On September 29, 2008, CMS issued a Medicare Learning Network (MLN) Matters article entitled "Clarification of Medicare Payment for Routine Costs in a Clinical Trial."

Coverage for clinical trials of certain medical devices has been available since 1995 via an interagency agreement between FDA and HCFA (now CMS). Coverage for routine costs was expanded to other research after an executive order issued in 2000 mandated coverage and CMS issued a National Coverage Determination (NCD) for clinical trials. CMS' coverage policy, which was minimally updated in 2007, has been criticized by stakeholders who sought additional clarity around the definition of routine and administrative services and the potential intersection between payments by industry sponsors of clinical research and Medicare Secondary Payer (MSP) rules.

In its attempt to clarify these questions about Medicare payment, CMS has likely left clinical trial sponsors and researchers with more unanswered questions. The online communication begins by reiterating that the policies for payment of the routine costs of a clinical trial are outlined in chapter 16, section 40 of the Medicare Benefit Policy Manual.

CMS then presents questions and answers to three different issues related to the payment of routine costs:

  1. If routine costs are paid by the research sponsor when there is no reimbursement from any insurance company (including Medicare), then Medicare will not pay for the routine cost of participating Medicare beneficiaries and the beneficiaries cannot be charged. If private insurers deny the routine costs and the provider of services does not pursue the non-Medicare patients for payment after the denials, Medicare payment cannot be made and the beneficiary cannot be charged for the routine costs.
  2. If routine costs are not billed to indigent non-Medicare patients because of their inability to pay (but are being billed to all other patients in the clinical trial who have the financial means to pay even when his/her private insurer denies payment for the routine costs), then Medicare payment may be made and the beneficiary (who is not indigent) will be responsible for the applicable Medicare deductible and coinsurance amounts. Thus, the provider of services should bill the beneficiary for co-payments and deductible, but may waive that payment for beneficiaries who have a valid financial hardship.
  3. If a sponsor offers to pay cost-sharing amounts owed by the beneficiary, it may present a fraud and abuse risk for the sponsor.

Unfortunately, in its attempt to answer questions, CMS has not fully answered the central question raised by stakeholders over the course of several years: Do contractual arrangements between industry sponsors and clinical trial sites that contemplate industry payment for routine costs for patients without coverage for investigational care violate Medicare Secondary Payer (MSP) rules? Further, is this action by CMS permitted under the Administrative Procedure Act (APA) or should this guidance have been a rulemaking subject to public notice and comment? Is the information provided by CMS subject to OMB oversight regarding good guidance?

Industry sponsors of clinical research, research institutions and patient groups interested in maintaining and increasing patient access to innovative research will want to closely examine this issue as a limitation of Medicare coverage and payment would pose a barrier to the funding of and enrollment in industry sponsored clinical trials.