While measuring and managing site costs can be challenging, these codes can aid in accounting for labor expenses, budgeting for sponsors, and more.
Investigative sites typically have a lot of issues with the budget proposals they receive from study sponsors (and CROs). A recent survey by the author of investigative sites yielded the following remarkable findings:
Although the survey was small (n=41), there is no doubt that the study budget negotiation process can be improved. Clinical research terminology (CRT) codes can help.
The American Medical Association (AMA) maintains an index of clinical tests and procedures in its directory of current procedural terminology (CPT) codes. The 2024 edition of the list includes 11,163 CPT codes. Healthcare providers, medical laboratories, Medicare, insurance companies, and others use CPT codes for billing and reimbursement.1
It is very helpful when study sponsors include CPT codes in budget templates. When an activity has a CPT code, it is easy to find in a site’s chargemaster (rate card or price list). Text descriptions without CPT costs can be ambiguous. For example, there are 69 different electrocardiogram (ECG) CPT codes in the current index. Absent CPT codes create extra work for sites and make it more difficult for both study sponsors and sites to track and compare prices for activities.
Study budgets may also include non-standard clinical tests and procedures, as well as activities, such as training, that do not have CPT codes because they are not clinical tests or procedures.
The Clinical Research Terminology (CRT) Code Index includes hundreds of investigative site activities without CPT codes. The index classifies the codes by type (e.g., safety) and study stage (e.g., start-up). (See tables 1 and 2.) To access the CRT Code Index, click here.
Site accounting departments measure costs in two basic categories:
An organization with more than one line of business, e.g., a hospital that provides both clinical care and clinical research services, may calculate a different overhead rate for each line of business, department, clinic, etc. Facility fees are a type of overhead rate that should be applied only to lines of business that use a specific facility. Overhead rates are typically reviewed and calculated annually, based on projections of costs and the revenues to which they can be assigned.
if a site wants to finance growth, pay interest on debt, or generate a return for the owners, its overhead rate must cover both indirect costs and a profit margin. Non-profit institutions may equate “non-profit” with “break-even,” but someone has to cover the cost of interest on debt, facility improvements, and growth. High-performing businesses typically earn relatively high profits because they are more efficient or deliver more value to their customers.
As a point of comparison, CROs do not charge separate overhead rates to study sponsors. Instead, they bundle overhead into the pricing of direct-cost items, as is customary in most industries.
Sites typically employ one of the following methods to establish their indirect costs for billing purposes:
A CPT or CRT code can be assigned to direct and indirect labor costs.
Investigative site startup costs are a bit complicated. Sites generally want sponsors to cover all of their startup costs, including contract and budget negotiation, which are selling costs normally borne by the seller. Study sponsors are generally willing to cover these costs to some extent, but only after a clinical trial agreement has been signed. As a point of comparison, CROs may invest tens of thousands of dollars in an in-person sales proposal (“bid defense”) and contract negotiations, with no expectation of reimbursement from the study sponsor except through payment for services rendered during the course of the study, assuming the CRO wins the business.
Overhead justifications typically consist of a list of overhead costs. They provide essentially no useful information to study sponsors. All they demonstrate is that the site can make a list. CRT codes can validate and provide structure to overhead justifications, e.g., by decomposing the total overhead rate into constituent rates for the 14 CRT code types.
Some line items in a study budget, e.g., patient recruitment pass-through costs, often require a separate invoice (with documentation). Sites may also be able to invoice study sponsors for other direct costs that are not covered by the study budget.3 Pass-through costs are typically not subject to overhead charges.
Study sponsors generally maintain records of the prices they have paid for site services. They use these records when constructing and negotiating the baseline budget for a new study and adjusted versions for specific sites. Many study sponsors also use a commercial database (Medidata’s Grants Manager, IQVIA’s GrantPlan, or Greenphire’s FMV Data) when constructing budget proposals. These products can enable sophisticated analytical methods on vast amounts of pricing data from actual, negotiated study budgets.2 For example, a sponsor may want to pay the sites in a specified therapeutic area at the 50th percentile in an average study and at the 70th percentile in a high-priority study.
These databases utilize CPT codes to organize price data. The use of CRT codes would make these databases more comprehensive.
Investigative sites often complain that budgets proposed by study sponsors exclude “hidden costs.” Hidden costs are the study-specific, direct costs for activities that typically are not specified in the protocol. They usually consist of activities that consume site personnel time, such as the following:
Unbillable direct-cost hours—hidden costs—can amount to a large fraction of the time site personnel spend on studies—it’s death by a thousand cuts. Billable hours as a percentage of total hours may be the most important metric for site success.
When a site develops its chargemaster, it estimates how many minutes, on average, each activity should take. If, in a given study, that activity takes significantly longer than normal because, for example, the study coordinator is inexperienced, that hidden cost should be borne by the site. However, if it takes significantly longer due to the study sponsor, that hidden cost should be borne by the sponsor.
When sites are unable to obtain compensation for hidden costs, they may bundle them into their overhead rate or into their rates for activities that are billable. This approach is an inferior solution for the following reasons:
CRT codes can bring hidden costs out of hiding. Study sponsors may not want to pay for them but at least everyone will know the burden they place on sites.
Before a site can correctly and competitively price its services, it must first measure and manage its costs. CRT codes can be useful for these purposes and also in budget negotiations with study sponsors. Study sponsors can use CRT codes to better understand and reduce unproductive site costs.
The author welcomes suggestions for additions, modifications, clarifications, and deletions of CRT codes.
Norman M. Goldfarb is executive director of the Site Council and of the Clinical Research Interoperability Standards Initiative (CRISI). Previously, he was chief collaboration officer of WCG Clinical, founded and led the MAGI conferences, and published the Journal of Clinical Research Best Practices.
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