CMS Publishes Annual Threshold Required by SMART
Roy Franco
February 20, 2014

In a flurry of CMS Alerts yesterday the Centers for Medicare & Medicaid Services (CMS) published the annual Medicare Secondary Payer (MSP) exemption threshold required by the SMART legislation that became law last year.  Under SMART, the publication is due each November 15th, and is effective for the following calendar year.  CMS did not explain why it had missed the first deadline, but in the Alerts included herein announced that the $1,000 MSP threshold exemption took immediate effect yesterday.  As a consequence of that announcement, two important issues now surface. First, how does this exemption impact yMMSEA Section 111 reporting threshold currently set for liability cases at $2,000?  Second, what is the legal effect of MSP reimbursement claims with settlements of more than $300 but less than or equal to $1,000 which CMS has demanded between January 1, 2014 through February 19, 2014?  We are analyzing these important questions and we ask that you follow this blog for updates.

At Franco Signor we provide our clients with the latest information impacting their MSP compliance and immediately implement steps to reduce reimbursement and penalty exposure.  While the MSP threshold exemption appears low, it is an improvement over the $300 exemption that was in place by Policy and is now backed by force of statute.  We are working with MARC, the coalition responsible for SMART to understand CMS methodology to support the calculation and advocate that CMS include all costs when preparing this important figure.  At first glance, the calculation was limited by CMS to recovery contractor costs, but does not take into account CMS administration and regional office cost that would increase the MSP exemption. Recall the SMART law is designed to save our government expense, by avoiding involvement in the collection of reimbursement claims that cost more than it is worth.
UPDATE – February 21, 2014
We learned today that CMS will issue a clarification on the recent alert by early next week, possibly today.  The “threshold” issue needs to be clear for MMSEA Section 111 reporting which stood at settlements, judgments, awards or other payments over $2,000 for liability claims prior to the CMS Alert.  The confusion stems from whether the alert intended to lower a certain segment of liability claims for physical trauma only to $1,000 for MMSEA Section 111 reporting, or was it simply meant to increase what we commonly refer to as the MSP “safe harbor” threshold from $300 to $1,000 for such claims.  We look forward to the updated alert to clear up the obvious confusion based evidenced from the differing interpretations by the Industry in postings yesterday.   We will update you as soon as it occurs.
UPDATE  FROM CMS – February 21, 2014

In response to questions and concerns raised from posting the Alert titled Change in Reporting Threshold for Certain Liability Settlements, Judgments, Awards, or Other Payments, the Centers for Medicare & Medicaid Services (CMS) will be issuing an updated NGHP User Guide.  This Guide is intended to provide additional clarification on the change in reporting threshold for physical trauma-based liability insurance (including self-insurance) settlements.  Please continue to monitor the website to obtain the most current guidance.