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Increasing Fiscal Return and Mitigating Risk in Clinical Trials. Tina Noonan, MBA, CHRC – St. Vincent Health Erika Stevens, MA – Ernst & Young LLP. Overview.

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increasing fiscal return and mitigating risk in clinical trials

Increasing Fiscal Return and Mitigating Risk in Clinical Trials

Tina Noonan, MBA, CHRC – St. Vincent Health

Erika Stevens, MA –Ernst & Young LLP



This session identifies pre-award processes and institutional approaches to increasing fiscal return and mitigating fiscal compliance risk for clinical trials. The ability to develop robust budgets and maintain billing compliance for clinical trials is a challenge for many sites. Poor fiscal forecasting and undefined billing compliance practices associated with clinical trials increases the risk of deficits and OIG investigations.

Successful oversight of pre-award processes for clinical trials research mitigates institutional risk. Furthermore, maintaining adherence to CMS regulations is a struggle for many Academic Medical Centers. This session describes the strategies for covering true costs related to clinical trials research, illustrates techniques for avoiding false claims and evaluates academic case studies.

This includes the following: identifying fiscal practices and establishing actions to maintain compliance oversight.


Learning objectives

  • Describe the processes for fiscal oversight of clinical trials research.
  • Recognize key tools for managing fiscal/ regulatory activities related to clinical trials research.

Areas of discussion for Increasing Fiscal Return and Mitigating Risk in Clinical Trials


Coverage Analysis

  • A uniform method of analyzing the items and services provided in a clinical trial to determine if the item or service can be appropriately billed to Medicare and other insurances.
  • It is very important that billings for routine/standard of care services are routed to the appropriate payer and are in compliance with applicable statutory requirements.
  • Coverage analysis allows for identification of routine (covered) services for appropriate coding on Medicare claims.

Coverage Analysis (continued)

An accurate and complete coverage analysis:

  • Provides patients with an accurate accounting of their financial liability before they enroll.
  • Protects your institution from violations of the False Claims Act and other regulations (e.g. double billing).
  • Protects patients from billing errors and unexpected balances not covered by their insurance.
  • Provides an accurate assessment of the costs to your institution to participate in a clinical trial.

Benefits of Coverage Analysis

  • Coordinates relevant study information.
  • Facilitates and strengthens the budgeting process.
  • Provides a standardized billing tool to all involved in the billing process.
  • Provides a financial and compliance auditing platform.

Serves as a centralized repository for documentation of billing decisions!

Source: Aegis Compliance & Ethics Center, LLP and Forte Research Systems. Clinical Research Billing Compliance Webinar. July 19, 2012.


Coverage Analysis Documentation

Each study is configured differently under billing rules, therefore documenting the reasoning process is critical to mitigating compliance risk associated with clinical research billing.

Mirrors protocol calendar & documents

billing decisions including assessment

of “routine costs”

Provides mechanism to

document assessment of

qualifying status


Clinical Trials Billing Compliance

  • Navigating and complying with the numerous federal regulations around clinical trials billing is perhaps one of the most complex and important operational and regulatory challenges faced by academic medical centers and health care systems.
  • Staying compliant and accurately billing for clinical trial services requires a tremendous amount of effort to coordinate operations and provide oversight to appropriately mitigate compliance risks.
  • Lack of adequate controls can increase the risk for false claims and insurance fraud allegations, both of which can result in stiff penalties.

Clinical Trials Billing Compliance

    • Billing Compliance–Oversight should be provided in all billing activities on the front and back end of a clinical trial to comply with federal, state and local regulations.
  • Establish “front- and back-end” safeguards:
    • Front-End: Billing tools that synchronize study information and guide which services are billable to payers/patient and which are billable to the study (e.g. Coverage Analysis)
    • Back-End: Processes to use the billing tools to direct charges to appropriate payer

Source: Aegis Compliance & Ethics Center, LLP and Forte Research Systems. Clinical Research Billing Compliance Webinar. July 19, 2012.


Mitigating Risk in Clinical Trials

  • Federal clinical trials billing regulations mandate that payers should not be billed for services that are not considered to be directly related to patient care or are being paid by someone else (such as participation in a clinical trial).
  • Academic medical centers and health care systems can maintain compliance and mitigate risk by staying in accordance with the Clinical Trial Policy National Coverage Determination (NCD) issued in the year 2000 in response to a Presidential memorandum directing the Secretary of Health & Human Services to:

“Explicitly authorize [Medicare] payment for routine patient care costs…and costs due to medical complications associated with participation in clinical trials.”1

  • Effective for items and services furnished on or after July 9, 2007, Medicare covers the costs of qualifying clinical trials, as well as reasonable and necessary items and services used to diagnose and treat complications arising from participation in clinical trials.2 The NCD for Routine Costs in Clinical Trials is the standard by which commercial payers base clinical research coverage decisions.

1Source: Medicare Clinical Trial Policies Overview 2011 at https:www.cms.govClinicalTrialPolicies

2Source: National Coverage Determination four Routine Costs Clinical Trials at https:www.cms.govClinicalTrialPolices


Why Comply?

  • Clinical trials billing compliance seems like a simple concept: Do not bill Medicare for services being paid by a sponsor and/or third-party payer, and do not bill Medicare for services that do not meet the requirements under the Clinical Trials NCD.
    • However, navigating the process of billing clinical trials has proven quite complex – settlement cases offer ample evidence – and often frustrating. Many stakeholders question whether the Medicare rules accomplish their goals, and in fact, the CMS has proposed a number of changes in an attempt to clarify gray areas surrounding the rules.

Source: Ryan D. Meade. Legal issues in billing Medicare for medical research services, the RAP Sheet. Washington DC: American Health Lawyers Association; 2006.


Risks of Non-Compliance

Significant risks exist for clinical trials billing non-compliance. These risks include:

  • Audits
  • Corporate Integrity Agreements
  • Corporate compliance agreements
  • Fines
  • Negative publicity
  • False claims
  • Damage to the institution’s and/or principal investigator’s reputation

Source: University Hospitals, Compliant Clinical Research Billing, October 2011.


Settlements for Non-Compliance

Palm Beach Imaging


$7 million

University of Minnesota

Misuse federal funds

$32 million

Public Demand


Improved Control

Rush Medical Center


$1 million

NYU Medical Center

Inflated research grant costs

$15.5 million


Device illegal import/use

$5 million


Maintaining Clinical Trials Billing Compliance

  • There is no single correct way to develop process compliance controls to meet federal clinical trials billing regulations, but standardization of the entire billing process is key. A comprehensive clinical trial billing compliance program can help organizations establish standards to meet regulatory requirements and provide sustainable organizational consistency.
  • Failure to comply with federal clinical trial billing regulations can lead to research suspension, fines and the imposition of Corporate Integrity Agreements (CIAs). Establishing standards is the key to mitigating risks around billing non-compliance.

Pre-Award Clinical Trials Fiscal Activities

Techniques, Tips, and Tricks

  • Budget Development
  • Budget Review Process
  • Budget Negotiation Strategy
  • Budget/Contract Negotiation Timelines
  • Document Harmonization
  • Study Participant Identification and Tracking

Budget Development

  • Docreate a project-specific detailed budget that includes all protocol procedures and associated costs, even if it’s not required by the sponsor or if the study is not yet funded. You should do this BEFORE you agree to take on a study.
  • Do make sure your budget accurately includes all the procedures which were determined to be study-related in the Coverage Analysis you did for the study.
  • Don't enter into final budget negotiations and execute an agreement until you have created a final budget and are confident you have identified all study costs.
  • Don'tgive final approval to the budget without reviewing the final protocol.

Budget Development (continued)

  • What is an appropriate calculation method for per-patient reimbursement?
    • If the sponsor has provided a detailed budget, this makes a good starting point; however, sponsor-prepared budgets do not always include all the costs associated with the study. Before beginning, both the PI and whoever is preparing the budget (e.g. study coordinator or research administrator) should review the study protocol or schema with the following information in mind:
      • Difficulty and/or complexity of study
      • Study preparation requirements
      • Patient acuity and age
      • Length of study
      • Inclusion/exclusion criteria for patient recruitment

Budget Development (continued)

  • When calculating a budget you should consider the following non-patient specific costs in your per-patient reimbursement in addition to protocol procedures:
    • Study start-up costs: contract negotiation and review, time spent preparing and maintaining regulatory documents
    • Data management both while the study is active and during close out
    • CRF completion
    • Time spent with monitors
    • Advertising
    • Screening, including the costs of pre-screening before any subject is enrolled
    • Archiving
    • Pharmacy storage and preparation costs
    • Shipping costs
    • In addition, be sure that the payment schedule takes into account front loaded screening or dose escalation visits that may be more intensive then later visits
    • Failure to manage the timeline for when you are paid can often present problems. Be careful how you request payment based on milestones

BudgetReview Process

Before beginning budget negotiations, it is very helpful to pull together the full study team (including your budget negotiator) to review the budget. Questions to think about during this review include:

  • Is the study financially feasible?
    • If not, is there departmental/institutional support for doing the study? (i.e. Is there a compelling reason the study should be done even if an overall financial loss has been projected)?
  • Does the budget reflect the Coverage Analysis?
  • Have all potential cost elements been incorporated?
  • Has a budget negotiation strategy been discussed and agreed to by the study team?
  • How will stalled budget negotiations be handled?
    • Is the PI willing and able to assist?
    • Is there a higher level institutional official who is willing to step in, as needed?

Budget Development and Review Process – Why?

  • Cost analysis done as part of budget development allows investigators, departments, and other stakeholders to understand true cost thus allowing for accurate financial planning
  • Links Coverage Analysis results with the study budget
    • Provides an opportunity to resolve any outstanding question of standard-of-care vs. research categorization BEFORE budget negotiations begin
  • Full budgetary review should be done with all studies, irrespective of funding source
    • Unfunded studies too? Yes – why? To clarify for all involved parties the actual financial investment needed to do the study thus promoting an informed decision to move forward
  • Provides leverage to your budget negotiator if that person fully understands the rationale for how the budget was set

Budget Negotiation Strategies

  • Open negotiations with a sufficient cushion to enable concessions, as necessary
    • Consider setting the opening quote for procedure costs at the institution’s “full charge” level, with an extra percentage added for price increases in future years
      • e.g. If MRI institutional full charge is $3500, and study is expected to last 2 years, with inflation rate of 3% per year. So set your opening MRI price at $3605 ($3500 plus 3% to cover potential price increase in year 2)
    • When setting FTE and salary opening quotes (whether as part of the per-patient fee or as a separate budget line item), add a buffer to each so that you have room to negotiate
  • No matter how you set your opening quote, always keep your actual costs in mind so that you don’t drop too low during the negotiations

Budget Negotiation Strategies (continued)

  • Think about how you will respond to the more typical sponsor negotiation tactics.
    • “That’s your cost of doing business”
      • Your potential response: No, it’s the sponsor’s cost of doing business. The sponsor stands to reap the financial rewards (profits) from doing this trial, so unless they want to profit-share with us, they need to bear the full costs of the study (including overhead)
    • “The indirect cost rate we’ve agreed to pay covers administrative costs, so we will not pay a separate administrative start-up fee”
      • Your potential response: No, the indirect rate for industry-sponsored clinical trials is lower than the federal rate specifically because many of the administrative costs of doing the trial can be allocated directly. Our indirect rate primarily covers the overhead costs of the facility (heat, light, depreciation, etc)
    • “Your costs exceed the Fair Market Value quoted in the sponsor’s database, so we can’t pay that much”
      • Your potential response: Fair Market Value isn’t a predetermined amount which can be pulled from some database (e.g. Medidata): FMV is a legal term which means the value two entities agree on through an arms-length negotiation – and that’s what we are doing in this budget negotiation process

Budget/Contract Negotiation Timelines

  • “Time is of the essence” for most clinical research, so having standard timelines for completion of the various pre-award steps is helpful. Consider the following real-world example from a major academic medical center with a centralized CTO:
    • Coverage Analysis and draft budget: Drafted and sent to the research team for review and approval within five business days of receipt of all study-related documents. Research team is asked to respond with revisions, issues, or concerns within two business days.
    • Legal Review of Clinical Trial Agreement: Initial redline drafted and sent to sponsor within five business days of receipt of all study-related documents.
    • Follow-up: Weekly follow-up with sponsors who have not responded within one week of documents/query being sent to them.
    • Three Strikes Policy: If sponsor does not respond after two weekly follow-up attempts, the PI is asked to contact the sponsor to inquire as to status. Further escalation to higher level institutional officials may also be used at this point.

Document Harmonization

  • Before finalizing contract/budget negotiations, review study documents to ensure harmonization of terms:
    • Informed Consent
    • Contract
    • Budget
  • Pay particular attention to terms related to:
    • Sponsor promises to pay for specific items or services
    • Timing of and/or restrictions on sponsor payments to site
    • Subject injury clauses

Study Participant Identification and Tracking

  • An important key to maintaining compliant billing once the study begins is to implement a reliable method of identifying and tracking participants in the institution’s billing system.
  • Alternatives include:
    • “Registering” all study participants in the institution’s Electronic Medical Record system, and flagging as “research”
      • Assumes EMR and billing system are linked, and that research flag carries through from one system to the next
    • Using a Clinical Trial Management System to register and track all studies and study participants
      • Also assumes that CTMS and billing system are linked, and that research information flows from one system to the next
    • Utilize a special research procedure order form, or a special research code on regular clinical order forms
      • Assumes that appropriately marked form is matched up with any resulting bill BEFORE that bill goes out the door

Double Billing Trend

  • Issue: DOJ/ OIG inquiries yielded issues of double billing and resulted in multi-million dollar bill-hold for the organizations.
  • Solution: Implementation of a centralized MCA process to include, development, QA, amendments, Advisory Committee and CMS response.

Non-Billing Trend

  • Issue: Hospitals, AMCs and large hospital networks not billing professional services for patients on clinical trials resulting in millions of lost revenue.
  • Solution: Implementation of a centralized MCA process.