FINANCIAL OBLIGATIONS WITHIN CLINICAL RESEARCH PROGRAMS

1. FINANCIAL OBLIGATIONS WITHIN CLINICAL RESEARCH PROGRAMS Shirley M. Warren Society of Research Administrators October 2005

2. Acronyms AMC � Academic Medical Center ASOC � Above Standard of Care CAS � Cost Accounting Standards CDM � Institutional Charge Master Code CPT � Current Procedural Terminology CTA � Clinical Trial Agreement F & A � Facility and Administrative SOC � Standard of Care

3. Academia provides.. Knowledge Education of future scientists Patients ALSO must preserve tax-exempt status

4. Overview Clinical trial market is competitive Academics health centers are obtaining fewer trials Clinical trial budgets typically follow a business model vs. cost recovery model

5. Overview Important that patient costs in the CTA, consent form and study budget align Different internal parties in the process do not partner resulting in discrepancies Lack of interaction between parties leaves all research parties vulnerable

6. Clinical Trial Framework Highly regulated Complex Account management problems can be traced back to procedures well before first participant is enrolled into clinical trial

7. Grant vs. Clinical Trial Grants are accrual based accounts Clinical trials regarded as cash based accounts

8. Federally Sponsored Distinguish administrative time from patient care time Subject stipend, travel, per diem are under �other�

9. F & A Costs Federally negotiated rate Patient care often excluded Institutional rate for clinical trials Exclude IRB fees, other administrative costs

10. Fixed Price Pitfalls Industry budgets are revenue oriented, not cost PI/Institution must know costs to accept study without cost sharing Define Standard of Care on the front end, not during the study � be consistent

11. CAS Complications CAS requires all costs be charged and recovered Account budget authority is usually on cash accrual basis

12. CAS Implications Establish account for hospital services Protocol revisions - submit new budget, get new contract end dates

13. What Does the Subject Pay for? Some oversight or linking to IRB and other departments Third party payer does not determine standard of care

14. Managing Cash Flow Slow payments lead to frustration and resentment If no private practice revenue, slow payments threaten viability Timing of grant payments rarely come close to matching the timing of costs Money is spent long before revenue received

15. Cost Meter is Running Sites spend as much or more than $10K on planning, developing and initiating a clinical trial BEFORE a subject ever enrolled Typically a CTA states 10-25% available for study start Takes about 4-6 weeks to receive start up funds once the contract signed

16. Hidden Costs Low estimate on staff time Ancillary costs Fringe benefits Inflation

17. Advertising Costs Cost/subject randomized Lack of incorporation into the CTA

18. Travel Investigator meetings Local travel Clinic Home visits

19. Other Costs Stipends Reimbursement for mileage Shipping of samples, films, etc Repeating samples, procedures

20. Other Hidden Costs Extended recruitment Partial subjects Long term storage of study records Monitor Visits FDA Audits

21. Other Hidden Costs Premiums for overtime, extra-pay shifts, and multi-shift work must be have prior approval On-Call time

22. Lab Requisitions Identify the requisitions as research related Potential pitfall: Charge automatically ends up on the patient�s bill

23. Supplemental Funding Difficult studies Unanticipated expenses Justification letter Renegotiate budget

24. Foreign Sponsors Request payment in US dollars Define exchange rate

25. It Takes a Village Multi-team approach Patient Registration Hospital Patient Billing Professional Billing Coordinators Department Grants Manager Compliance

26. Tracking Study Accounts Accounts Receivable Accounts Payable Because clinical trial account are study visit driven, difficult to track cash intake and outflow

27. Management Challenges

28. Management Challenges Recovering cost for sponsor decisions Studies placed �on hold� Studies closing early Payments based on monitoring visits Payments based on locked database

29. Management Challenges Incentive payments How to handle appropriately Institutional policy

30. Adverse Events Discrepancies between clinical trial agreement and informed consent Billing 3rd party payors Responsibility for the research-related injuries Responsibility for follow-up care for a research-related injury Management Challenges

31. Medicare Be mindful of the Medicare National Coverage Decision (NCD) and state�s regulations regarding Medicaid Medicare General Guidelines Medicare Device Guidelines Medicare D � January 2006 http://www.cms.hhs.gov/coverage/8d2.asp Management Challenges

32. Medicare vs. Private Payors Private payors preauthorize Medicare do not preauthorize

33. GENERAL MEDICARE PAYMENT PRINCIPLES No payment for covered services if other funding (such as payment from a research sponsor) covers the cost No payment for medically unnecessary care (including experimental or investigational care) Costs of usual patient care given in conjunction with a research study are generally reimbursable if such costs are not already met by research funds Special rules for investigational devices (Class A/B) and investigational drugs (generally no coverage if not FDA approved) National Coverage Decision for Clinical Trial Services (Sept. 2000) Covered �routine� costs include items and services otherwise generally available to Medicare beneficiaries that are provided in either the experimental or the control arms of a �qualifying� clinical trial Rules are complicated and challenging for most institutions to implement as a practical matter - Mark Barnes � Ropes & Gray LLP 2004

34. Management Challenges �If you believe you are hurt or if you get sick because of something that is done during the study, you should call _____________ (PI�s or medical supervisor�s name) at _____________ immediately. It is important for you to understand that the INSTITUTION will not pay for the cost of any care or treatment that might be necessary because you get hurt or sick while taking part in this study. That cost will be your responsibility. Also, the INSTITUTION will not pay for any wages you may lose if you are harmed by this study. Medical costs that result from research-related harm can not be included as regular medical costs. The INSTITUTION is not allowed to bill your insurance company. You should ask your insurer if you have any questions about your insurer�s willingness to pay under these circumstances. Therefore, the costs related to your care and treatment because of something that is done during the study (add study specific language here �. will be your responsibility; or will be paid by the sponsor; or the sponsor has agreed to pay up to $XXX of all those costs; or your insurer has agreed to pay all those costs).�

35. AMA Ethical Guideline E-8.0315 �(5) Physicians should ensure that protocols include provisions for the funding of subjects� medical care in the event of complications associated with the research. Also, a physician should not bill a third-party payor when he or she has received funds from a sponsor to cover the additional expenses related to conducting the trial.�

36. Management Challenges Study account residual dollars Who controls the residual dollars Incentive for investigator not to cost out study properly Motivation to conduct trial Tax consequences for AMCs

37. Management Strategies

38. Management Strategies Understand cost at your site Choose studies which can enroll participants

39. Management Strategies How long can you go before enrolling first participant? Know the breakeven point

40. Management Strategies Establish flexibility to cover �pass through� costs Negotiate screening/enrollment costs Evaluate payment schedule/milestones

41. Review of Financial Obligations During the Life of the Study Communication Track Review Reconcile Payment of study costs Awareness of breakeven point Invoice Sponsor

42. Account Closure Business manager and coordinator review it all again Reconcile any inconsistencies

43. Metrics for Good Clinical Trial Management Metrics relate to the measurement, involving or proceeding by measurement Metrics that exist in clinical studies speed quality quantity cost

44. Why Use Metrics? Evaluate current process Develop relevant analysis plan Evaluate data Validation of process or mandates change

45. Future of Clinical Research at AMCs Dependent on budget preparation Contractual payment information Subject Accrual Grants maintenance Grant reconciliation

46. Develop Best Practices for Business Model Develop internal metrics to develop best business practices Buy In Fiscal Compliance

47. Fiscal Best Practice Outcome Develop standardized workflow within the institution to avoid inconsistencies.

48. Fiscal Best Practice Outcome Study budget should specifically outline the fair market value of all services provided to clarify how many procedures are eligible to be billed to third parties, and what co-pays/deductibles will be the responsibility of study participant.

49. Fiscal Best Practice Outcome Implement internal monitoring process on a regular basis to assist with identifying and problem resolution.

50. Fiscal Best Practice Outcome Institutional purchase or development of grant management software. Integration of software with the regulatory and data management.

51. Fiscal Best Practice Outcome Standard of Care determined when study budget developed.

52. Fiscal Best Practice Outcome Spend and bill as budgeted (corporate compliance).

53. Good Fiscal Stewardship Balance enthusiasm with facts Educate, Educate, Educate!

54. FINANCIAL OBLIGATIONS WITHIN CLINICAL RESEARCH PROGRAMS Shirley Warren Society of Research Administrator October 2005