Developing a Clinical Trial Budget Following Medicare’s Clinical Trial Policy and Device Regulations

There are many challenges involved in developing and negotiating a clinical trial budget that applies Medicare’s rules and regulations for device and drug clinical trials. In this blog, we’ll discuss these challenges, and suggest strategies to assist with this process.

Medicare and Clinical Trials

There are three regulations addressing Medicare coverage in clinical trials:

• Medicare Coverage Related to Investigational Device Exemption (IDE) Studies
• Clinical Trial Policy: National Coverage Determination (NCD) for Routine Costs in Clinical Trials (310.1)
• Coverage with evidence development (CED): Centers for Medicare & Medicaid Services (CMS), as part of the national coverage determination (NCD), may determine coverage of an item or service only in the context of a clinical study, which typically also involves a registry. The NCDs requiring CED are listed here.

All three of the regulations allow Medicare beneficiaries to participate in clinical trials, as Medicare payment (coverage) is no longer precluded. However, rules must be followed to prevent triggering the False Claims Act and other fraud and abuse laws arising from noncompliance.

Medicare Claims Management

A Medicare Administrative Contractor (MAC) is a private healthcare insurer awarded a jurisdiction to process Medicare Part A and Medicare Part B claims. Currently, there are 12 A/B MACs. In addition to processing Medicare claims, MACs address coverage decisions, which includes developing local coverage determinations (LCDs) following specific guidelines.

Medicare Coverage Analysis

Early adopters of the NCD for Routine Costs in Clinical Trials set the stage with a process to work with the policy, which is called a Medicare Coverage Analysis (MCA) or Coverage Analysis (CA). While the three regulations addressing clinical trials have specific unique requirements, the MCA process works well with all three.

Sponsors and Clinical Trial Budgets

Sponsors have the daunting task of developing a study budget template. Typically, this is a line item budget with some pass-through costs; however, some budgets are a per-participant lump sum. Budget template considerations include the number of participants required, the number of sites, and whether the study is conducted within the US. The budget typically provides funding for items and services to conduct the clinical trial (to meet study objectives and ensure participant safety) and include time and effort, study startup fees, IRB fees, laboratory, and pharmacy costs. Other factors include the cost of healthcare within the US, standard of care (SOC) items and services billed to healthcare insurers, items/services required for research purposes only, and the concept of fair market value (FMV). A budget must be fair but not excessive; both too high and too low of a budget negatively impacts the clinical trial’s outcome.

Once completed, each site receives the budget template, along with the Clinical Trial Agreement, protocol, and informed consent. The site is expected to review the template and modify it based on the site’s charge master/research fee schedule and other specific terms/fees applicable to the site. All these costs vary by institution.

Site Budget Development

The site must consider FMV as well as the cost of providing healthcare at their site, resources needed to adequately conduct the study, pharmacy costs, laboratory costs, indirect costs, etc. If the site accepts governmental healthcare insurance funding (e.g., Medicare), they must also factor in the rules and regulations regarding drug and device clinical trials; for example, many items and services associated with clinical trial conduct (even if considered SOC) cannot be billed to Medicare.

With this in mind, payment of SOC items and services is often a big surprise for both sponsors and sites. The sponsor may assume the site will bill healthcare insurers for these items/services, so these are not line items on a study budget. For the site, if they are unable to bill Medicare for these items/services not covered by the sponsor, participation in the clinical trial can be cost prohibitive—the site may not be able to participate in the trial. Losing a participating study site affects accrual, which impacts the clinical trial meeting specific timelines/endpoints. If this occurs with many sites, and the sponsor is not equipped to address these issues, the study risks failing due to lack of accrual. This is a devastating scenario for all involved (sponsor, site, and participants).

The development of a good clinical trial budget is time-consuming and challenging for everyone involved. But it’s not an insurmountable challenge. Many sites and sponsors focus on potential participants to enroll in the study, but it’s important to also address budget needs and negotiations early. Through education and communication, sites and sponsors can address potential pitfalls early in the process before they become major issues.

In our next blog, we will address how to talk through clinical trial budget negotiations outlined in a case study scenario. Need assistance in developing or negotiating your next clinical budget? Contact Advarra for global virtual and on-site support.

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