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Home News Letters Clinical Trials Update with input from MAGI WEST conference attendees

Clinical Trials Update with input from MAGI WEST conference attendees

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After speaking at MAGI WEST and having a chance to discuss Medicare’s Mandatory Insurer Reporting (e.g.,  Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007) with the attendees it became even more apparent that there is a great deal of confusion about a clinical trials sponsor’s requirement to report, what to report and the negative impact on clinical trials sites.

In brief, the reporting requirement applies to clinical trials sponsors because the Centers for Medicare and Medicaid Services (CMS) has found that a Clinical Trial Agreement (CTA) that states the sponsor will pay for injuries arising from the trial must, by law, be primary to Medicare.  In effect, by contract the sponsor is insuring the test subject against injury, make them a de facto insurer and invoking the Medicare Secondary Payer (MSP) statute as a “primary payer.”  The sponsor has to report the injuries to Medicare in the quarter after they arise or the sponsor faces penalties of $1000 per day per unreported beneficiary.

Since the CTA represents a primary plan and the sponsor a primary payer, a clinical trial site must bill the sponsor. Bills inadvertently submitted by the site to Medicare become ‘overpayments’ that must be reported and refunded to Medicare.  If the site neglects to inform Medicare of the overpayment(s) they may face paying out three times the cost of the claim(s) under the False Claims Act.

Strikingly, one of the most provocative outcomes of the conference was that many of the  existing CTAs are contradicted by the MSP statute.  In particular, a CTA that states that the sponsor will pay if another insurance plan will not pay implies that the sponsor’s obligation to pay is secondary to Medicare.  Medicare, by statute, can never be primary when another plan has an obligation to pay.  Sponsors that use this language may face double damages under the MSP statute and clinical trials sites that try to bill Medicare first will find themselves in the same trouble as outlined in the paragraph above.

Perhaps the biggest question at MAGI WEST was: what is a injury?  There was a great deal of debate about the definition of a subject injury, but the majority concluded that a subject injury was an Adverse or Serious Adverse Event (AE or SAE) that was related to the drug or device under investigation.  Sponsors should report related AEs and SAEs.

Finally, it was interesting that the sponsors, though generally unprepared to meet their reporting obligations, saw it as their moral and ethical obligation to pay if their drug or device caused an injury.   They indicated and had no plans to modify there CTAs to preclude payment.  Clinical trial sites were understandably less content as they face changes to their billing processes and for some, difficult coordination efforts involving off site investigators.

According to the CTA, clinical trials sites are required to bill sponsors for related AEs and SAEs if the test subject is enrolled in Medicare or face treble damages under the False Claims Act.  Sponsors are required to report these AEs and SAEs or face Section 111 fines of $1000 per day per unreported beneficiary and risk double damages under the MSP statute.