Key Considerations to Ensure Compliant PI Compensation: Choosing a Compliant PI Compensation Model

By David Russell, Director, Site Strategy

This blog has been developed for educational purposes only and does not constitute legal advice. It does not look at any unique circumstances in your particular organization. 

One of the questions that is frequently asked in our industry is “How much should we pay investigators for their work on a clinical trial, and what methodology should be used?” The amount and method used to pay investigators may play a large part in the success, or lack thereof, of your site. The amounts paid to investigators are considered part of their overall annual compensation amount. This means that they are subject to Fair Market Value (FMV) guidelines. When determining amounts and methodology, a firm understanding of the laws governing investigator compensation is key to ensure compliance. This blog can help in determining methodologies and understanding laws that surround them. There are numerous approaches for paying principal investigators (PIs) and the three most popular models include: Research Salary, Percentage of Study Budget, and Hourly rate for work performed.

Research Salary

In the Research Salary method, the PI is paid a fixed salary for all their time spent working on clinical trials. With this model, you always know your expense amount and the PI always knows the amount they will be paid. If the volume falls, this can be a risky method to use. It could prove very costly on a per hour analysis and could be construed as receiving compensation above FMV as it relates to Stark Law and the Anti-Kickback Statute (AKS). Inversely, the PI may feel they are not being compensated enough if the volume rises. This strategy does not align with standard sponsor budgeting formats, so the goal is to be able to show that the salary is consistent with FMV hourly rates. Time tracking to calculate actual payments to the PI is not necessarily needed, but ideally time should be tracked to prove FMV compliance and to determine what the actual salary should be. There are no requirements for payment triggers attached to patient study activity.

Percentage of Study Budget

In the Percentage of Study Budget method, the PI is paid a fixed percentage of the final study budget for all their time spent working on the specific clinical trial. In this model, the risk is shared between you and the PI. The downside is that it can be risky based upon the amount of time the PI works on the trial vs. the actual dollars compensated and could be construed as receiving compensation above FMV as it relates to Stark and AKS. It also becomes difficult to administer if sub-investigators are involved in the trial, or if there is a change in PI during the trial. Oftentimes, expenses are front-loaded in a clinical trial, and the original PI will have been paid the lion’s share of the compensation available due to early visits. It’s key to consider when the PI will be paid.

Hourly Rate for Work Performed

The third payment method is Hourly Rate for Work Performed. This method can be broken down into two unique methods based upon how you track PI time: Estimated Time and Actual Time. In both, you must assure that the hourly rate is within established FMV for your specific region.

Estimated Time:

When looking at each activity the PI performs, you will create time allowances for each activity. For example: A research physical exam for a certain study should take about 30 minutes. An informed consent for a specific study should take about 60 minutes, etc. This method involves less paperwork for the PI and shows that much thought was put into the amount of compensation to avoid paying over FMV. A robust tracking mechanism is needed to assure proper payments. Expense percentages will vary widely over different trial types, and payment triggers can be linked to patient activity.

Actual Time:

A PI would physically fill out documentation describing the exact time spent for a specific study, and the activity performed. Although this is the most compliant method, as you are compensating for actual documented time spent on the clinical trial, many PIs will resent the additional work needed on their part to track time and effort. Additionally, a robust tracking mechanism is needed to ensure proper payments and expense percentages, as they vary widely over different trial types. Payment triggers must be created in real-time, rather than preemptively, and time should be tracked to determine the payout. In general, the hourly rate method is considered the gold standard for compliance, because the hourly strategy aligns with most sponsor budget templates.

Another Consideration:

In the case of non-employed investigators, assure that the PI Agreement includes language that the PI will assume legal responsibility for their performance of services under the Clinical Trial Agreement (CTA). The PI Agreement is the Institution’s opportunity to ensure the PI is complying with the same laws and regulations that the sponsor is requesting the institution adhere to under the CTA. One potential option that includes a different form of ‘compensation’ is the allocation of time. We’ve recently been involved in more conversations where institutions are using blocks of allotted time for PIs vs. payment in dollars. Although this could drop their clinic hours, and billable hours, it could increase the level of research conducted within your program. Many institutions view research and access to innovative treatments as a need in their community and a differentiator among competitors.

PI Perspective

Some might wonder why PI’s should be paid for research activities since these are typically tasks they already do. PI’s are the lifeblood of research operations, apart from patients, and are arguably the most valuable part of the clinical trial process. They aren’t paid by third party payers for research related activities and there is no other compensation means for tasks such as protocol review, coverage analysis (CA) review, study initiation visit time, monitoring visit time, or case report form signoffs. PI’s take on a heightened level of risk when engaging in a research trial. They must be appropriately trained, whether it’s human subjects protection training, device training, or other required training. PIs also must monitor the patient more closely than they would in ordinary standard of care because ultimately, the PI is responsible for all conduct within the clinical trial. Consequences of errors could affect medical license and ability to bill CMS for services. There is a lot at stake for PIs involved in clinical trials, so it is only fair that they are compensated for their efforts.

 

Conclusion

As a site, whatever payment method you decide to use should be consistent for all PI’s. You should also assure that the PI agrees with and signs all calculation documentation before any payment is made. You’ll also need to set payment timetable expectations (i.e. monthly, quarterly, when sponsor pays, etc.). A written PI payment policy should be created and shared with all PI’s to avoid confusion and should include a clear and concise explanation of each payment made to the PI. Keeping a consistent, compliant method to paying PIs is key to any research programs’ success.