compliance advisory: the cms clinical trial policy

July 2007

Compliance Advisory:

The CMS Clinical Trial Policy

The Medicare Program issued its revised Clinical Trial Policy (CTP) on July 9, 2007 with virtually no change to the original Clinical Trials National Coverage Determination published in September 2000. The Centers for Medicare & Medicaid Services (CMS) opted not to move forward with the proposed Clinical Research Policy it published in draft form earlier this year.

The revised CTP keeps the entire conceptual framework of the original rule which allows Medicare to cover “routine costs” during “qualifying clinical trials.” The decision memo issued by CMS adds wording to the CTP that allows CMS’s coverage with evidence development process to be a basis for covering items and services during non-qualifying clinical trials and the decision memo clarifies that the investigational item or service of a qualifying clinical trial will be covered by Medicare if that item or service would be “otherwise covered outside of the clinical trial.”

In a stunning maintenance of the status quo, CMS backed off from its proposal not to cover drug studies that are exempt from the FDA’s investigational new drug application rules (IND exempt studies) and also chose not to expand coverage for Phase I drug studies in which therapeutic benefit is a secondary objective rather than a primary objective. CMS stated that it is committed to reopening the reconsideration of the CTP in order to reform the coverage policy but to do that it will need to go through the same process as the past year.

While the revised CTP clarifies an important point on coverage for the investigational item or service, all of the ambiguities of the Clinical Trials NCD remain in place. Providers will need to rely on interpretation until such time as the rule is reformed. Meanwhile, the compliance risks associated with clinical research billing compliance continue to mount as more and more health care providers are understanding the billing risks associated with not having a centralized initiative to develop compliance safeguards and review each study for coverage.

What Should Providers Do Now?

With the CTP left essentially intact and industry attention to clinical research billing compliance at its height, providers should not wait to implement their clinical research billing compliance initiatives. The proposed CRP from CMS was never meant to alleviate the immediate risks providers face from fundamental

operational challenges of not safeguarding their billing systems. The four highest risk areas providers need to tackle and implement safeguards for are: a) not billing for items and services that are paid for by a contract or grant; b) not billing for services promised free in the informed consent; c) determining whether a study is a qualifying clinical trial; d) applying national and local Medicare rules to any items and services in a research study that are “routine costs.”

What Research Does the CTP Apply to?

The CTP has always had both a reimbursement dimension to it and an important compliance dimension. The reimbursement aspect of the CTP sets out criteria for the types of clinical research services that can be billed to Medicare. The compliance aspect of the CTP draws boundaries around what cannot be billed and calls on providers to implement compliance safeguards to prevent false claims.

Providers need to be concerned with any research study which requires the investigator to interact with a patient and that interaction could be caught by the charge capture system. If the research study requires a service that might in other contexts be billed, the provider should identify the research study and analyze it under the CTP. As a practical matter, the CTP takes in virtually all human subject research that health care providers conduct at clinical sites.

The revised CTP keeps the entire

conceptual framework of the original

rule which allows Medicare to cover

“routine costs” during “qualifying clinical

trials.”

The Medicare CTP: CMS Leaves Clinical Trials NCD at Status Quo Providers Should Move Forward with Clinical Research Billing Compliance

Qualifying Clinical Trials: Threshold Question is Critical

For any items or services required by the protocol to be billed to Medicare, the research study must first qualify for coverage. If the research study does not qualify for coverage, then even items and services that are medically necessary will not be covered. The exception to this broad non-coverage involves treatment of complications which will always be covered during research.

The CTP uses the term “qualifying clinical trial” to describe a research study that qualifies for coverage. There has been considerable controversy and confusion over what constitutes a qualifying clinical trial. If the research study as a whole does not qualify for coverage, then no services are billable. A qualifying clinical trial is a research study that is one of 4 types of studies that are “deemed” to have 7 “desirable characteristics.” This is a two part test. The chart on this page illustrates the criteria for a research study to be a qualifying clinical trial under the CTP.

The first part of the qualifying clinical trial test involves meeting the 7 desirable characteristics. Currently there is no process outside of being “deemed” by CMS to have the desirable characteristics. CMS considers four types of studies to meet other government rules that ensure that they have the highly desirable characteristics. The draft CRP from April 2007 proposed to eliminate one of the deemed studies, the IND exempt studies. The revised CTP leaves IND exempt studies as one of the four types of “deemed” studies.

The four types of studies that are “deemed” to have the 7 desirable characteristics are:

Studies funded by the NIH, CDC, AHRQ, CMS, DOD or VA.

Studies supported by a center or cooperative group funded by the NIH, CDC, AHRQ, CMS, DOD or VA.

1.

2.

Studies conducted under an investigational new drug application (IND) reviewed by the FDA.

Studies that are IND exempt under 21 CFR 312.2(b)(1).

The second part of the qualifying clinical trial test involves meeting all three “necessary requirements.” These requirements are driven by Medicare policy. The following are the three requirements:

The study must investigate something that falls within a Medicare benefit category.

The study must have therapeutic intent and not be designed exclusively to test the toxicity of the investigational item or service or disease pathophysiology.

Therapeutic interventional studies must enroll patients with diagnosed disease.

What About Therapeutic Intent?

The most controversial requirement in the qualifying clinical trial analysis is the requirement that the study have “therapeutic intent.” The CTP says little as to what constitutes sufficient therapeutic intent, although one of the desirable characteristics is that “the principal purpose of the trial [be] to test whether the intervention potentially improves the participants’ health outcomes.” (emphasis added) In fact, CMS has stated publicly on numerous occasions that in order for the study to have sufficient therapeutic intent, one of the primary objectives of the protocol must be therapeutic benefit. The draft CRP proposed to allow any of the protocol’s objectives to be therapeutic benefit if the study enrolled patients with “chronic, life-threatening, or debilitating” disease. With CMS not choosing to move forward with the expansion of their understanding of therapeutic intent and the July 9 decision memo silent on therapeutic intent issues, this presumably leaves in place the primary objective requirement. This will continue to make it difficult for Phase I drug studies to obtain coverage.

3.

4.

1.

2.

3.

Meade & Roach, LLP Client Advisory: CMS Clinical Trial Policy

Coverage of Routine Costs & Investigational Items

During a qualifying clinical trial, Medicare covers “routine costs.” The CTP explains that it considers “routine costs” to be:

Items and services that are conventional care

Items and services to diagnose or prevent complications

The administration of an investigational item

As long as Medicare covers these routine costs under normal Medicare rules, then the routine costs during a qualifying clinical trial will be covered. Some items and services that might be considered routine costs will not be covered during a qualifying clinical trial if other Medicare rules operate to exclude coverage (e.g., self-administered drugs provided in a hospital outpatient setting).

The revised CTP also clarifies that the investigational item or service will also be covered as long as the item or service being investigated would be covered outside the clinical trial. This will have a significant influence on clinical trials investigating the off-label use of FDA approved drugs. There are specific rules that allow for coverage of certain off-label uses of FDA approved drugs and if the off-label use is covered outside of the research study, then it will be covered during a qualifying clinical trial even if it is the thing being studied. This clarification also allows coverage if a local Medicare contractor’s LCD allows coverage for an item or service outside of the study but is being investigated in a trial.

What About Devices?

If a research study is a device trial and the device is being reviewed under an IDE by the FDA, then the CTP continues to defer to the IDE device trial coverage rules for Category A and Category B investigational devices. If the research is studying a device that does not have an IDE (e.g., comparing two FDA approved devices used for their labeled purposes), then the CTP is silent. It has been the practice in many jurisdictions in the country for providers to consult their local Medicare medical director for coverage approval for these types of trials that “fall through the gap” of the CTP. The decision memo issued by CMS and the revised CTP does not appear to withdraw that authority of the medical director for now.

How to Determine Whether Items & Services are Covered During Research Studies

The practical impact of the CTP continues to require providers to think through each research study uniquely and determine whether the research study meets the CTP criteria. On Page 4 we have set out a chart which provides a high-level overview of how a research study must be analyzed for coverage under the new CTP.

The following are six questions that providers should ask for each research study.

1.

2.

3.

1. Is the research study a proposed study or is the study already open for enrollment?

If the research study is a proposed study, then the provider has an opportunity to negotiate a budget with the sponsor or request a grant. The provider can utilize the CTP rules to figure out what would be covered by Medicare if the provider received no money from the sponsor. The provider can choose to negotiate an arrangement in which the sponsor pays for the items and services that Medicare will not cover, thereby leveraging the CTP so that the research study is both compliant and financially viable.

The provider must analyze the clinical trial agreement or grant to determine what the contract or grant pays and ensure that those items and services are not billed. The provider must also examine the financial discussion in the informed consent (if a patient has signed an informed consent) and be sure that the items and services promised free are not billed.

2. Does the research study qualify for Medicare coverage?

If a research study does not meet the criteria for a qualifying clinical trial, then no items or services required by the study can be billable to Medicare. This includes items and services that might be considered medically necessary. Only treatment of complications is billable to Medicare during a non-qualifying clinical trial.

If a research study is a qualifying clinical trial, then Medicare potentially covers items and services during the research study that are “routine costs” as well as the investigational item or service – as long as 1) those items and services would be covered outside the trial when provided for the same purposes; 2) the items and services are not being paid for by the sponsor (or through a grant); and 3) the items and services are not promised free in the informed consent.

3. Which items and services are “routine costs”?

If a research study is a qualifying clinical trial, then each item and service must be analyzed whether it is a “routine cost.” Routine costs are essentially items and services that are provided for the clinical management of the patient enrolled in the study. If an item or service is for research purposes only, then it will not be a routine cost and will not be billable. An item or service will be considered a routine cost if it is conventional care for the patient’s treatment, it is being provided for the detection or prevention of complications, or it is for the administration of the study item or service (for example, infusion of an investigational cancer drug).

Not all routine costs are billable to Medicare. The routine cost must be covered by Medicare generally for the purpose for which it is provided and it is only then billable if it is not being paid for by the sponsor (or grant) and not promised free in the informed consent.

There is a misconception within the health care industry that Medicare pays for “standard of care” during research studies. This is not true. First, Medicare only pays for certain services during “qualifying clinical trials.” Second, during a qualifying


clinical trial, Medicare pays under its definition of “routine costs.” Routine costs do not equate to the “standard of care” – sometimes they are less than the standard of care and sometimes they are more than the standard of care.

4. What items and services are being paid for by the sponsor (or grant)?

Any item or service that is being paid for by the sponsor may not be billed to Medicare. The clinical trial agreement for each research study must be analyzed to determine if the provider is receiving any money from the sponsor for specific clinical services.

Providers should be careful of contracts that pay for clinical research services in lump sums or in bundles at milestones. These lump sum payments could be considered to cover otherwise billable services and effectively exclude coverage. Billing Medicare for such services could subject the provider to false claims liability.

Providers should also be sure that the main contractual terms in the body of the contract do not contradict the compensation arrangement that serves as the budget. If a contract states that the monies the provider receives for conducting the study covers all costs associated with the study, then no items or services required by the protocol may be billable to Medicare.

5. What items and services are promised free in the informed consent?

Any items and services that are promised free in the informed consent cannot be billed to Medicare, even if they are routine clinical services. A number of enforcement actions and public statements by CMS in the past year clearly indicate that if a provider promises anything free to the patient, then the provider must live up to that promise.

The “added costs” section of the informed consent is one of the most overlooked sections of the informed consent. Providers should be careful before the informed consent is approved by the IRB that the financial promises in the informed consent document are closely scrutinized and in harmony with what the CTP allows providers to bill to Medicare.

Providers should be careful of language in the informed consents that promises that there will be no costs associated with participating in the research study. Such language operates to exclude coverage of items and services during the research study, even if the services are medically necessary.

6. Does Medicare generally cover the types of routine costs required by the study?

Not all routine costs during a qualifying clinical trial are billable to Medicare. Medicare will only pay for a routine cost if it is an item or service that is generally covered by Medicare outside of a research study.

Medicare only covers items and services that are “reasonable and necessary” to diagnose or treat illness or injury. Congress has allowed Medicare to pay for very few preventive care services.

CMS sets out coverage rules for what Medicare considers “reasonable and necessary” in a variety of formats, including national coverage determinations (and national non-coverage determinations), a series of manuals available on the Internet, transmittals and a host of other rules. Additionally, local Medicare medical directors can issue local coverage determinations in order to fill in the gaps when national rules need more detail or if no national rules exist for an item or service. These various layers of rules must be sorted through to determine if a routine cost is covered by Medicare.

Medicare coverage rules for specific items and services are not always intuitive. For example, a particular type of therapy may include a device that has been determined to be “safe and effective” by the FDA but CMS or a local Medicare contractor may not consider the device to be “reasonable and necessary” in the same situations the FDA considers the device “safe and effective.” Such a determination by Medicare does not mean that the therapy and device cannot be used as the FDA has approved it; it just means that Medicare will not pay for the item or service.

What Should Providers Do?

The following are suggested tasks that providers should think about implementing in a clinical research billing compliance initiative.

1. Identify a point person who can serve as the coordinator of a clinical research billing compliance initiative.

2. Put together a list of research studies that are being conducted by the provider or at the provider’s facility.

3. Develop a process to identify the patients who are enrolled in a research study in order to “flag” the patient in the provider’s registration system.

4. Require investigators or their study coordinators to send the following items to a central source for a coverage analysis: the protocol, the clinical trial agreement (or notice of grant award), the informed consent document, and any relevant information that supports IND status if the study is a drug trial or IDE categorization if the study is a device trial.

5. A coverage analysis should be conducted of all items and services required by a research study to determine if the items and services are billable to Medicare. The coverage analysis process uses information from the study documents listed above and applies the CTP rules to the information.

6. Develop a process for the investigator to communicate to ancillary clinical areas that the services being ordered are part of a research study.

7. Develop a process for clinical areas to know the results of a research study’s coverage analysis so they know whether to bill an item or service to Medicare or to an internal research account.

8. Develop a training program on the CTP to educate investigators, clinical area administrators, financial managers and others on what the government’s expectations are and the processes the organization has developed.


©2007 Meade & Roach, LLP


9. Develop an auditing and monitoring plan as part of the provider’s compliance program to be sure that the coverage analyses are being developed accurately and the clinical areas or billing departments are properly utilizing the coverage analysis.

10. Turn a negative into a positive – analyze a research study for coverage before the provider agrees to conduct the research study. Then negotiate with the sponsor to be sure the sponsor pays for items and services that are not billable to Medicare.

If you have any questions about clinical research compliance, please contact:

Ryan D. Meade at 312.498.7004 or [email protected]

Michael C. Roach at 312.255.1773 or [email protected]

Steven W. Ortquist at 312.285.4850 or [email protected]

compliance advisory: the cms clinical trial policy

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