It does neither

A bill was introduced into Congress in 2011 with the goal of improving the Medicare Secondary Payer recovery process.  It was sponsored by a small coalition of insurers, self-insured companies and Medicare Set-Aside (MSA) firms.  The bill bears the unlikely name of Strengthening Medicare and Repaying Taxpayers called the “SMART” ACT for short.  Unfortunately, it does neither.


H.R.1063 was introduced into the House in March of 2011 and a similar bill, S. 1718, was introduced in the Senate in October 2011.  The bill was an attempt to encourage Medicare to: 1.) respond more quickly to requests for conditional payments; 2.) give insurers the same appeals rights as the ones in place for beneficiaries; 3.) set a minimum reimbursement (e.g., lien) amount; 4.) clearly make reporting penalties discretionary and 4.) require Medicare to come up with a way to implement Section 111 without SSNs or Health Identification Claim Numbers (HICNs).  The bill was reported by committee on September 20, 2012.   Although, gives it a 34% chance of being enacted, it does appear to have spurred a number of voluntary changes within the Medicare Secondary Payer Recovery Contract (MSPRC).

Medicare responds

First, Medicare added a telephone system that allowed representative to check on cases and request conditional payment information.  Then Medicare added an additional Internet portal allowing representatives simpler access to the data that was originally, and still is, hosted on the MyMedicare.Gov portal.  Both of these moves have greatly enhanced timeliness.

Second, after Medicare’s unfortunate congressional hearing in which it was discovered the Agency routinely mailed out demands for less than two dollars to insurers, CMS published a minimum recovery amount of $300.  We tried to tackle that problem during my tenure as the MSPRC program director.  The bare minimum effort we identified was receiving and processing an unsolicited reimbursement payment.  That cost $25, but Medicare would not budge at that time for even for that small amount.  A more realistic scenario of processing a solicited reimbursement demand takes 20 minutes to generate a CPL, of which 30% are disputed and 2% are disputed twice for an average cost of less than $300 per case.  Although the proposed statute would require the Chief Actuary of the Centers for Medicare & Medicaid Services (CMS) to calculate and publish the single threshold amount annually, it is unlikely the threshold would rise significantly or at all for a long time.

Some work yet to be done

Although the Medicare Secondary Payer (MSP) statute does not provide for a formal appeals process, CMS has had an informal appeals process in place for insurers and their representatives since the time of my tenure.  For example, firms representing insurers are allowed to dispute conditional payment amounts.  That was a start, but not really adequate then and less so now with increased volume of reports of “Ongoing Responsibility for Medicals” (ORM) by all types of insurers.  A primary plan appeals process should be codified in regulation if not statute even if it does adds cost to the program

Should not be controversial

Making the penalties for not reporting discretionary should not upset anyone, including CMS.  They have repeatedly stated it is not their intention to regularly levy the fine, but rather to encourage reporting.

Old problems already overcome

The turmoil surrounding the collection of SSNs needed in order to submit a query for enrollment verification has subsided.  Even the federal courts have upheld the insurers right to collect the data.  Most significantly, changing the query process would be problematic for Medicare and might lead to them dropping the process -- one that RREs rely on to establish due diligence and an audit trail to avoid fines.  CMS had a difficult negotiation with the Social Security Administration to get the process in place and the SSA has not been forthcoming in making any changes.

Another roadblock to passage

Finally, the Congressional Budget Office (CBO) published a report entitled “H.R. 1063 Cost Estimate” on November 9, 2012 stating that the only cost savings may be found when, “Beneficiaries, or their representatives, would be able to query a secure Web site and receive an estimate of Medicare’s conditional payments. That amount would be factored into the settlement between the beneficiary and the insurer, allowing certainty about the amount that will be paid to Medicare out of the settlement funds for conditional payments made to that point.”  Unfortunately, beneficiaries and their representative have had access to this process through since 2009.  Apparently, there are no projected savings and hence, no repaying taxpayers.

The bills are unlikely to become law, but have had a positive effect on improving Medicare’s recovery process.  The MSPRC and Coordination of Benefits Contractor (COBC) save Medicare billions of dollars annually.  They do this for cents on the dollar.  The best way to strengthen Medicare and repay taxpayers would be for Congress to fully fund these two efforts for a change.

Click HERE for the official summary of the proposed House bill  found on the Congressional website.