SMART Act – Initial Summary of Changes in Workers’ Compensation Practice

On January 10, 2013, President Obama signed the SMART Act into law after it passed in the House of Representatives and the United States Senate.  While many of the specific implementations will become known to us in the months ahead, it certainly appears as though this Act contains favorable reforms as part of the interplay between CMS and the administration of workers’ compensation claims.

First, it appears as though CMS will now be able to issue a “final demand letter” for conditional payments PRIOR to settlement (up to 120 before the redemption hearing), and implements specific time periods for which disputes will be resolved.  This provision will go into effect 90 days after the signing of the law, and is certainly preferable to the current system where a final demand letter is not issued until after the redemption hearing, which leaves open the possibilities that CMS will request a different amount for conditional payments after the settlement than it requested before the settlement hearing.

In 2014, the Secretary will institute a threshold level where conditional payments will no longer be reimbursed.  Very little is known about this provision at the present time, although we look forward to learning more about it in the year ahead.  It may be similar to the $25,000.00 threshold in place regarding MSA’s.  In addition, the new Act provides for a quick turnaround time of 11 days in order to resolve any disputes of reported conditional payments from CMS.

The Act also includes a specific statute of limitations for which CMS can recover conditional payments of three years after the receipt of notice of the settlement (or payment, if the case was not redeemed).

There are additional provisions regarding the fines for noncompliance with CMS provisions and changes to the reporting requirements that we urge you to discuss with your RRE.  Those changes are still in the process of being clarified.