Does H.R. 1063 Have Lame Duck Potential?

Medicare Set-Aside Blog on November 13, 2012
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As the 112th Congress crawls to an end, many sit and ponder what its last efforts may consist of. While taxpayers, farmers, whistleblowers, and U.S. postal workers are clearly in their hearts and minds, could Medicare beneficiaries seeking expedited personal injury settlements be so lucky? While the SMART Act doesn’t really do anything that voters will care too much about (not that their feelings matter for four more years anyway), it also doesn’t cost the government anything and could make people feel all warm and fuzzy going into the holiday season that we care about the elderly and disabled. So what are its chances?

On November 9, 2012, the Congressional Budget Office (CBO) released the cost estimate for the SMART Act. The CBO estimates that HR 1063 would reduce Medicare spending by $45 million over the next 10 years. This estimate was essentially reached by evaluating the difference in settlement timelines and dollar values between Medicare and non-Medicare beneficiaries. The SMART Act would not only allow some settlements to occur more quickly and hasten reimbursement to Medicare, but it would also cause some cases to settle that otherwise would not due to easier access to needed information. The CBO also identified that some settlements could include a lower payment due to the timing of conditional payment determinations, yet overall the effects of the bill would result in a slight reduction in outlays between 2013 and 2022. Small claim exemptions and moving away from the use of Social Security numbers were determined to have no budgetary impact and the change in penalty collections was determined to not be significant if made discretionary as opposed to mandatory.

It was in the evaluation of section 6, however, that I recognized that the CBO must not understand what it is evaluating. Section 6 proposes to implement a three year statute of limitations triggered by the date of reporting for claims by the federal government arising from the MSP. While it would be comforting to know that there is a limit to the government’s ability to recover MSP debt, the provision contradicts the entire concept of future medical allocations. If the government cannot bring an MSP related claim more than three years after the settlement is reported, Medicare set-asides would only need to be funded for three years, leaving Medicare holding the bag after that. How that can be viewed as having “no significant budgetary impact” is beyond me. Nevertheless, despite the scoring being complete, it is my understanding that Ways and Means still needs to consider the bill before it gets to the House floor, and I can find no evidence of any related hearings scheduled.

While I would much rather see the fiscal cliff dealt with, if the SMART Act doesn’t pass during the lame duck session, it is likely back to the drawing board to draft a new MSP bill to put before the new congress. By my count, at least 23 of the bill’s co-sponsors either lost the primary or the election, retired, or just didn’t run for reelection. More importantly, incumbent Pete Stark, after 40 years of service and currently ranking 5th in seniority in the House, lost to 31 year old Eric Stalwell by 10,000 votes in California. You may recall that Congressman Stark is the Chairman of the House Ways and Means Committee’s Health Subcommittee and was one of the first members of Congress to identify the Medicare Secondary Payer problems and request that the GAO look into the issue in August 2010. With 20% less overall support and a new chairman looking to establish a new regime, the momentum the bill enjoyed this summer is likely lost. However, in many ways, I think an opportunity to draft a new and more comprehensive MSP bill should be viewed as a positive. For those who felt as if the MARC Coalition didn’t address their MSP concerns, don’t squander the opportunity if presented.

Click here to see the Congressional Budget Office Cost Estimate

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