Don’t overlook budgeting, billing quality initiatives
Don’t overlook budgeting, billing quality initiatives
Experts offer strategies that work
One weak link for many research institutions in clinical research quality and best practices lies in the realm of financial affairs.
Too often the clinical research team charged with negotiating budgets consists of research professionals who don’t have training in finance or compliance, explained Harriett Singer, MS, FACMPE, an instructor in the department of pediatrics at Baylor College of Medicine in Houston. Singer spoke about this topic at the 2005 Association of Clinical Research Professionals (ACRP) North American Annual Conference, held April 2-6 in Orlando.
"They often are trained in human subjects protection, but not in the sort of financial compliance areas where we feel there are significant risks to the investigators and also to the institutions," she said.
One of the chief financial issues that research institutions should address concerns creating budgets, noted Angela Fornataro McMahill, JD, CCP, CCRA, director of the University of California, San Diego (UCSD) Clinical Trials Administrative Services and Research Compliance Office. McMahill also spoke about financial compliance at the recent ACRP conference.
Research institutions need to ensure their final budget for a clinical trial has been drafted appropriately to make sure all costs are included so the institution is not subsidizing the research, she added. "Some institutions haven’t developed initiated standardized research prices," McMahill said. "Four years ago, our institution put those in place, and most are moving in that direction."
Singer and McMahill offered these guidelines to improve the financial aspects of clinical trials:
1. Include all hidden costs in budgets.
"An industry sponsor might send out a complex or an even simple budget attached to a contract," Singer said. "That budget may not include all the line items and all the elements that go into the cost of doing clinical research."
For example, direct costs may include a lot of indirect or overhead costs, so if researchers are not experienced at teasing out those costs, then they may be undervaluing their research, she noted. "Even though there may be the appearance that there’s excess revenue at the end of the study, I think it’s more likely the costs are just not being outlined ahead of time and that a study is being underfunded," Singer explained.
"Another financial issue that occurs when investigators negotiate budgets is they may accept a proposed budget without discussing it because they think they have to and are uncomfortable with financial negotiations," she said. "Maybe they were in a hurry and didn’t have the time and patience for it."
Singer recalled a study where the investigator was willing to accept the sponsor’s proposed budget, but wisely made the decision to receive Singer’s input first.
"I said, I think we need to enhance the revenue in a variety of line items,’ so we sat down and negotiated together with the sponsor, and this particular budget turned out to be greatly enhanced," Singer said. "After we successfully negotiated this study, the investigator turned out to be my biggest supporter, who now sends his contracts directly to me to negotiate."
When a study is underfunded, then it could run foul of regulatory rules that do not allow tax-exempt organizations to provide subsidies to for-profit sponsors, Singer explained.
"That might jeopardize the tax-exempt status of a nonprofit investigator site," she noted.
On the other hand, overfunding could represent a profit to an institution that might also jeopardize tax-exempt status, although this is far less likely because many more budgets are under-funded than overfunded, Singer said.
When an ending budget shows a profit, it’s probably because the clinical trials office has not included line items for all of the costs, giving the illusory appearance of a profit when there actually is none, she added.
This problem of underfunding results from a lack of coordination between finance staff and clinical research staff, and it also represents a major compliance risk, Singer explained.
"The people invoicing a sponsor may not be responsible for day-to-day operations; and at a big institution, there may be a separation between finance and research staff," she continued.
A solution would be to have finance and research staff work together to determine all hidden and overhead costs prior to approving a sponsor’s budget, Singer said.
2. Put in checks and balances for billing.
If an institution chooses to bill for clinical trial research, it should have specific policies and appropriate monitoring to ensure billing occurs appropriately.
"Our institution has a conservative policy that for commercially sponsored clinical trials, we don’t feel it’s appropriate to bill the participant or insurer for costs in the trial," McMahill said. "Instead, we bill the sponsor, and if there’s an injury related to the trial, the injury costs cannot be billed as well."
The University of California has that policy despite the Medicare clinical trials coverage decision and a California law that permits some research billing to go to third parties for certain trials, she added.
Some sponsors will request research billing, but university policy does not permit this activity, McMahill noted.
This is such a long-standing policy at the university that it hasn’t been an issue with sponsors, she said.
Another checks and balance in place involves requiring investigators to open a bulk account number for a research trial prior to signing the clinical trial contract, McMahill noted.
"In order to register a patient here at UCSD and to make sure charges don’t pass to the patient or insurance, we have a bulk account established," she explained. "There’s a bulk account form on-line, and a number is assigned, so when they have a patient enrolled, the registration includes that bulk account number."
Institutions also could monitor clinical trial patients’ accounts to make certain all billing goes to the research account and hasn’t been mistakenly diverted to the patient or a private insurer, she added.
"We’ve set up a system where calls come in related to billing complaints, and we monitor those," McMahill said. "If there appears to be a systems problem, then we do a root cause analysis so we can correct it."
If there are errors related to research staff issues, then training is provided, she said.
Another good checks and balance tool is the institutional billing account, which should be sent to the person who oversees the research study to make certain the research staff are involved in deciding what is the standard of care vs. research care, Singer added.
"We work with the research staff from the very beginning of a study," Singer explained. "And we make sure the hospital is paid and the ancillary costs are paid from the appropriate source."
3. Provide adequate training of clinical trials and finance staff.
Training for clinical trial staff should include a financial compliance module, she suggested.
"This module might be anything from just raising sensitivity to the issues, lasting an hour or two, to a more extensive seminar training session," Singer said. "It’s mostly to make people aware of the institution’s resources that can help them and having them aware of compliance risks and how to mitigate them."
Likewise, finance staff should be educated about clinical trial work, she added. "If you’re on the business side of a large academic research center, you might not be aware of what clinical research is or how these studies work." Education for finance staff could take place with on-line courses and interactive tests, Singer added.
At UCSD the research compliance program is structured in a way that relies heavily on training and education, McMahill said.
The research compliance education activities include:
- bimonthly newsletter that focuses on research compliance policies and changes;
- monthly training sessions that provide basic information on conducting research, plus a recent session on effective budget preparation and negotiation;
- help line for staff who have questions;
- intranet that centralizes research information and forms necessary to conduct research at UCSD.
"Now we’re working on mandatory competencies for research staff," McMahill said.
Compliance is woven into all of the clinical trials education, and educational sessions are taught by UCSD researchers, staff, and community members, who are considered experts, she noted. "We feel education is so important, and it’s the basis for ensuring you have compliance."
4. Conduct a profit-and-loss analysis.
When research and finance staff have a working partnership, it’s a good idea for the two groups to pair up and conduct a profit-and-loss analysis of research contracts after they’ve ended to see whether the contract budget was accurate, Singer said.
The first step of the analysis to look at what’s included with regard to direct patient care costs, she explained.
Questions to consider during the analysis include these:
- What were the variable and indirect costs?
- Was the sponsor billed for all research-related costs?
- Has the sponsor paid everything agreed to in the contract or are there holdbacks?
- If it wasn’t fully funded, why wasn’t it?
- How was the investigator’s effort extended, and was that effort covered by the clinical trials revenue?
Once the analysis is complete, the information should be used to help investigators and clinical staff understand more fully the true costs of research and the true revenue of research, Singer said.
When hidden costs are discovered through this analysis, then those will need to be researched, and this may include talking with clinical research professionals to find out what unusual or undocumented circumstances took place in the clinical trial, she noted.
"Were there visits that were unscheduled, and were they billed to the sponsor?" Singer added. "A lot of times the answer is, No.’"
A profit-and-loss analysis shows researchers the big picture of research costs, so they’ll understand global costs the next time they negotiate a clinical trial contract, she said.
One weak link for many research institutions in clinical research quality and best practices lies in the realm of financial affairs. Too often the clinical research team charged with negotiating budgets consists of research professionals who dont have training in finance or compliance, explained Harriett Singer, MS, FACMPE, an instructor in the department of pediatrics at Baylor College of Medicine in Houston.Subscribe Now for Access
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