INTRODUCTION

On September 19, 2000, the Health Care Financing Administration ("HCFA") issued its final national coverage decision to implement President Clinton’s June 7, 2000 Executive Memorandum directing Medicare to cover the routine health care costs of beneficiaries in clinical trials. The new policy, effective September 19, 2000, is binding on all the private contractors that process and pay Medicare claims as well as Medicare+Choice managed care plans. These policy changes are intended to encourage the greater use of clinical trials by older Americans, and clarify a modest, but important, expansion in Medicare coverage.

The coverage decision, a detailed HCFA program memorandum to Medicare contractors, and a draft provider bulletin are on the internet at: http://www.hcfa.gov/quality/8d.htm, or you can get them from our office.

OVERVIEW OF NATIONAL COVERAGE DECISION

Covered And Non-Covered Costs

Effective for items and services furnished on or after September 19, 2000, Medicare covers the routine costs of qualifying clinical trials (as defined below), as well as reasonable and necessary items and services used to diagnose and treat complications arising from participation in all clinical trials. All other Medicare rules apply.

Routine costs of a clinical trial include all items and services that are otherwise generally available to Medicare beneficiaries that are provided in either the experimental or the control arms of a clinical trial, but Medicare will not cover:

• The investigational item or service, itself;
• Items and services provided solely to satisfy the trial’s data collection and analysis needs (e.g., monthly CT scans for a condition usually requiring only a single scan); and
• Items and services customarily provided by the research sponsors free of charge for any enrollee.

Routine costs in clinical trials that can be covered include:

• Items or services typically provided absent a clinical trial (e.g., conventional care);
• Items or services required solely for the provision of the investigational item or service (e.g., administration of a noncovered chemotherapeutic agent), the clinically appropriate monitoring of the effects of the item or service, or the prevention of complications; and
• Items or services needed for reasonable and necessary care arising from the provision of an investigational item or service, especially for the diagnosis or treatment of complications.

Requirements For Medicare Coverage Of Routine Costs

To qualify for Medicare coverage of routine costs, a clinical trial must meet the following three requirements:

• The subject or purpose of the trial must be the evaluation of an item or service that falls within a Medicare benefit category (e.g., physicians’ service, durable medical equipment, diagnostic test) and is not statutorily excluded from coverage (e.g., cosmetic surgery, hearing aids).
• The trial must not be designed exclusively to test toxicity or pathophysiology; it must have therapeutic intent.
• The trials of therapeutic interventions must enroll patients with diagnosed disease rather than healthy volunteers. Trials of diagnostic interventions may enroll healthy patients in order to have a proper control group.

In addition to these three requirements, HCFA requires covered clinical trials also to have seven "desirable characteristics." These characteristics are as follows:

• The principal purpose of the trial is to test whether the intervention potentially improves the participants’ health outcomes;
• The trial is well-supported by available scientific and medical information or it is intended to clarify or establish the health outcomes of interventions already in common clinical use;
• The trial does not unjustifiably duplicate existing studies;
• The trial design is appropriate to answer the research question being asked in the trial;
• The trial is sponsored by a credible organization or individual capable of executing the proposed trial successfully;
• The trial is in compliance with federal regulations relating to the protection of human subjects; and
• All aspects of the trial are conducted according to the appropriate standards of scientific integrity.

HCFA provides that certain clinical trials automatically are qualified to receive Medicare coverage of their routine costs because they have been deemed by the Agency for Healthcare Research and Quality ("AHRQ"), in consultation with other health care agencies, to be highly likely to have the seven desirable characteristics listed above. Effective September 19, 2000, clinical trials that are deemed to be automatically qualified are:

• Trials funded by the National Institutes of Health ("NIH"), Centers for Disease Control and Prevention ("CDC"), AHRQ, HCFA, the Department of Defense ("DOD"), and the Department of Veterans Affairs ("DVA");
• Trials supported by centers or cooperative groups that are funded by the NIH, CDC, AHRQ, HCFA, DOD, and VA;
• Trials conducted under an investigational new drug application ("IND") reviewed by the Food and Drugs Administration ("FDA");
• Drug trials that are exempt from having an IND under 21 C.F.R. § 312.2(b)(1), until the qualifying criteria are developed and the certification process is in place. At that time, the principal investigators of these trials must certify that the trials meet the qualifying criteria in order to maintain Medicare coverage of routine costs.

Provisions To Implement The Coverage Policy

In the program memorandum implementing the coverage decision, HCFA provides detailed interim billing instructions for submitting Medicare claims for items and services related to clinical trials. In particular, providers must identify the qualifying services with a newly-created "QV" procedure code modifier (Item or service provided as routine care in an approved clinical trial). Providers also must report diagnosis code V70.5 (Health Examination of Defined Subpopulations) as a secondary diagnosis for patients participating in Medicare-covered clinical trials. Use of these two codes serves as the provider’s attestation that the service meets the Medicare coverage criteria related to clinical trials.

The program memo also specifies that payment for Medicare-qualifying clinical trial services furnished on or after September 19, 2000 will be paid under the current payment methodologies specific to the provider type and the service being provided. All applicable deductible and coinsurance rules apply to clinical trial services, except that in the case of fee-for-service claims for managed care enrollees, the beneficiary will not be responsible for the Part A deductible. Moreover, where the payment is bundled (e.g., DRG payments), Medicare will later adjust amounts paid for non-covered investigational items and services for which payment should not have been included as part of the bundled payment.

Finally, HCFA notes in September 19, 2000 press release that it is developing a registry of ongoing clinical trials in which routine beneficiary costs are being reimbursed by Medicare. This registry will track Medicare expenditures associated with clinical trials. HCFA also will use the information contained in the NIH and FDA clinical trial registries to develop a national registry of all clinical trials receiving Medicare reimbursement for their routine costs.

CONCLUSIONS

The coverage determination is notable for introducing certain new concepts into the formal coverage process, including the requirement that clinical trials have certain "desirable characteristics" and be designed with a "therapeutic intent." In addition, the new policy reaffirms HCFA’s intent to use "improved health outcomes" and to link FDA approval with Medicare coverage.

Physicians and hospitals involved in clinical trials can now bill, using new billing codes, and be paid for certain research-related services. Heightened financial support should encourage patients, hospitals, and physicians to help develop new breakthrough medical technologies. The expanded coverage opportunities may facilitate collaboration between providers, device manufacturers, pharmaceutical companies, and other sponsors of clinical trials.