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HR 1063 was introduced in the 112^th Congress by Representative Tim Murphy (R-PA) and Representative Ron Kind (D-WI) on March 14^th, 2011.  The bill is titled the Strengthening Medicare and Repaying Taxpayers Act of 2011 (SMART Act) and it is an attempt to streamline the Medicare conditional payment resolution process.  The bill was introduced in the House and has been referred to the House Ways and Means committee and the House Energy and Commerce committee.  This legislation is being pushed by the Medicare Advocacy Recovery Coalition (“MARC”) and is supported by the AAJ.  MARC is a coalition of businesses and insurers that is looking to reform the Medicare Secondary Payer Act to make it more user friendly and more efficient. 

HR 1063 is similar to HR 4796 which died in committee during the 111^th Congress.  HR 1063 does address some of the flaws in HR 4796 and is an improved attempt at MSP reform.  The important provisions of the new House bill are as follows:

Subsection 2 - EXPEDITING SECRETARIAL DETERMINATION OF REIMBURSEMENT AMOUNT TO IMPROVE PROGRAM EFFICIENCY

This subsection of the bill provides:

• The claimant may request conditional payment reimbursement amount 120 days before the “reasonably expected date of a settlement, judgment, award, or other payment”. 
• CMS would have 65 days after the date of receipt of the request to respond.
• If CMS fails to respond within 65 days, the claimant would provide an additional notice and if CMS fails to respond within 30 days of the second additional notice, CMS forfeits its right to repayment of the conditional payment.  However, CMS can cure its failure to respond to the second additional notice by showing the “failure was justified due to exceptional circumstances” to be defined by further regulations.  The regulations shall be created such that only 1% of repayment obligations would qualify under the exceptional circumstances cure.
• A right of appeal is also created under this subsection which allows for a federal district court to review after administrative remedies are exhausted. 

Subsection 3 - FISCAL EFFICIENCY AND REVENUE NEUTRALITY

This subsection of the bill provides:

• CMS shall determine a low dollar threshold below which conditional payment obligations will not be pursued and mandatory insurer reporting will not be required.
• For ongoing responsibility for medicals (ORM) reporting, the threshold will be calculated by considering the cumulative value of medical payments plus the purchase price of any annuity or similar instrument.
• CMS will calculate the thresholds on a yearly basis.  This is designed to achieve revenue neutrality.

Subsection 4 - REPORTING REQUIREMENT SAFE HARBORS

This subsection of the bill provides: 

• Fines for an insurer failing to report settlements and ORM with Medicare beneficiaries becomes discretionary and not mandatory and the amount goes from $1,000 to “up to $1,000” for each day of noncompliance. 
• It mandates establishment of practices, through publishing in the Federal Register, that avoid imposition of penalties for failing to report including “good faith efforts” to comply.

Subsection 5 - USE OF SOCIAL SECURITY NUMBERS AND OTHER IDENTIFYING INFORMATION IN REPORTING

This subsection of the bill provides: 

• CMS must come up with an alternate way of identifying whether someone is a Medicare beneficiary through the query system in place of the use of the claimant’s full Social Security number or Medicare number.

Subsection 6 – Statute of Limitations

This subsection of the bill provides: 

• A 3 year statute of limitations with respect to conditional payment recovery actions under the MSP.
• It provides “An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed.”
• A 3 year statute of limitations with respect civil money penalties for an insurer’s failure to report under the mandatory insurer reporting provisions.
• It provides “A civil money penalty may not be imposed under this clause with respect to failure to submit required information unless service of notice of intention to impose the penalty is provided not later than 3 years after the date by which the information was required to be submitted.”

While the proposed changes to the MSP does not cure all problems, it is certainly a step in the right direction.  The addition of a three year statute of limitations is welcome relief from the dicta in US v. Stricker suggesting it was a six year statute for personal injury attorneys (and three years for insurers).  An expedited process for getting conditional payment information is also welcome if it does work effectively.  Unfortunately, the legislation does not address anything in regards to Medicare futures so as to provide clarity regarding Medicare Set Asides in liability cases.  I do hope this bill moves forward unlike HR 4796. 

Perhaps the renewed interest in the 112^th Congress for MSP reform and the impending GAO study requested by Representative Pete Stark (D-CA), senior member of the powerful Ways and Means Committee and Ranking Minority Member of its Health Subcommittee, will spur some action regarding codification of Medicare Set Asides.  Legislation and regulation is desperately needed to provide clarity and due process in this area of MSP compliance.

To track the bill click, go to http://www.govtrack.us/congress/bill.xpd?bill=h112-1063