the query system relies on the plaintiff’s SSN or Medicare number to identify whether the plaintiff is eligible for Medicare.  While the SMART Act addresses the reluctance of many plaintiffs to provide their personal information out of privacy and other concerns, it is still unclear how CMS will implement a system that does not require SSN’s or other personal information. Of course, even with these changes, nothing happens fast with CMS.  The SMART Act allows CMS between 9 and 18 months to implement the changes outlined in the legislation, depending on the particular item.  However, while it hasn’t cured all ills, the SMART Act is certainly a step in the right direction when it comes to making Medicare lien resolution more plaintiff-friendly and efficient.

Please give us a call if you have any questions. We are happy to present in-house CLE or lunch-and-learn seminars to plaintiff firms on this topic.  If you think you and your staff could benefit from a short (45 minute to 1 hour) seminar on these or other settlement planning related topics, please contact us.  All CLE and other seminars are free of charge and can be given in-house at your firm.

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