An Overview of the SMART Act Part 1

Attorneys and their plaintiffs know all too well the frustration of dealing with lien resolution. Despite this, liens are an ever-present part of the litigation process involving personal injury and workers’ compensation. The Strengthening Medicare and Repaying Taxpayers Act (SMART Act) was implemented to make this process easier for all parties to ensure that Medicare’s interest is protected when settling their cases. This two-part article will give an overview of the SMART Act.

Conditional Payments

The process of settling a lien comes with its own difficulties. Back in 1980, Medicare was established as a secondary payer to certain primary plans to shift costs from Medicare to private sources of payment. If payment cannot reasonably be made by a beneficiary’s primary plan, Medicare makes conditional payments. However, these payments must be repaid when the plaintiff receives their settlement, judgment, or award. More often than not, however, parties that settle a case and rely on a conditional payment statement from the Centers for Medicare and Medicaid Services (CMS), soon find that after their settlement, CMS sends a lien demand amount that is significantly higher than originally provided.

Healthcare Liens

If your client is dealing with any healthcare lien, including a hospital lien, your client is obligated to reimburse Medicare for bills they’ve paid on your client’s behalf. When representing a client in a personal injury case, ideally, the responsible party’s insurance company is responsible for those bills. In many cases, however, the client’s insurance company ends up paying the bill. Once your client receives or is about to receive a settlement, your client’s insurer will look to your client for payment.

When dealing with a hospital lien, the hospital will often bypass billing your client’s insurer opting to bill your client instead hoping to receive a higher payout from your client’s settlement. This is troublesome for you and your client since hospital bills tend to be grossly inflated above what an insurer would normally pay. If you are not particularly experienced in the area of hospital liens, it is wise to consider working with a settlement planner because your client’s entire settlement award might be at risk.

We will continue our discussion in part two where we will focus on reporting challenges and the benefits of the SMART Act.

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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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