Work Comp Central - Business Says CMS Rules to Implement Smart Act Fall Short

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By Michael Whiteley

New rules proposed by the Centers for Medicare and Medicaid Services could delay creation of a web portal required for obtaining conditional payment information until 2016 and appear to expand the time the agency has to report conditional payments from 65 days to 215 days.

Critics of the proposed rule said Monday the proposed changes to 42 Code of Federal Regulations Part 411 represent a departure from the normal federal rulemaking process and appear to violate deadlines in H.R. 1845, which President Obama signed into law on Jan. 10, 2013.

Employer groups spent years lobbying Congress to pass the bill, known as the Strengthening Medicare and Repaying Taxpayers Act of 2012, with hopes it would speed the reporting by CMS of conditional payments Medicare has made in cases involving auto, liability and workers' compensation insurance. That information is crucial for carriers and employers who are attempting to settle claims involving future medical care because the federal government can sue for recovery if insufficient money is set aside and Medicare ends up picking up the tab.

On Sept. 5, House Subcommittee on Oversight and Investigations Chairman Tim Murphy, R-Pa., and three other members of Congress sent a letter to CMS Administrator Marilyn Tavenner inquiring about the status of rulemaking needed to implement the law, also known as the SMART Act.

Murphy issued a statement that day calling for CMS to post the rules needed to implement the SMART Act.

"Congress enacted the SMART Act so seniors owed settlements aren't waiting years for CMS to resolve old medical billing cases, needlessly risking their Social Security checks and Medicare coverage in the process," Murphy said in the statement. "Passage of the SMART Act was just half the fight. Now the agency must demonstrate to the committee that they are implementing the SMART Act swiftly, transparently and according to congressional intent."

On Monday, a member of Murphy's staff said he sent an additional list of questions to CMS asking why the agency adopted an interim final rule and why the rule appears to violate deadlines set forth in the law.

Murphy's office said he also has arranged a conference call with CMS to get further details.

The posting by CMS in the Federal Register last Friday opens a public comment period that will end Nov. 19 -- the same day the interim final rule takes effect.

Jeff Signor, chief operating officer of Medicare Secondary Payer compliance firm Franco Signor, said CMS appears to have proposed the interim final rule in response to the Sept. 5 letter from Congress, but has ignored key deadlines included in the law.

"CMS appears to be taking liberties with the law," Signor said Monday. "They've been given certain parameters to do something, and they've gone hog-wild with the timing. They've made it clear they want to do it their own way, but it's really frustrating for parties trying to follow the Medicare Secondary Payer Act."

The Medicare Secondary Payer Act requires that Medicare be reimbursed for payments it has made that should have been covered by settlements of auto, liability and workers' compensation insurance claims. The act also requires that settlements include set asides to pay for future medical care if the claimant is a Medicare beneficiary or if the claimant has a reasonable expectation of Medicare enrollment within 30 months of a settlement becoming final.

But parties to settlements in workers' compensation and other insurance cases have complained CMS has been slow in reporting conditional payments for which the federal agency may later pursue recovery.

H.R. 1845 required that, within nine months of the law taking effect, CMS establish a web portal through which parties could notify CMS that a settlement is expected within 120 days. The law then gives CMS 65 days to report all conditional payments to the settling parties.

The interim final rule calls for CMS to expand its MSP web portal to accommodate the new law. But it also requires the use of "multifactor authentication" -- a system that would require attorneys and other users to supply two or more sets of information needed to gain access to the portal.

CMS said it could develop the new authentication system within 90 days, but the rule does not require launch of the new process until Jan. 1, 2016.

In addition, the proposed rule extends the time CMS can report conditional payments until 65 days after the 120-day period for notification of proposed settlements has expired -- extending the conditional payment reporting to 185 days. That would be an addition to a 30-day extension the SMART Act gives CMS to report conditional payments in cases involving associated claims or in the event of a CMS system failure.

Franco Signor argued in a blog posted Friday that the rule, in effect, could give CMS 215 days to supply conditional payment information after it has been informed of a potential settlement.

David Farber, an attorney for the Medicare Advocacy Recovery Coalition, said MARC members plan to express concerns about the interim proposed rule and hope to convince CMS to make changes before it issues a final rule.

"There are a lot of people that are very unhappy with this interim rule," Farber said Monday. "I'm sure we will all be coming together to try and convince them to correct the mistakes that they've made."

Melissa Shelk, vice president of federal affairs for the American Insurance Association, said the insurers' group also will push CMS for changes.

"This is a somewhat complicated rulemaking process and it raises a lot of questions," Shelk said. "We will be consulting with our members and filing comments as appropriate."

Doug Holmes, president of UWC − Strategic Services on Unemployment & Workers' Compensation, said his members are still reviewing the proposed interim final rule.

"We are looking at these and intend to file comments probably sooner rather than later," Holmes said.

Under the normal federal rulemaking process, agencies post proposed rules, open a 60-day comment period and then adopt a final rule.

CMS said in the rulemaking notice that the normal process would delay providing public access to its web portal and would delay the SMART requirement that it come up with a rule within nine months of the law taking effect.

"We find that notice-and-comment rulemaking is unnecessary because this regulation provides an additional procedural option for stakeholders but does not change any substantive provision of the MSP program or otherwise impact our administration of the MSP program," CMS said. "For all of these reasons, we find good cause to waive the notice of proposed rulemaking and to issue this final rule on an interim basis."

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