Independent sites without the time, staff or accounting experience to keep a close eye on sponsor billing and payments can avoid losing thousands of dollars by instituting a few best practices to help keep the cash flowing.
On average, independent sites are failing to collect $3,500 in sponsor/CRO payments per study, according to WCG PharmaSeek. Fifteen percent of those lost payments are the result of sites’ inadequate invoicing practices. In one case, PharmaSeek’s auditors uncovered $56,000 of revenue across 16 studies that the site hadn’t invoiced for or that the sponsor or CRO just hadn’t paid.
The primary culprit is lack of staff dedicated to accounting tasks, Pharma-Seek’s Ryleigh Mosley told participants in a recent webinar. “While many sites have an accountant or bookkeeper to run monthly reports and manage high-level financials, many sites don’t have an employee dedicated to daily operational-level accounting or managing revenue,” said Mosley, who is associate manager of operational accounting. “And too often, coordinators split their time between trial conduct and administrative work, leaving little time to manage collections and recordkeeping.”
But it doesn’t need to be this way, she said, not if site staff understand how and when to dig in hard on their accounts receivable and keep great records.
It starts, she said, with getting to know the payment details of the clinical trial agreement (CTA) for each of the studies a site has taken on. Sites should ask a few questions when reviewing a CTA:
To get reimbursed for all services in a timely and uncomplicated manner, it’s better if CTAs are negotiated to be very detailed, said Mosley. Make sure the language makes all payment expectations very clear.
“There can be some pretty tricky language hidden in these contracts that can definitely slow down” your understanding of how exactly to get paid and when, she said.
For instance, a clear statement about monthly invoicing would be:
Institution shall invoice CRO monthly for services performed related to study subject costs as set forth in the attached budget; this invoice will be payable after it has been determined whether the study subject has been randomized or is a screen failure. CRO will verify the amount of money owed the institution based on completed and accepted electronic case report forms.
A less precise statement would be:
Payment for study subject visits shall be made monthly for confirmed, completed visits upon receipt of valid invoice.
In addition to reviewing the CTA, sites should improve their recordkeeping, ideally using a program, software or application to store all study payment information, Mosley said. She suggested opting for a program that allows the site to keep all its financial information in one place so site staff don’t have to click through too many pages to find it.
Mosley also recommended classifying accounts receivable into three groups: administrative fees; patient visits; and conditional fees. Some of these categories can blend, she warned.
“There are some fees that can border on administrative or conditional, depending on terms,” said Mosley. “For example, dry ice. Ask yourself: Is it a flat fee for shipment? That’s administrative. Or is it per subject per visit? That would be more conditional. Or even is it included in the cost of each visit?”
Invoices should be as detailed as possible, containing date of service, description of the item/visit/procedure, protocol number, principal investigator (PI) name and subject number if it’s a patient visit charge. And always include supporting documents like receipts. It’s likely that if you don’t include those the first time around, she said, the sponsor or CRO will just kick it back to you and you’ll have to start all over again, further delaying payment.
Finally, Mosley recommended sites create a master reconciliation document, listing in columns all the studies they’re working on, who the PI is, the payment terms and due dates, sponsor or CRO contact info, and most importantly, amount outstanding. Then keep it constantly up to date even if it seems like a pain, she said.
“While that may seem like overkill or extra work, I guarantee it’s something you’re going to want to do just to make sure your bases are covered,” she said.
This may all seem like a lot, especially for staff who are already doing double or triple duty. But Mosley said it’s worth it. “Even just carving out 30 minutes to an hour each week on collections can make a big difference, and it will help decrease time spent on this at the end of the month, which is always a crunch.”