Understanding the New Medicaid Research Coverage Regulation

December 6, 2023

by David A. Mata, Catherine Cruz-Montes, and Sarah M. Couture

Originally Posted on: Compliance Cosmos

On January 1, 2022, the new Medicaid clinical research coverage law became effective. State legislatures must amend their state plans to provide this new mandatory benefit. Clinical research sites should proactively take steps to address coverage issues, understand the regulation, and anticipate state coverage decisions.

Medicaid programs had no requirement to cover the costs of a clinical research trial until the passage of H.R. 133 – The Consolidated Appropriations Act of 2021, Sec. 210 of the Act, required states to add clinical research coverage as a mandatory benefit for Medicaid enrollees.[1] While this law aims to increase Medicaid enrollee participation in clinical research trials, the regulation may do the opposite. In fact, the law, as written, could decrease coverage and potentially harm participation and access.

To better understand how Medicaid coverage will impact research sites, it is important to understand Medicare coverage; this article will contrast Medicare coverage policies with those found in the new Medicaid research rule. Most payers follow the Medicare billing rules, as Medicare is the driver of reimbursement for the American healthcare system. Accordingly, clinical research billing operations follow the Medicare rules for determining which items may be billed to insurance and which must be covered by research funds. Billing Medicare has also carried the most risk, as false claims for payment can open the institution to federal penalties. The Medicaid rule contains similar language to Medicare language with which research sites are familiar, such as “routine cost” and “qualifying clinical trial.”

However, the terms are defined differently and may result in varying degrees of coverage.

Medicare has been paying for “routine costs” in “qualifying clinical trials” since 2000 when Centers for Medicare & Medicaid Services (CMS) issued the Medical Clinical Trial Policy in national coverage determination (NCD) 310.1.[2] Under this policy, routine costs are defined as:

  1. Items or services typically provided absent a clinical trial (i.e., conventional care).
  2. 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.
  3. Items or services needed for reasonable and necessary care arising from the provision of an investigational item or service, in particular, the diagnosis or treatment of complications.

According to Medicare, routine costs do not include:

  1. The investigational item or service itself, unless otherwise covered outside of the clinical trial.
  2. Items and services provided solely to satisfy data collection and analysis needs and that are not used in the direct clinical management of the patient.
  3. Items and services customarily provided by the research sponsors free of charge for any enrollee in the trial. And under NCD 310.1, “All other Medicare rules apply.”

Qualifying criteria

Qualifying a clinical trial under the Medicare Clinical Trial Policy, or NCD 310.1, a study must meet the following criteria:

  1. It is one of the four types of “deemed” studies.
  2. Studies an item or service that Medicare generally covers under a “benefit category.”
  3. Enrolls subjects with diagnosed disease.
  4. It is designed for therapeutic purposes.

Medicaid contrasts these criteria by outlining a qualifying clinical trial as a clinical trial (in any clinical phase of development) that is conducted concerning the prevention, detection, or treatment of any serious or life-threatening disease or condition and is described in any of the following clauses:

  1. Funded by certain federal agencies.
  2. Subject to U.S. Food and Drug Administration Investigational New Drug (IND) application.
  3. IND exempt drug study.

Some studies which are Medicare-qualifying clinical trials will also qualify under Medicaid. Medicare requires patients have a “diagnosed disease,” while Medicaid requires a “serious or life-threatening disease or condition.” What constitutes a serious or life-threatening disease is undefined. Depending on how states define this term, if they choose to, it could lead to coverage varying from state to state.

Similarly, some items and services covered under the Medicare analysis will be covered under a Medicaid one. Medicare covers conventional care, items or services required for the administration of the investigational item, and services performed to prevent, diagnose, or treat complications arising from the provision of the investigational item. Medicaid only explicitly covers administering the investigational item and monitoring for complications. An April 2022 CMS letter to state Medicaid directors appears to permit coverage of conventional care by saying that routine costs include coverage for items or services that the state plan would otherwise cover, but the language is imprecise.[3] While the Medicare law NCD 310.1 is very clear regarding coverage of conventional care, the Medicaid law does not openly discuss coverage of conventional care, leaving some to question whether there is intent to cover it. Time will reveal how states interpret coverage.

Despite its best intentions, the law appears to fall short in its coverage of clinical research trials. Some trials may not qualify for coverage if a state does not expand upon a definition of serious or life-threatening disease or condition. It is unclear if conventional care is covered for studies that do qualify.

Complying states

States have begun to comply with the new rule. Colorado took the initiative and passed a law adding a benefit for clinical trials in July 2020 (HB20-1232, 7/20/20).[4] The law defines “life-threatening disease or condition” as one from which the likelihood of death is probable or the disease is progressive or significantly debilitating. The definition of routine costs includes items or services furnished to the patient regardless of enrollment in a clinical trial. This definition solves the problem of coverage for conventional care that is unclear and found in the federal law.

Virginia’s state plan took effect on January 1, 2022 (State Plan Amendment 22-009 – Clinical Trials).[5] The plan adopted the language and structure of the federal law—with no additional language concerning conventional care—determining what counts as a life-threatening disease or condition or explaining how the prior authorization process will work. The state Medicaid office anticipated that no significant new costs would arise from the benefit, as the state already covered participation in clinical research trials.

Similarly, Illinois’s state plan does not state who will determine what constitutes a life-threatening disease or condition (SB 1864 101st Regular Session, 7/7/2020).[6] However, it adds a category of clinical trials that the Department of Health determines are approved. The plan does appear to include conventional care, stating it will cover “routine care costs that are incurred in the course of an approved clinical trial if the medical assistance program would provide coverage for the same routine care costs not incurred in a clinical trial.” It states that the Illinois Department of Healthcare and Family Services will further define “routine care costs.”

The nature of Medicaid means that we may have 50 different approaches to compliance with the new rule. Each state can adjust its definition of routine costs, and a study that qualifies in one state may not qualify in another. Some states, such as Virginia, may not have additional costs because the state Medicaid plan already pays for most of what the new law covers. However, other states may need to shift their budget to afford the new mandatory benefit.

So, what should study sites be doing in response to this legislation?

Get in touch with your state Medicaid agency or legislature. Explain how the rule, as written, could limit patient access and increase financial burden. Advocate for precise definitions of the Medicaid terms and consider increasing coverage beyond the plain letter of the law.

Review your state’s new plan or follow your legislature as it works to update the plan. The state plan amendment will outline the coverage decisions.

Sites should continue performing coverage analysis based on the Medicare billing rules. As more information comes in from your state, you can adjust the coverage analysis process as needed to account for any state-specific coverage decisions.

The Medicaid rule adds a prior authorization process, similar to what many private payers require. The site must include an attestation to the appropriateness of the trial with an option to reference clinicaltrials.gov, and the full process is still being developed. The states may not require onerous documentation such as submitting the entire protocol or other lengthy study-related documents. A coverage decision must be made within 72 hours.

Importantly, continue to insist on including indigency clauses in your clinical trial agreements with sponsors. Sponsors may argue that the Medicaid research rule renders these clauses unnecessary, but, as discussed, your site may encounter trials that do not qualify under the Medicaid rules. Patients may be unable to pay for services in trials that qualify and having the indigency clause as an outlet for these situations is vital. Additionally, some patients enrolled in private insurance programs may be indigent as well. Keeping these clauses in the clinical trial agreements ensures that the institution has all its bases covered.

Takeaways

  • H.R. 133—The Consolidated Appropriations Act, which housed the new Medicaid research coverage rule—was effective January 1, 2022, but is not yet implemented in many states.
  • According to the new regulation, each state will determine what will be covered in their state plans. Depending on coverage decisions, Medicaid coverage could be more restrictive than Medicare coverage.
  • Research sites should continue to require indigency clauses in sponsor contracts. This may help cover costs that result from potential Medicaid coverage issues.
  • Research sites should continue following Medicare rules for coverage analysis and other clinical research billing processes. As you get information on what your state will cover, you can amend your coverage analysis process to include what will be covered under Medicaid.
  • Creation and dissemination of internal education to study teams and revenue cycle of the new Centers for Medicare & Medicaid Services regulation and attestation form should begin if not already in action.
  • Map out a workflow for the complicated operationalization of completing the attestation form, as there are often several teams involved in authorization processes.
  • As there has been little to no communication from state Medicaid plans on how to submit the attestation form, including receipt and response times, we recommend seeking clarification from your state plan(s).

1 Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, § 210, 134 Stat. 1182, 2989 (2020), https://www.congress.gov/bill/116th-congress/house-bill/133/text.

2 Centers for Medicare & Medicaid Services, “Routine Costs in Clinical Trials 310.1,” accessed December 29, 2022, https://www.cms.gov/medicare-coverage-database/.

3 Centers for Medicare & Medicaid Services, “SMD # 21-005 RE: UPDATED: Mandatory Medicaid Coverage of Routine Patient Costs Furnished in Connection with Participation in Qualifying Clinical Trials,” letter to state Medicaid directors, April 13, 2022. https://www.medicaid.gov/federal-policy-guidance/downloads/smd21005.pdf.

4 Colorado General Assembly, “HB20-1232 Equity In Access To Clinical Trials in Medicaid,” accessed December 29, 2022, https://leg.colorado.gov/bills/hb20-1232.

5 John E. Little, Secretary of Health and Human Resources, Commonwealth of Virginia, Office of the Governor, “SPA 22-009 Clinical Trials,” March 8, 2022, https://www.dmas.virginia.gov/media/4501/spa-22-009-clinical-trials.pdf.

6 Health Care Affordability Act, Art. 5., S.B. 1864, 101 Gen. Assmb. 101 (Ill. 2020), https://www.ilga.gov/legislation/101/SB/PDF/10100SB1864lv.pdf.

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