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Medicare Compliance Update:
Smart Act Alert



On January 10, 2013, President Obama signed H.R. 1845 into law, which included a provision entitled “Strengthening Medicare and Repaying Taxpayer’s” (“SMART”) Act. The Act impacts the efficiency of the Medicare conditional lien recovery process and addresses several important issues surrounding Section 111 Mandatory Reporting. The key provisions of the Act are summarized below.

Title II, Section 201

Section 201 requires Medicare to maintain a secure web portal for use by Medicare beneficiaries, representatives, or, with the beneficiary’s consent, an applicable plan (i.e., liability insurer, no-fault insurer, self-insured, or workers’ compensation law or plan). The portal will contain conditional lien payments relating to a potential, settlement, judgment, or award, and Medicare is required to update this information no later than 15 days after the date payment is made. The parties will also be able to obtain a final conditional lien amount prior to settlement. Specifically, the parties can notify Medicare of an expected resolution at any time beginning 120 days prior to an expected settlement, judgment, award, or other payment. Medicare will then have 65 days, which can be extended an additional 30 days, to post the conditional lien on the website. This will be considered the final lien amount if the following criteria are met:

  • The lien amount is downloaded during the “protected period” (i.e., after the 65-95 day window is up to the date of resolution);
  • The settlement, judgment, or award occurs within the protected period;
  • The statement was downloaded within three business days of the settlement, judgment, award, or other payment; and
  • The statement was the last statement downloaded from the website.

This section also allows the parties to dispute the conditional lien amount, and Medicare will have 11 days to respond to the dispute. Medicare is also required to promulgate regulations establishing a right to appeal and an appeals process.

    Title II, Section 202

    This section requires Medicare to establish conditional lien recovery thresholds to ensure that the cost of securing payment of the conditional lien would not be more than the expected recovery.

    Title II, Section 203

    Pursuant to Section 111 Mandatory Reporting requirements, a mandatory $1,000-a-day civil penalty was imposed on an applicable plan for each day it was in non-compliance with the reporting requirements. Section 202 has now made this penalty discretionary and requires Medicare to solicit proposals to establish when penalties should actually be imposed.  Medicare will thereafter issue final rules outlining when penalties are appropriate.

    Title II, Section 204

    Section 204 of the Act requires Medicare to identify an alternative to the use of Social Security/HICN numbers for the identification of Medicare beneficiaries. This should be completed by July 10, 2014, but may be extended by one year or more. 

    Title II, Section 205

    Significantly, this section of the Act imposes a three-year statute of limitations on Medicare’s right to recovery. The three-year period runs from the date Medicare received notice of a settlement, judgment, award, or other payment pursuant to Section 111. The statute of limitations applies to all actions brought and penalties sought on or after six months from the enactment of the Act.

    Attorney Bridget Langer Smith Bridget Langer Smith
    Dickie, McCamey & Chilcote, P.C.


    For further information regarding this alert, or for any Medicare compliance assistance, please contact:

    Charles G. Brown, Esq., 412-392-5204,
    Bridget Langer Smith, Esq., 412-392-5624,
    Katherine S. Gallagher, Esq., 412-392-5413,