Medicare Smart Act Signed By President Obama

Workers’ compensation practitioners should be aware that President Barack Obama signed the SMART Act on January 10, 2013 (H.R.1845). Just as a side, this bill was attached to a Medicare IVIG Access Bill which has nothing to do with Medicare Conditional Payments.

The MSP reforms within this bill are summarized as follows:

Section 201 (Conditional Payment Final Demand and use of Website):

1. A claimant (or his/her representative) may at any time 120 days prior to the settlement, judgment or award notify the Secretary of the expected date and amount of the settlement, judgment or award.

2. The Secretary must provide conditional payment information through a website and update the information no later than 15 days after a payment is made.

3. If certain conditions are met, the last statement downloaded from the website can be considered the final demand (H.R. 1845 defines the “Protected Period” in section V, as 65 days from notice to the Secretary “except the Secretary may extend such period for an additional 30 days”).

4. If there is a dispute over the conditional payment amount, the Secretary must respond/resolve the dispute within 11 business days or the proposed resolution by the claimant/representative will be deemed accepted.

5. This process will go into effect 90 days after the effective date of the Act (January 10, 2013). This section also provides that the Secretary create an appeals process for conditional payments.

Section 202 (Thresholds for Reporting and Conditional Payment Reimbursement):

By November 15th each year, the Secretary will have to publish a threshold, under which, reporting and conditional payment reimbursement will not apply. This will begin in the year 2014. The threshold amount will be based upon “the estimated cost of collection (including payments made to contractors)” for “physical trauma-based incidents.” This threshold will not apply to “alleged ingestion, implantation, or exposure cases.”

Section 203 (Discretionary Fines for Noncompliance with MIR):

Fines for noncompliance with MIR (Mandatory Insurer Reporting) will now be discretionary rather than mandatory; however, the guidelines for discretion are not yet created. Within 60 days of the effective date (January 10, 2013) CMS will seek comments on which actions should be subject to fine and which should not be subject to fine. The Secretary in conjunction with the Attorney General shall publish in the federal Register, those actions subject to and those actions not subject to, allowing for public comment during the 60 day period.

Section 205 (Statute of Limitations for conditional payment recovery):

The statute of Limitations for conditional payment recovery is 3 years after the receipt of notice of a settlement, judgment, award or other payment made. This amendment shall be applicable to “actions brought and penalties sought on or after 6 months after the date of enactment.”


1. The amount of conditional payments downloaded through the website within the “protected period” or 30 day extension by the Secretary shall be conclusively final.

2. A disputed amount of conditional payments must be responded to by the Secretary within 11 business days or deemed accepted.

3. The reporting threshold may help with the small Section 20 and minimal medical cases in New Jersey.

4. An action brought by the United States to recover payments conditionally made must be brought within 3 years of receipt of the date of settlement, judgment, award or other payment.

5. The Act eliminates the required use of social security and health identification claim numbers for Section 111 reporting. CMS must phase out the required use of social security and health identification numbers for Section 111 reporting within 18 months of the enactment of the SMART Act.


This edition of Currents was written by the Hon. Richard E. Hickey, former Administrative Supervising Judge of Compensation. Judge Hickey is of counsel to Capehart Scatchard, P.A.

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