Don’t Leave Money on the Table: Ten Tips for Budgeting, Negotiating, and Collecting Clinical Trial Payments

Blog Contributor Liz Christianson, Client Engagement Manager, PFS Clinical

While it may seem obvious that budget creation, negotiation, and payment collection are interconnected, institutions can be met with payment delays and unrecognized revenue if their strategies for these steps do not capture the points of connection from the start. Here are 10 tips that will help you build a holistic strategy for budgeting, negotiating, and collecting clinical trial payments.

Tip #1: Develop an internal budget.

Why would you spend time creating an internal budget when an itemized budget has already been provided by the sponsor? For starters, the sponsor budget typically captures just a portion of the items called out in the study protocol. Creating an internal budget gives you the chance to compare the protocol items with the number of items reflected in the sponsor budget. This will give you a detailed and defensible platform for negotiations and payment collection. Plus, you will have a more accurate idea of the true cost of conducting the study, and you will be able to link costs to the appropriate timelines and departments from the outset. Your finance team will have more guidance regarding payment triggers and will be better able to separate payments across departments when lump sums are received from the sponsor.

Creating an internal budget grid is not a project you need to start from scratch-- you should repurpose your coverage analysis (CA) grid. You can use your CTMS to automate this process, or copy the CA grid into a new Excel tab. You may have to make slight modifications if visits listed in the protocol do not exactly match up to how the sponsor intends to pay.

Tip #2: Be consistent in your pricing—and update your chargemaster!

For time and effort items, create a list of standard time estimates. Since study coordinators are familiar with the nuances that impact procedure length, some of our clients ask coordinators to review time estimates to ensure proper budgeting for each study.

Generally, you should use a chargemaster or Medicare rates to price any items with current procedural terminology (CPT) codes. There is no need to estimate prices for CPT coded items—a definitive cost exists for these. Most organizations use a chargemaster for research pricing, and large institutions have research-specific chargemasters. Some institutions start with a standard chargemaster, then discount by a certain percentage for research. No matter your process, remember to keep things up-to-date; if you have not seen a new chargemaster since 2010, it might be time for an update.

Tip #3: Consider everything

Some cost considerations require a bit of hypothetical thought. Any item that leaves you asking, “what if?” is worth considering in the budget. These items could really affect the cost of running the study. For example, what if your study allows homecare? This will likely impact the budget as the charges will differ from in-clinic care, or services might be contracted out to a different group.

Also consider admin costs related to study start-up, IRB fees and renewals, contract and budget amendments, serious adverse events, data monitoring and record storage. How long does it take to complete these activities? What is the administrative burden? Check to see if associated departments—such as pharmacy or pathology—charge for their services and incorporate these costs into your budget creation. Creating letterhead templates with standard fees and explanations can help justify your pricing during negotiations.

Tip #4: Prioritize your negotiable items.

It is not reasonable to expect coverage for every administrative cost, so choose your negotiations wisely. Evaluate your costs based on levels of importance: fees that are non-negotiable, fees that can be lowered, and fees that can be given up. Well-justified prices and negotiation priorities should help you negotiate coverage for some admin items.

Tip #5: Make sure payment terms specify payment triggers and timelines.

The language used in payment terms is important, and simplicity is key. When creating and negotiating these terms, avoid language that requires heavy interpretation.

Consider the following terms:

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 Quarterly payments:

Although this is technically a defined timeline, quarterly payments could be made at any point between 30 to 45 days of the end of the quarter. Under this language, when the end of the quarter comes, your institution has no way of knowing how long it will take to receive payment.

Data monitoring:

Even if monthly payments are negotiated, a term that relies on data monitoring could cause significant payment delays. If payments depend on data monitored, you must know how often data is monitored—and you must confirm this with the sponsor.

Reconciliations:

If reconciliations are put off until the next quarterly payment, your books will be off at least a few more months. Once this occurs, almost every study service and payment will require some sort of reconciliation.

When negotiating payment terms, always consider the ways different pieces of language interact. Avoid payment delays with language that clearly defines timelines and explicit payment triggers.

Tip #6: Keep Screen Failure Terms Simple.

Screen failure terms based on enrollment percentages, tiers and caps can be major challenges for research organizations. In these scenarios, payment requests cannot be submitted until a certain number of patients enroll. Finance teams are often without direct access to patient data and may require extra communications with study teams to learn the status of the enrollment ratio.

When negotiating enrollment caps, add a clause stating the allowance of additional paid screen failures with permission from the sponsor/CRO. When negotiating percentages and tiers, try to negotiate coverage for all screen failures. If this is not accepted, negotiate for coverage of procedures performed. If the sponsor will not allow these options, a percentage of the screening visit total can work, but never accept language such as “the first 50% will be paid 75% of the total visit.” This is too vague and puts too many roadblocks in place for your finance team.

Tip #7: Include Payment Details

Your preference for paper or ACH payments should be included in payment terms, and requiring the protocol number and/or PI name on the payment invoice can save the finance and accounting teams several headaches. Some sponsors or CROs send one lump sum for work on multiple studies; in order for the finance team to allocate those dollars appropriately, your institution will need the sponsor/CRO to include the details of what they are paying for. If the sponsor requires your institution to provide details regarding your invoices, they should be held to the same standard.

Make sure the payee name is correct and identical to the W-9 information. This is particularly important if your organization has multiple sites participating in the same study, or if different locations are working independently with the same sponsor/CRO on multiple studies. If the information sent to the IRS differs from the information your organization uses to file tax returns, issues will arise for both payee and payer.

Tip #8: Do not accept more than 10% holdback

Sometimes, sponsors negotiate to hold back a portion of the payment until a study is complete. This results in a significant loss of working capital for your institution while you are putting in the time and effort to run the study. Additional accounting work must be done to track and manage holdback capital. To make matters more difficult, some studies have very long follow-up periods, meaning that holdback payments may not be made for 5-10 years. Negotiate for no holdback, or <5% holdback, particularly for studies with long follow-up periods or those that might be open for several years. Completed work is usually required to be entered in case report form (CRF) for payment, so it is not unreasonable to request as close to full payment as possible.

Tip #9: Be aware of IRB deadlines, goal dates and signatory schedules.

When working with sponsors, be sure that deadlines and goal dates are communicated clearly and regularly. Include these items in each email communication. Be consistent; deadlines and goal dates included in the subject line of your emails (i.e. “Goal to Finalize 3/29”) will serve as an easy reference for all parties.

It is also important to know when the signatory is available. With your goal dates and deadlines in mind, reach out to make sure your timelines will align with the signatory’s availability and make adjustments on your end if necessary. Ending negotiations the first day of their three-week vacation is certainly less than ideal.

Tip #10: Present all comments in the same communication platform throughout each round.

Again, consistency is key! During negotiations, do not respond to some items in email bullet points and other items in draft document comments. Sticking to one communication platform throughout each round of negotiations will help you and the sponsor both follow the evolution of the language. This can save you a lot of time and energy, and will help you keep track of which items have been resolved and do not require further negotiation. Plus, it will keep you from accidentally negotiating outdated terms.

In Summary

Budget creation, negotiation, and payment collection are not just three separate steps in the clinical trial administration process. Considering their points of connection from day one can help you improve communication with the sponsor and within your organization, avoid payment delays, and increase clinical trial revenue.