Clinical Trial Agreements, Medicare Reporting and the MSP Statute

 

Medicare Secondary Payer (MSP) Statute

 

The Veteran’s Administration was the first US Government agency to protect their healthcare funds in 1962 when a law was passed that allowed them to recover medical payments from the settlement of a beneficiary’s lawsuit.  That law was incorporated into the Medicare bill in 1965 along with provisions to recover from Worker’ Compensation Plans.  Then, starting in 1980, successive laws were passed making Medicare the “secondary payer” under liability insurance and other insurers as the forms of insurance changed (e.g., captive insurers).  Today, the law applies to all businesses whether they have insurance or not if a medical payment can reasonably be expected to be made by the business.  Clinical trial agreements are included when the sponsor agrees to pay for study subject injury.

 

Up through 2006, Medicare relied on group healthcare insurance companies to voluntarily inform them when their company was the primary payer and responsible for paying medical claims.  That process worked so well that in 2007 they helped write the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) law (see below).  The law requires all businesses that have paid, or are liable to pay, a medical claim(s) to formally let them know they are responsible for paying the claim(s) (e.g., are primary payers).

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Isn’t this dealt with in a “Coverage Analysis” ?

 

No.  Medical institutions perform clinical trials for many reasons including humanitarian, accreditation, physician retention and for prestige -- not for profit.  As a matter of fact, most trials are more likely to run at a loss than a gain.  A coverage analysis is an attempt to reduce the cost to the institution, by allocating the cost of the protocol across what is billable to the Sponsor and what can billed to other potential payers -- Medicare in particular.  Medicare will pay for the standard of care associated with the diagnosis the study drug or device was designed to alleviate or cure, but Medicare is generally prohibited by law from paying for research except for specific treatments covered under national (National Coverage Decision) and local (Local Coverage Decision) decisions made by the regional Medicare Administrative Contractors (MACs).

 

Subject injuries are not part of the protocol.  They are not included in the budget, but they are usually billable to the sponsor and can reduce the cost of the trial for the institution.  If they are not billed, they may be a Medicare compliance issue

 

Subject Injury Provisions

 

The Subject Injury provision in your Clinical Trial Agreement (CTA) may be an opportunity to reduce the cost of conducting the trial, or it may be a lurking Medicare compliance problem

 

Based on Department of Health and Human Services (HHS) and the Federal Drug Administration (FDA) regulations, CTAs generally contain a provision that addresses who is responsible for paying for study subject injury. This provision is required for institutions accredited by the Association for Accreditation of Human Research Participant Protection Programs (AAHRPP).  The provision usually designates the Sponsor as the payer.  (Watch out for old boilerplate CTAs that say the Sponsor will pay if no other insurer will pay; they are in direct violation of the MSP law.)

 

CTA subject injury payment provisions range from payment for any injury, including known side effects and adverse reactions, for all who participate in the trial, to only those injuries in which there is deemed to have been a direct causal connection between the product being tested or protocol and the injury.  In other words, related to the trial, not the underlying condition.  All are billable.

 

The price of treatment for adverse events is not readily available; however, comparable numbers may be inferred from patients who experienced adverse drug events (ADEs).  They were hospitalized an average of 8 to 12 days longer than patients who did not suffer ADEs and their hospitalization costs ranged from $22,500 to $34,000 (FY18 dollars) and higher. (Source: Agency for Healthcare Research and Quality Publication 01-0020)

 

Since they can be billed, a payment can reasonably be expected to be made by the Sponsor and the Medicare Secondary Payer statute [See 42 U.S.C. § 1395y(b)(2)(A)(ii)] is invoked.  The institution, as the entity responsible for submitting claims, would be well served to ensure there is adequate revenue cycle capture and, if required, a causality adjudication process in place.

 

Compliance Issues

 

Sponsor

 

If the Sponsor should have paid for an injury to a beneficiary, then Medicare, Medicare Advantage Plans and the even the beneficiary may to sue to for twice the amount of the payments (double damages) Medicare and/or the Advantage Plan made to providers.  Medicare may also impose a penalty of $1000 per day per beneficiary if the Sponsor fails to report their responsibility under MMSEA (see below).

 

Principal Investigator or their Institution

 

The required Medicare Secondary Payer Questionnaire most physician offices and institutions use (42 C.F.R. § 489.20 ) applies.  Institutions and independent Principal Investigators must not bill Medicare when the Sponsor will pay.  If the Institution or provider inadvertently bills Medicare, under the Affordable Care Act they must self-report and refund the “overpayment” within the 60 days or face potential False Claims Act (FCA) liability, Civil Monetary Penalties Law (CMPL) liability, and exclusion from federal health care programs for failure to report and return an overpayment.

 

For claims reported by the Sponsor under MMSEA, any past overpayments will be recovered from the Sponsor.  The site will not have to report those overpayments or reimburse Medicare.

 

Medicare Clinical Trials Reporting under Section 111 (MMSEA)

 

Sponsor

 

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) 42 U.S.C. 1395y(b)(7)&(b)(8) - [PL 110-173] requires Sponsors to report acceptance of their responsibility to make ongoing medical payments related to treatment of a subject injury according to their CTA.  The penalties for not reporting can be much higher than the Sunshine Act -- $1000 per day per unreported beneficiary.

 

The Sponsor’s reporting duty is ongoing.  They must report once per quarter for injuries that occurred in the previous quarter.

 

Reporting sponsors have taken different approaches to identifying which subject injuries are reported.  They either monitor and adjudicate the Adverse Events (AEs) and Serious Adverse Events (SAEs) as they are reported to them by the trial site, or they wait for the trial site to invoice them for payment, relying on the site to ensure their compliance.

 

Principal Investigator and/or their Institution

 

Principal Investigators and their Institutions do not report; however, the Sponsors (and their third party vendors) require the site’s cooperation to collect the identifiable patient information required by MMSEA.

 

MMSEA requires each injury be reported using identifiable patient information:

• Full name,
• Date of birth,
• Gender and
• Medicare Beneficiary Identifier (MBI), Health Insurance Claim Number (HICN) or Social Security Number (SSN)

and may occasionally request the time and nature of the injury:

• Medical codes,
• Date of diagnosis and
• Date of resolution (if any).

 

One of the hurdles facing the Sponsor’s proper reporting is making sure they have reported all of the beneficiaries that suffer an injury that were enrolled in a trial.  If they under report, they are subject to fines of $1000 per day per beneficiary without legal recourse.  In legal terms there is no “safe harbor.”  However, Medicare does provide a process for verifying whether or not a test subject is a beneficiary.  Third party vendors may submit the test subject’s personal information, including their SSN (or less desirably the last five (5), not the more commonly used last four, digits of their SSN) to Medicare for verification.  This process, or requiring a signed statement from the test subject that they are not enrolled, serves as “due diligence.”  Many Sponsors insist on this process for their audit trail.

 

Third Party Vendors

 

Third party vendors or “Reporting Agents” are Heath Care Clearinghouses.  They allowed by Medicare to collect and store information covered by HIPAA for use in reporting under MMSEA.

 

Medicare Demands for Reimbursement

 

The Medicare Secondary Payer Statutes were written with the understanding that treating the beneficiary outweighs the importance of proper billing, so they will pay “conditionally” in anticipation of being reimbursed by the proper primary payer in the future.

 

Sponsor

 

Although Sponsors are required to report promptly each quarter, there will be situations in which a beneficiary sought treatment at a facility before the Sponsor’s quarterly report, or when treatment was inadvertently billed to Medicare by the institution or the Principal Investigator’s office staff.  In these situations, a Medicare contractor will send a “Demand” for reimbursement to the sponsor with a list of medical claims in an Explanation Of Benefits (EOB).  Before reimbursing Medicare, Sponsors should review the EOB carefully; Medicare employs “grouper software” that is designed to collect all of the related claims they paid based on the date of incident (date of diagnosis for clinical trials reporting) and the EOB is often overstated.  Reporting Agents (including MCS) offer “Lien Resolution” services to adjudicate the claims and limit the sponsor’s financial exposure.

 

Principal Investigator and/or their Institution

 

In the rare instances when Medicare and the Sponsor pay the Institution, Medicare will initially seek reimbursement from the Sponsor.  When Sponsor disputes the Demand for reimbursement as already having been paid, the site will receive a Duplicate Primary Payments (DPP) Demand for reimbursement.

 

Conclusion

 

A Clinical Trial Agreement Subject Injury provision can be a source of potential clinical trial cost reduction or a Medicare compliance issue.  The institution, as the entity responsible for submitting claims, would be well served to ensure there is adequate revenue cycle capture and, if required, a causality adjudication process in place.

 

Many sponsors are required to report under MMSEA and they are required to report once per quarter for injuries that occurred in the previous quarter.  In order to maintain the double blind nature of the trial, most Sponsors engage a Reporting Agent.  The Sponsor and the Reporting Agent must have the assistance of the Institution and independent PIs to collect the information required for the report.  There is often language in the CTA that specifically addresses MMSEA reporting, though some attorneys leave it under the umbrella of reports required by Federal statute.  The impact to the site is not particularly onerous, often all it requires is a securely transmitted spreadsheet of the test subjects’ personal information (covered under the Privacy Act not HIPAA), but the site may want to include a few hours per quarter to keep the spread sheet current.

 

MMSEA reporting can have a positive impact on the institution’s compliance and financial team; once the injury is reported, Medicare will deny any future medical claims associated with  its treatment and any past claims paid by Medicare will be recovered from the Sponsor.