Clinical Trials Billing Compliance: Current Practices and New Developments

1
Clinical Trials Billing ComplianceCurrent
Practices and New Developments

• FDA News Audioconference
• February 1, 2007

Mark Barnes Ropes Gray LLP mark.barnes_at_ropesgray
.com 212.497.3635
2
Overview

• Sponsor Perspective
• Medicare
• General Rules
• Investigational Drugs
• Investigational Devices
• National Coverage Determination
• Current Interpretation
• Proposed Revisions
• Medicare Secondary Payor Rules
• Medicaid
• Private Insurance
• Sponsor Concerns

3
Sponsor Perspective
4
MedicareGeneral Coverage Principles

• No payment for Medicare covered services if other
  funding (such as payment from a research sponsor)
  covers the cost
• No payment for medically unnecessary care
• Medicare payment only for items and services that
  are reasonable and necessary for the diagnosis or
  treatment of illness or injury or to improve the
  functioning of a malformed body member (42 U.S.C.
  1395y(a)(1)(A))
• Experimental and investigational care is
  considered not reasonable and necessary

5
MedicareGeneral Coverage Principles

• Determination of Medical Necessity
• National Coverage Determination
• New coverage initiatives meant to ensure that
  Medicare pays for services only if medical
  necessity is certain and if data exists to
  support medical necessity determination
• Medicare takes active role in developing data
• See www.cms.hhs.gov/MedicareCoverageGuideDocs/
• Coverage with Evidence Development
• Coverage with Appropriateness Determination
  Conditioned on submission of data
• Coverage with Study Participation Limited to
  clinical trial
• Local Coverage Determination
• Local Medicare contractors have discretion to
  make medical necessity decisions variation in
  coverage depending on contractor jurisdiction

6
MedicareGeneral Coverage Principles

• Non-Covered Services Rule
• No payment for non-covered services or services
  related to non-covered services
• Exclusion includes services related to follow-up
  care and complications of non-covered services
  which require treatment during a hospital stay in
  which the non-covered service was performed
• Services to treat complications after discharge
  from non-covered hospital stay may be covered
• Medicare Benefit Policy Manual, Ch. 16, 180.

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Medicare General Coverage PrinciplesApplication
of Non-Covered Services Rule

• Services Not Related A beneficiary was admitted
  to the hospital for covered services, but during
  the course of hospitalization became a candidate
  for a non-covered transplant or implant and
  actually received the transplant or implant
  during that hospital stay. When the original
  admission was entirely unrelated to the diagnosis
  that led to a recommendation for a non-covered
  transplant or implant, the services related to
  the admitting condition would be covered.
• Services Related A beneficiary was admitted to
  the hospital for covered services related to a
  condition which ultimately led to identification
  of a need for transplant and receipt of a
  transplant during the same hospital stay. If, on
  the basis of the nature of the services and a
  comparison of the date they are received with the
  date on which the beneficiary is identified as a
  transplant candidate, the services could
  reasonably be attributed to preparation for the
  non-covered transplant, the services would be
  related to non-covered services and would also
  be non-covered.

8
MedicareGeneral Coverage Principles

• Research Cost/Usual Patient Care Costs Rule
• Medicare Provider Reimbursement Manual 504.1
  states that (w)hereresearch is conducted in
  conjunction with or as a part of the care of
  patients, the costs of usual patient care are
  reimbursable to the extent such costs are not met
  by research funds
• Usual patient care is the care which is
  medically reasonable, necessary, and ordinarily
  furnished (absent any research programs) in the
  treatment of patients by providers under the
  supervision of physicians as indicated by the
  medical condition of the patients. (Medicare
  Provider Reimbursement Manual, 502.2)
• Medicare interpretations of what constitutes
  usual patient care can vary widely among local
  Medicare contractors

9
MedicareMedicare Part B Investigational Drugs

• Medicare Part B generally does not cover drugs
  that have not received FDA approval and limits
  exist on coverage of FDA-approved drugs
• See Medicare Benefit Policy Manual, Chapter 15
  (Covered Medical and Other Health Services),
  Section 50
• Medicare Part B will cover FDA-approved drugs
  used on-label if medically necessary for the
  particular patient
• Medicare considers drugs approved by the FDA to
  be safe and effective when used consistent with
  their labeling
• Local Medicare contractors make medical necessity
  determinations for particular patients

10
MedicareMedicare Part B Investigational Drugs

• Medicare Part B may cover an FDA approved drug
  used off-label if medically necessary for a
  particular patient
• Local Medicare contractors make medical necessity
  determinations
• Particular use
• Particular patient
• Medical necessity determination for drug use
  considers
• Treatment in major drug compendia
• Authoritative medical literature
• Accepted standards of practice

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MedicareMedicare Part B Investigational Drugs

• Anti-Cancer Drugs
• Medicare coverage mandated for any "medically
  accepted indication" of FDA-approved drug
• On-label uses
• Certain off-label uses
• Off-label use must be
• Supported by one of three drug compendia
  (American Hospital Formulary Service-Drug
  Information, American Medical Association Drug
  Evaluations or the United States
  Pharmacopoeia-Drug Information) and not listed as
  not indicated in any compendium, or
• If the off-label use is not addressed in any
  compendium, the Medicare contractor may determine
  that such use is medically accepted based on
  forthcoming compendia reports or supportive
  clinical evidence in peer reviewed medical
  literature appearing in specified publications.
• 42 U.S.C. 1395x(t)

12
MedicareMedicare Part D Investigational Drugs

• Drug is Medicare Part D covered drug only if the
  drug has been approved by the FDA and is used for
  a "medically accepted indication"
• Medically accepted indication
• On-label use
• Off-label use if use is supported by one of three
  drug compendia (American Hospital Formulary
  Service-Drug Information, the United States
  Pharmacopoeia-Drug Information or DRUGDEX
  Information System)

13
MedicareInvestigational Devices

• General Rule No Medicare coverage for devices
  that are not FDA-approved and no coverage for
  services related to the devices
• Safety and efficacy of device not proven
• Services related to device include services
  furnished
• in preparation for the use of a device
• contemporaneously with the device and necessary
  to the use of the device and
• as necessary after-care that are incident to
  recovery from the use of the device or from
  receiving related non-covered services
• See 42 C.F.R. Part 405, Subpart B and Medicare
  Benefit Policy Manual, Chapter 14 (Medical
  Devices)

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MedicareInvestigational Devices

• Exceptions for Certain Investigational Devices
  and/or Related Services Coverage contingent upon
  investigational device exemption (IDE) and type
  of device.
• Sponsors who seek to study a significant risk
  device in a clinical trial must obtain an
  investigational device exemption (IDE) from the
  FDA
• Sponsors who seek to study a non-significant risk
  device in a clinical trial must obtain approval
  from an institutional review board (IRB)
• IDE/IRB approval allows sponsors to distribute
  devices for use in clinical without complying
  with requirements applicable to commercial
  devices

15
MedicareInvestigational Devices

• FDA will categorize investigational device as
  Category A or Category B
• Category A (Experimental) Innovative devices for
  which the absolute risk of the device type has
  not been established (i.e., initial questions of
  safety and effectiveness have not been resolved
  and the FDA is unsure whether the device type is
  safe and effective).
• Category B (Non-Experimental) Devices for which
  underlying questions of safety and effectiveness
  concerning that device type have been resolved or
  safety and efficacy is known (e.g., other
  manufacturers have obtained FDA approval for that
  device type).
• Medicare coverage rules are different for
  different categories
• Coverage rules for IRB approved device similar to
  Category B device

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MedicareCategory A Investigational Devices

• Device is never covered
• Coverage for certain services in certain clinical
  trials only if prior approval obtained from local
  Medicare contractor
• Trial Must be FDA-approved and meet other
  CMS/Medicare contractor criteria
• If trial is initiated before January 1, 2010, the
  device must be determined as intended for use in
  the diagnosis, monitoring, or treatment of an
  immediately life-threatening disease or
  condition.
• Immediately life-threatening A stage of disease
  in which there is a reasonable likelihood that
  death will occur within a matter of months or in
  which premature death is likely without early
  treatment.
• Services Covered routine cost of care is
  interpreted consistent with the Medicare NCD
• Special coding rules apply
• See CMS Transmittal 131, MedLearn Matters mm 3548
  and CMS Question and Answers Nos. 5139 - 5142

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MedicareCategory B Investigational Devices

• Device will be covered only if prior approval
  obtained from local Medicare contractor
• Coverage criteria applied by local Medicare
  contractor
• Device must be used within the context of the
  FDA-approved clinical trial
• Device must be used according to clinical trial's
  approved patient protocols
• Device must comply with national or local
  Medicare policy guidelines for similar FDA
  approved devices
• Device must be medically necessary for the
  particular patient and medically appropriate in
  amount, duration and frequency of use or
  application of the service
• Device must be furnished in a setting appropriate
  to the patient's medical needs and condition
• If device covered, then services related to
  device covered
• Special coding and billing rules apply

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Investigational DevicesCoverage Principles
Summary
19
MedicareNational Coverage Decision for Clinical
Trial Services (NCD)

• NCD establishes specific principles for coverage
  of specific services provided in some clinical
  trials
• General rule Medicare will cover routine
  costs of qualifying clinical trials
• Defined terms establish scope
• All other Medicare coverage rules continue to
  apply
• NCD establishes coverage of complications in all
  clinical trials
• NCD affirms coverage of standard of care in all
  clinical trials
• See www.cms.hhs.gov/ClinicalTrialPolicies/

20
Medicare National Coverage DecisionSpecifically
Included Routine Costs

• Services typically provided absent a clinical
  trial
• Services required solely for the provision of the
  investigational item or service
• Clinically appropriate monitoring of effects of
  investigational service or prevention of
  complications
• Services needed for care arising from provision
  of an investigational item or service such as
  diagnosis and treatment of complications

21
Medicare National Coverage DecisionSpecifically
Excluded Routine Costs

• Investigational item or service
• Items or services (1) no Medicare benefit
  category, (2) statutorily excluded from coverage,
  or (3) subject to national non-coverage policy
• Items and services provided solely to satisfy
  data collection and analysis
• Items and services customarily provided by the
  research sponsors free of charge
• Items and services provided solely to determine
  trial eligibility

22
Medicare National Coverage DecisionQualifying
Clinical Trials

• Trial must evaluate item or service within
  Medicare benefit category
• Trial must have therapeutic intent
• Therapeutic trials may enroll only diagnosed
  subjects, but diagnostic trials may enroll
  healthy subjects (for control group)
• Trials must have certain desirable
  characteristics or be deemed to have those
  desirable characteristics

23
Medicare National Coverage DecisionQualifying
Clinical Trials

• Desirable Characteristics
• Principal purpose is to test whether intervention
  improves health outcomes
• Trial supported by scientific information or to
  clarify health outcomes of interventions already
  in use
• Trial design appropriate to research question
• Trial sponsored by credible organization
• Trial complies with human subjects protection
  regulations
• Trial meets scientific integrity standards

24
Medicare National Coverage DecisionQualifying
Clinical Trials

• Deemed Desirable Characteristics
• Trials funded by National Institutes of Health
  (NIH), Centers for Disease Control and
  Prevention (CDC), Agency for Healthcare
  Research and Quality (AHRQ), Centers for
  Medicare and Medicaid (CMS), Department of
  Defense (DOD) and Department of Veterans
  Affairs (VA)
• Trials supported by cooperative groups funded by
  same agencies
• Trials conducted under investigational new drug
  exemption (IND) or trials exempt from an IND

25
Medicare National Coverage DecisionQualifying
Clinical Trials Certification

• Desirable Characteristics (Not Yet Available/May
  Be Eliminated)
• Principal investigator certifies compliance with
  characteristics
• Self-certification process
• Deemed Desirable Characteristics
• Sponsors of IND and IND-exempt trials must
  provide notice to CMS
• IND and IND exempt trials will be subject to
  self-certification process (once in place)
• All other deemed trials must register with
  clinical trials registry (once developed)

26
Medicare National Coverage DecisionRegistration,
Documentation and Billing Rules

• IND Identification. Sponsors of both IND trials
  and IND-exempt trials must identify themselves by
  e-mail to clinicaltrials_at_cms.gov for
  administration, payment and program integrity
  purposes.
• Documentation.
• Medical Record Trial name, sponsor and
  sponsor-assigned protocol number
• Readily Available Informed consent
• Coding. Special coding rules apply
• Physician QV procedure code modifier and
  ICD-9-CM code V70.7 as primary diagnosis on claim
  for services rendered to healthy control group
  volunteers
• Hospital ICD-9-CM code V70.7 as secondary
  diagnosis on claim for all services

27
MedicareGeneral Payment PrinciplesVersusNation
al Coverage Decision

• NCD expands coverage for qualifying clinical
  trials
• Routine costs with non-covered device or service
• Monitoring for side effects or complications that
  exceeds routine care
• NCD currently has limited applicability
• Most commercially sponsored trials (other than
  drug trials involving covered drugs) therefore
  not covered
• NCD imposes specific billing requirements
• Registration requirements for sponsors of drug
  trials (clinicaltrials_at_cms.hhs.gov)
• Coding requirements for providers

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Comparative Analysis of Medicare Coverage
29
Medicare National Coverage DecisionA Policy In
Revision

• Spring 2006 CMS announces Questions Answers
  will be issued to clarity NCD
• July 2006 CMS announces that NCD will be
  revised and solicits comments
• December 2006 Medicare Coverage Advisory
  Committee (MCAC) meeting
• April 2007 Draft revised policy to be issued
• Summer 2007??? Final revised policy to be issued

30
Medicare National Coverage DecisionRevisions
Supported by MCAC, 12/06

• MCAC supported the following revisions
• Remove the status of IND-exempt studies as
  deemed automatically to have the desirable
  characteristics for an NCD qualifying trial
• Extend such deemed status to trials that have
  been approved by any federal agency not just
  CDC, NIH, AHRQ, CMS, DOD and VA, as exclusively
  specified in the original NCD
• Clarify that deemed status would include trials
  that have been reviewed and approved as
  scientifically sound by centers or cooperative
  groups funded by a federal agency
• Extend qualifying trial status to otherwise
  eligible humanitarian device exemption (HDE)
  protocols

31
Medicare National Coverage DecisionRevisions
Supported by MCAC, 12/06 (continued)

• MCAC supported the following revisions
• Require that qualifying clinical trial under the
  NCD must be registered at clinicaltrials.gov
  the NIH registry of clinical trials
• Require that qualifying clinical trial under the
  NCD must address plans for the release and
  diffusion of study results, including negative
  results
• Require that qualifying clinical trial under the
  NCD must enroll sufficient numbers of relevant
  subpopulations, as defined by gender,
  race/ethnicity, age and other factors.

32
Medicare Secondary Payor Rules

• CMS issued an interpretation of Medicare
  secondary payor (MSP) rules in clinical trial
  context (Letter dated April 13, 2004).
• Letter addresses Medicare coverage of
  complications resulting from investigational
  procedure when trial sponsor promises to pay for
  research-related injuries provided that these
  services are not covered by another payor.
• Letter states MSP rules render Medicare benefits
  secondary to benefits payable by a third party
  payor even if the third party payor (i.e., trial
  sponsor) states that its benefits are secondary
  to Medicare or otherwise limits its payments to
  Medicare beneficiaries.
• Interpretation restricts the ability of sponsors
  to agree to operate as a payor of last resort.
• Provision common particularly for research
  related injuries
• Provision promotes patent access to clinical
  trials
• CMS to provide additional clarification

33
Medicare as Secondary Payor Rules
The Medicare statute precludes payment when
payment has been made or can reasonably be
expected to be made under a liability insurance
policy or plan (including a self-insured plan).
An entity that engages in a business, trade or
profession shall be deemed to have a self-insured
plan it if carries its own risk (whether by a
failure to obtain insurance, or otherwise) in
whole or in part. 42 U.S.C.  1395(b)(2)(A)(ii).
The clinical trial sponsors agreement with
trial participants that it will pay for medically
necessary services related to injuries
participants may receive as a result of
participation in the trial constitutes a plan or
policy of insurance under which payment can
reasonably be expected to be made in the event
such an injury occurs. A liability insurance
policy or plan must make payment without regard
to an individuals Medicare eligibility. 42
C.F.R.  411.32(a)(1). Therefore, Medicare will
not make payment it if is aware of a situation
such as you described.
34
Medicare as Secondary PayorApril 2004
While your e-mail to Mr. Olenick was phrased as a
hypothetical question, we urge you to advise any
of your clients that may have failed to make
primary payments for services related to injuries
sustained by Medicare beneficiaries in the course
of their participation in clinical trials that
CMS is willing to work with them to resolve their
payment obligations with minimal inconvenience to
participants and their health care providers.
35
Medicare Clinical TrialsGovernment Enforcement

• Rush University Medical Center (2005)
• Internal investigation revealed Medicare billing
  irregularities
• A research sponsor had agreed to pay for and
  indeed did pay for certain services that Rush
  had also billed to third-party payors
• Informed consent forms used in the trials also
  raised issues because the forms provided that the
  research sponsor would cover the cost of
  providing certain services, or that services
  would be provided for free, yet bills were
  rendered for those services
• Corrective action taken and government disclosure
• Settlement
• No Admission of Liability and Release of Claims
  from Federal Government and State of Illinois
• 1 million payment (United States and Illinois)
• Certification of Compliance Agreement (CCA)
• Modified (less burdensome) Corporate Integrity
  Agreement

36
RUMC SettlementLessons Learned

• Wake-Up Call for Research Institutions
• Multiple OIG actions on research compliance
• Billing audits have hit some NCI centers
• Recent UAB whistleblower case included
  allegations of illegal third-party billing,
  although focused on time and effort reporting
• November 2005 OIG Compliance Guidance for
  research grant recipients
• 2006 OIG Work Plan

37
MedicaidGeneral Principles

• Coverage depends on state Medicaid program
• CMS stated in a letter to state Medicaid
  directors dated October 30, 2000 that was issued
  in the wake of the NCD
• Medicaid is liable only for Medicaid
  services covered in the Medicaid State plan.
  State Medicaid agencies may already cover
  services provided in a clinical trial, as long
  as other pertinent Federal requirements are met
  (e.g., the services are medically necessary,
  provided by a qualified provider, etc.).
• Most states will cover medically necessary
  services even if provided in clinical trial but
  will not cover experimental care

38
MedicaidExamples of Payment Principles

• California California MediCal program does not
  cover experimental services. Investigational
  services may be covered under certain
  circumstances if (1) services are not performed
  as part of a research study protocol and (2)
  there is a reasonable expectation and a medical
  benefit to the patient. Cal. tit. 22-51303.
• Illinois The Illinois Medicaid program excludes
  coverage for Experimental procedures and
  Research oriented procedures. 89 Ill. Adm. Code
  140.6.

39
MedicaidExamples of Payment Principles

• New York New York Medicaid program does not
  cover medical services that (1) fail to meet
  existing standards of practice, (2) are
  professional unacceptable, or (3) are
  investigational or experimental in nature. NY
  Medicaid Manual 2.1.7.
• Texas The Texas Medicaid program excludes
  coverage for procedures and services
  considered experimental or investigational.
  Texas Medicaid Manuals, Part I, Section 1.4

40
Medicaid Coverage/Enforcement Concerns

• Medicaid programs historically exercised little
  oversight over billing
• Coverage of clinical trial services often based
  on general medical necessity principle
• Generally no specific rules
• Generally no claims review/claims edits
• Federal legislation promotes whistleblower
  activity
• State false claims acts mandated
• Health care provider policies on false claims
  acts
• Section 6031 of Deficit Reduction Act of 2005
• Medicaid Third Party Liability Issues
• Sponsor payor of last resort language

41
Medicaid Drug Coverage

• Drugs must be FDA approved and prescribed for a
  use that is approved or listed in major drug
  compendia (set forth in Medicaid drug rebate
  statute)
• American Hospital Formulatory Service Drug
  Information
• United States Pharmacopeia Drug Information
• DRUGDEX Information System same as Medicare Part
  D
• Medicaid definition of covered drug includes
  off-label uses

42
Private InsuranceGeneral Principles

• Industry Practice
• Coverage Criteria
• Sponsorship (Government vs. Commercial)
• Nature of Trial (Phase I vs. Phase III)
• Medically Necessary (Fact Specific Analysis of
  Services Provided)
• Cost Neutrality (Treatment No More Expensive than
  Standard Therapy)
• Example Aetna Clinical Policy Bulletin (0466)
• Coverage of routine patient care costs of
  clinical trial if other general coverage
  requirements met
• Services provided under protocol
• IRB approval
• Coverage of unintended complications

43
Private InsuranceGeneral Principles

• State Laws
• Mandated Coverage of Routine Care in Clinical
  Trials
• Cancer or life-threatening conditions
• External Appeals Laws
• Permit independent consideration of medical
  necessity of clinical trial services if insurers
  deny coverage

44
Billing Compliance Challenges
45
Coordinating Coverage Common Problems

• Which Medicare Principles Apply?
• How to Identify/Address Different Coverage
  Principles of Different Payors?
• What is Standard of Care in the context of the
  patients/subjects and the protocol?
• What Coordination of Benefit/Secondary Payor
  Principles Apply?
• How to Ensure that Prior Authorization/ Prior
  Approval Requirements Are Met?
• Is informed consent form consistent with the ways
  that costs are actually allocated in a trial?

46
Coordinating Clinical Trial Documents

• Clinical Trial Documents (Study Budget, Clinical
  Trial Agreement, Informed Consent) Collectively
  Work to Allocate Costs of a Clinical Trial
• Clinical costs (often presumed billable to
  insurance and therefore not covered by research
  sponsor, subject co-pays and deductibles)
• Costs of denied claims sponsors obligation,
  subjects obligation
• Costs of conducting the study itself (e.g., cost
  of data collection undertaken solely for research
  purposes)
• Cost of any research-related injuries experienced
  by subjects (cost of immediate care to treat
  injury and/or long term care required going
  forward)
• Subject compensation for participation (if any)

47
Coordinating Clinical Trial Documents

• Common Rule and FDA regs (Part 50) require that
  subjects be told in the informed consent process
  of any additional costs to the subject that may
  result from participation in the trial
• Subjects need to know about co-pays and
  deductibles, even if all trial services are
  appropriately billed to third party payor(s)
• Many boilerplate consent forms state that the
  subject will not incur any additional expenses as
  a result of participating in the study because
  institution believes it can bill insurance
• Need to identify possibility of billing subject
  if there is no insurance coverage
• Important that terms of clinical trial agreement
  and study budget align with what subjects are
  told about their costs of participating
• Sponsors should carefully review these sections
  of ICFs after IRB has approved, to assure
  accuracy/consistency
• This brings up issue of subjects who have no
  source of third party payment/uninsured are
  they qualified for entry into a trial? Who will
  pay their costs? Or are they excluded?
• Clinical trial agreement and study budget must
  identify what research sponsor will cover and
  what can appropriately be billed to insurance (or
  patient)
• Requires complete billing analysis by sponsor,
  site and investigators before execution of
  clinical trial agreement

48
Coordinating Budgets

• No need for uniformity across multiple sites
• Must consider FDA rules on charging for
  investigational drugs and devices
• Proposed changes to investigational drug rules
• Impact of proposed changes on expanded access to
  investigational drug rules

49
Clinical Trials Billing ComplianceCurrent
Practices and New Developments

• FDA News Audioconference
• February 1, 2007

Mark Barnes Ropes Gray LLP mark.barnes_at_ropesgray
.com 212.497.3635