SMART Act Streamlines CMS Repayment for Negligent Care

On Jan. 10, President Barack Obama signed into law the Strengthening Medicare And Repaying Taxpayers (SMART) Act, which is intended to help senior citizens and disabled persons obtain timely, clear and definitive information from the Centers for Medicare & Medicaid Services (CMS) regarding Medicare payments made on their behalf that must be reimbursed, while at the same time ensuring U.S. taxpayers are repaid millions of dollars spent by Medicare each year for care which a third-party may be liable.

The SMART Act is designed to bring clarity to—and streamline—the process of repaying medical expenses to the Medicare Trust Fund. Currently when a Medicare beneficiary initiates a medical malpractice lawsuit and receives a monetary jury verdict or out-of-court settlement and Medicare has paid the related medical bills, that person is required to wait until Medicare is reimbursed before receiving the proceeds of that lawsuit. This process can take months or years for CMS to provide the injured beneficiary with the amount it is due in reimbursement. If the Medicare Trust Fund is not repaid, CMS can bring a lawsuit against the Medicare recipient and his or her attorneys to recover those medical expenses. In addition to recoupment of the cost of the negligent care, CMS can levy additional fines and penalties.

The SMART Act defines time frames under which CMS and Medicare beneficiaries must provide information in cases where a settlement is expected. The new law also eliminates many of the bureaucratic challenges that often prevent CMS from closing out medical billing cases in a timely manner. Industry experts have suggested that the SMART Act could collect between $1 billion and $4 billion annually, while saving the CMS countless hours of staff work pursuing claims of little or no value.

Prior to the passage of the SMART Act, the process for obtaining the payment information and actually repaying the Medicare Trust Fund was time consuming and cumbersome, filled with complicated forms and little guidance from CMS. Most times, cases are settled without knowing the exact amount to be repaid to the Medicare Trust Fund.

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