A report by the Insurance Journal says that a rule proposed by the Centers for Medicare and Medicaid Services contradicts the intent of a recently passed law aimed at requiring CMS to tell insurers how much of a claims settlement involving federal health insurance recipients must be given to CMS. The regulatory process was mandated by passage in January, after years of effort, of the SMART Act, or The Strengthening Medicare and Repaying Taxpayers Act. It deals with mandates for providing timely information to CMS on settlements of lawsuits involving no-fault auto-insurance claims, workers’ compensation claims, and payments under liability insurance, such as auto accidents.

The interim final rule–which means it goes into effect immediately–more than doubles the statutory 120-day period CMS is given under the new law to provide to insurers the portion of the final settlement that insurers will have to give to CMS rather than the claimant. Under the interim final rule, CMS will be given 245 days to process claims submitted by the insurers and other third-party payers, as well as lawyers involved in settlements. The comment letters sent by insurers voiced concern that, contrary to the intent of the law, the proposal doesn’t reflect the fact that when a deal is reached, all parties have certainty within a reasonable period of time.

Among those submitting comment letters are the American Insurance Association, the Risk and Insurance Management Society (RIMS) and the Medicare Advocacy Recovery Coalition (MARC), which includes self-insured employers. RIMS members include a number of municipalities, public school systems, etc.

“In addition to conforming to the requirements of the SMART Act, the CMS proposal also must work within the context of how settlements actually occur, and should promote, rather than delay the settlement of claims. The potential that settling parties would have to wait over half a year to conclude their settlement because of a lengthy MSP process will lead many settlements to breakdown,” said John Phelps, RIMS president.

Michele L. Adams, chair of MARC said that the interim final rule designed to implement the SMART Act “is flawed” because it creates a settlement process that is in “direct contradiction to Congress’ clear instruction, exceeds and misconstrues the SMART Act, and fails to address needed regulatory issues,” “For all the reasons set forth above, the MARC Coalition urges CMS to withdraw the IFR and reissue a proposed rule upon which all stakeholders can comment,” .

The insurers and other interested parties are also concerned that CMS is presenting them with a fait accompli, meaning immediate implementation of the rule, rather than a full notice and comment process, interested parties including insurers, are saying in comment letters.