Compensating Investigators: Core Principles of Compensation and Contracting
This is the first in a four-part CenterWatch Weekly series on the principles and best practices of setting investigator compensation levels that are both fair and compliant with federal laws.
How to fairly compensate principal investigators (PI) for their role in a clinical trial can too often feel like a difficult decision for trial sites. What specific services should a PI be paid for? Is it possible to negotiate a flat fee upfront or should you track the investigator’s actual work over the course of the study? And how can you be sure that the compensation is fair, motivating the PI to take on the work of the trial but not paying them so much that it risks overtaxing the study budget — or running afoul of federal anti-kickback statutes.
It’s important to understand some key operational and compliance considerations before deciding on a compensation plan. There are a few important questions to think through:
- What sort of contract will you provide to the PI and how can you both determine and defend a fair market value payment for the PI’s services?
- What specific services will be compensated for, including both clinical work and administrative tasks that require significant investments of the PI’s time?
- Will your organization allow for contract and payment adjustments based on the PI’s area of specialty or will it use a one-size-fits-all model?
Drafting an Investigator Contract
Some clinics and hospital systems, rather than offer direct payments to PIs, instead compensate them by allocating them blocks of time to devote to research, especially where physicians are salaried, and so allocating more of their time to research would, in effect, amount to a form of compensation. That could decrease their clinic time and billable hours, but the trade-off may be worth it for organizations that want to emphasize clinical research.
But once a site has decided to compensate PIs for their work on a trial, the next step is to begin drawing up a standard contract that can be modified as needed for specific studies. Suzanne Rose, director of the Office of Research for Stamford Health in Stamford, Conn., prefers what she calls a “personal service exception,” which is a written agreement signed by the site and the PI laying out which specific services will be covered by the contractual arrangement. The personal service exception is crucial, Rose says, because it carves out a regulatory exception to payments that might otherwise run afoul of federal statutes.
The exception should cover all the services to be performed by the PI and it needs to have a contract term of at least one year, even if the study itself won’t run that long. That contract term is meant to keep the arrangement from violating the U.S. Anti-Kickback Statute, which prohibits “knowing and willful” solicitation, receipt or offer of remuneration for referring, recommending, leasing or ordering items or services to Medicare or Medicaid beneficiaries. The law includes a safe harbor provision for activities carried out within the parameters of a written and signed personal service exception and compensated at fair market value. That safe harbor provision includes a stipulation that the written and signed agreement be for a period of at least one year. So, even if a trial will only last for six weeks or six months, the agreement needs to cover a 12-month span and its terms can’t be changed within that time.
The contract should also spell out compensation, set in advance, and make clear that these compensation levels have been determined based on fair market value principles — not on any volume metrics, value of referrals or any other business generated between the two parties. In the past, Rose says, PIs might have been offered enrollment-based incentives as part of their payment packages, but these are a no-go because they could be interpreted as violating the Stark Law, which, like the Anti-Kickback Statute, prohibits physicians from making referrals for Medicare- or Medicaid-payable services if they or their immediate family members could gain financially from those referrals.
To prevent a Stark Law violation, Rose advises, sites and PIs need to have an agreement that lays out the methodology for payment and demonstrates that compensation is based on services rendered rather than income generated for the site.
The contract should have at least two other core provisions, Rose says:
- A stipulation that the services are “commercially reasonable,” i.e., that the aggregate services do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement; and
- A provision stating that services furnished under the agreement do not involve the counseling or promotion of a business arrangement or other activity that could violate any state or federal law.
At Stamford, Rose says, the Office of Research drafted a master personal service exception to keep on file. “And then for each study, because every study is different and how a physician is going to be compensated can also be different, we have amendments that we tack on to that master agreement,” she says.
The most important thing to keep in mind when setting up a compensation methodology, Rose says, is that the compensation needs to be at a level that is legally compliant, ethical and fair. The money should serve to motivate a PI to perform research-related work but should not incentivize him or her in any ways that could violate either the Stark Law or the Anti-Kickback Statute.
What Is Fair Market Value?
To demonstrate that a site is not illegally incentivizing a PI’s behavior in a clinical trial, it’s important to demonstrate that the compensation is in line with fair market value for the work performed. But what is fair market value and how can you know when you’re within its target range? Statutorily, Rose says, fair market value is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” That’s how the term was defined by the Office of the Inspector General in its 2003 compliance program guide for the pharmaceutical industry. The term is also used in a variety of applicable federal statutes, including the Anti-Kickback Statute, the False Claims Act and the Physician Payments Sunshine Act, she notes.
So, how does that broad definition apply in the realm of clinical trials? Rose says it can be difficult to translate. “Even though it’s a clear definition, I probably could not tell you what that means when it comes to clinical research,” she says. “There’s really no perfect percentile for fair market value. But we need to make sure we are motivating people to do research without incentivizing them.”
For a PI, fair market value may depend on his or her medical specialty, as well as the relative difficulty of the study itself and experience level. It can also depend on geography. Unfortunately, these factors too often are not taken into account by sponsors when putting together a study budget, Rose says.
There’s no set formula, but there are some best practices for determining fair market value. The first, Rose says, is to consult with your billing team on a pricing strategy. “We meet every year with our billing team and update our fee schedules,” she says. “How has Medicare changed? How have our commercial insurers changed?”
Second, provide full justifications for all fees charged in a clinical trial’s budget. “Justify, justify, justify. I really can’t stress that enough,” Rose says. “We have hundreds of documents within a justifications folder, which we’re able to turn around and give back to the sponsor at a moment’s notice.”
Finally, engage with an internal support team or an external vendor to create an hourly compensation fee schedule for research and administrative duties. Stamford uses an outside vendor that it pays roughly $3,000 every three years.
In sum, fair market value should be “defensible, documented, consistent and transparent,” Rose says. It’s important that, no matter the specific methodology, these core principles are followed. Sites should also keep in mind that fair market value is not necessarily the same as “a physician’s going rate,” nor should it be based on historical comparators.
Categories of Compensation
When thinking about fair compensation for a PI, it’s necessary to get a handle on what, specifically, you’ll be paying for. One way to do that is to consider the different “buckets” that a PI’s research-related services might fall into.
The first of those buckets includes clinical services that are paid as part of the study budget. That could mean evaluation and management services, such as office visits, radiology reads, EKG interpretations, etc. Importantly, these are not clinical services that are billed to a third-party payer — that is, the kind of routine care that would have been performed regardless of the patient’s status as a study participant. Instead, they are clinical services that the PI wouldn’t be compensated for unless paid by the study itself. This bucket of services could also include professional fees for required procedures, such as colonoscopies, surgeries or cardiac catheterization lab procedures. But again, it would only include those procedures that aren’t going to be reimbursed by a third-party payer.
One challenge, according to Geoffrey Schick, director of site strategy partnerships at WCG, is if a study has a PI and several sub-investigators. This can require careful work on the part of the site to ensure that the correct person is being reimbursed for the services and procedures he or she performed.
The second bucket of payable items includes administrative duties related to the study that require time and effort for the PI. These could include study startup meetings, monitoring visits, safety reports and study closure visits.
“There’s a lot of discussion around the safety reports and how those are mushrooming into a tremendous amount of work for study teams, including the investigator,” Schick says. “So those types of services where there’s a significant block of time that’s expected of the investigator, you need to think about how you’re going to make that investigator whole, in terms of time and effort, but also the opportunity cost of potentially causing them to give up time they’d otherwise spend in patient care.”
The third bucket includes any work the PI does in oversight and management of the study. This category is a bit more vague and not something that’s always reimbursed, but more and more sites are considering a kind of add-on payment — often a percentage of the overall study budget — meant to recognize the responsibilities a PI has beyond the literal day-to-day work of the research. “That may be something you want to think about,” Schick advises. “What role does your PI play above and beyond the role of a sub-investigator? Is there some methodology that could recognize that workload and compensate the PI for it?”
Compensation Dos and Don’ts
When setting up a reimbursement model for a study’s PI, be sure to adhere to the following rules:
- All compensation should be linked to the PI performing specific and necessary services — medical procedures, the collection of data, reviews of study reports, etc.;
- The financial relationship between the site and the PI should be disclosed to participants in the study as part of their informed consent;
- A written and signed contract needs to describe the nature of the services provided by the PI and spell out the basic methodology used to determine a fair market value for those services; and
- Compensation can, in some cases, include reimbursement for travel and travel-related expenses, if that travel is required by the study, i.e., a required meeting with sponsor staff.
Financial compensation to a PI should not:
- Be tied to any particular study outcome;
- Include incentives to enroll a certain number of patients; or
- Include stocks or stock options.