Changes to the Medicare Secondary Payer Act

President Obama signed into law changes to the Medicare Secondary Payer Act. The laws change the reporting requirements for settlements and judgments with Medicare and Medicaid beneficiaries, and the process for requesting demand letters from the Center for Medicare and Medicaid Services ("CMS"). The timeline for the changes includes:

Section 201: Effective nine months after the after the deadline by which CMS must promulgate final regulations to carry out the legislation. This section applies to both workers' compensation and liability claims. It set out a process by which parties may request a demand letter from Medicare that is good for a period of time before disposition of the case. CMS must be provided notice within 120 days of and expected or reasonably expected settlement date, and that the expected date. CMS has 65 days to produce a demand letter, but can extend this timeframe by an additional 30 days. Parties may then retrieve the demand information from the CMS website and rely on it so long as the settlement occurs within 120 days of notice and 3 days from the last download of the website. There is also a dispute process in Section 201. If a dispute is raised the Secretary’s determination is final and not subject to appeal. The procedure outlined in Section 201 is an alternative, and does not replace that procedure currently in place. Lastly, Section 201 grants a new right to the insurance carrier to appeal without the consent of the Medicare beneficiary, only if notice is given to the Medicare beneficiary.

Section 202: Effective 1/1/2014. This section applies to liability claims excluding ingestion, implantation, and exposure cases. It provides that there is no obligation to repay Medicare under 42 U.S.C. § 1395y(b)(2)(B)(ii) or to report under 42 U.S.C. § 1395y(b)(8) if a claim falls below the annual threshold as set by the Secretary of Health and Human Services. The threshold for a given year shall be published by the Secretary by November 15 of the previous year. CMS must report to Congress on thresholds for workers’ compensation and no fault cases.

Section 203: This section amends the Mandatory Insurance Reporting law. It changes the civil penalty amount of $1,000 for each day of non-compliance concerning a given claimant by adding the language “up to.”  This additional language gives Medicare discretion. This section also requires Medicare within 60 days of enactment, to solicit proposals for safe harbor situations, and propose final safe harbor regulations for good faith efforts when a Medicare beneficiary cannot be identified.

Section 204: Effective 18 months after enactment, but the Secretary may apply to Congress for a 12-month extension. This section amends the Mandatory Insurance Reporting law. It allows insurance companies responsible for electronic reporting to report without requiring the use of a Medicare beneficiary’s social security number or Health Care Identification Claim Number. This applies to all claims subject to Mandatory Insurance Reporting. The change provides an alternative so that insurance carriers do not have the burden of protecting certain sensitive information.

Section 205: Effective six months after enactment. This section applies to all workers’ compensation, liability, and no fault claims. This section amends actions brought by the U.S. pursuant to 42 U.S.C. §1395y(b)(2)(B)(iii) and limits actions to enforce reimbursement claims and penalties to three years from the Mandatory Insurance Report of a settlement, judgment, award or other payment. This section creates a clear standard, but to trigger protection, the claim must be electronically reported under 42 U.S.C. §1395y(b)(8).