Summary of Smart Act Which Amended Medicare Secondary Payer Act

After passing Congress late in 2012, the President has signed the SMART Act into law.  The Medicare Secondary Payer Act is supposed to guarantee that Medicare does not pay medical bills that are the primary responsibility of a third party. The SMART Act amends the Medicare Secondary Payer Act to streamline and improve the reimbursement process.

Section 201 (Calculating a Final Conditional Payment Amount & Appeals)

The Web Portal

CMS is required to maintain a secure web portal with access to claims and reimbursement information. The web portal must meet the following requirements:

  • Payments for care made by CMS must be loaded into the portal within 15 days of the payment being made.
  • The portal must provide supplier or provider names, diagnosis codes, dates of service and conditional payment amounts.
  • The portal must accurately identify that a claim or payment is related to a potential settlement, judgment or award.
  • The portal must provide a method for receipt of secure electronic communications from the beneficiary, counsel, or the applicable plan.
  • Information transmitted from the portal must include an official time and date of transmission.
  • The portal must allow parties to download a statement of reimbursement amounts.

The Reimbursement Process

The SMART Act requires parties to notify CMS of when they reasonably anticipate settling a claim (any time beginning 120 days before the settlement date). CMS then has 65 days to ensure the portal is up to date with all of the appropriate claims data. CMS can have an additional 30 days on top of the 65 days to update the portal if necessary. At the expiration of the 65 and potentially the 30 day periods, the parties may download a final conditional payment amount from the website. The final conditional payment amount is reliable as long as the claim settles within 3 days of the download.

Resolution of Discrepancies

CMS is required to provide a timely process to resolve any discrepancies regarding the amount to be reimbursed. An individual can provide the Agency documentation to establish that the web portal is not reflecting an accurate reimbursement amount. CMS is required to respond to this documentation within 11 business days. If CMS does not make a determination within 11 days, the reimbursement amount as calculated by the beneficiary becomes the final conditional payment amount.


CMS must draft regulations that give applicable insurance plans limited appeal rights to challenge final conditional payment amounts. These appeal rights are only applicable in the event CMS attempts to collect reimbursement from the plan. Beneficiaries must be given notice of any appeal undertaken by an insurance plan. Existing appeal rights for beneficiaries remain the same. 

Section 202 (Claims Threshold for Collection)

CMS, with input from the GAO, is required to calculate and implement a threshold amount for liability claims (excluding ingestion, implantation, and exposure claims) only. The threshold amount will be based on the costs to CMS for collecting an average claim. If an amount owed is under that threshold amount, CMS is barred from seeking repayment. The threshold will be calculated and adjusted annually. 

Section 203 (Reporting Requirements)

CMS has discretion in applying reporting penalties on insurance companies. Previously, any reporting error by an insurer was subject to a $1,000 a day penalty. The SMART Act amends the statute to allow for discretion in the amount of the penalty based on the severity of the violation. 

Section 204 (Use of Social Security Numbers in MSP Reporting)

CMS is required to modify plan reporting requirements within 18 months so that plans do not have to use SSN or health id claim numbers (HICN). CMS may have an additional 12 months if it affirms to Congress it needs more time. This provision addresses several policy concerns related to privacy and reporting problems. 

Section 205 (Statute of Limitations)

CMS only has 3 years from the time they are notified of a settlement to seek payment for medical services provided. This provision will eliminate a CMS push for a 6-year statute of limitations that had recently been argued in the 11th Circuit.

(This summary was provided by AAJ)