Budget Preparation and Development

OCR Finance offers a range of services to assist investigators and research personnel with the pre-award submission process and the post-award management of industry-funded clinical trials. OCR offers budget creation and negotiation services; we will work with investigators and their study teams to develop budgets for clinical trials and negotiate terms with industry sponsors. Generally, budgets should be developed only after a coverage analysis has been approved, unless fully funded by the Sponsor. The following document is a presentation on building budgets.  

The Budgeting Team Can Help

• Develop protocol-specific budgets and negotiate with sponsors to ensure adequate financial support
• Assist the PI in projecting the costs for investigator-initiated trials
• Ensure the use of standardized costs for research procedures and clinical trials across multiple programs
• Ensure that appropriate budget and payment terms are included within the clinical trial agreements

Industry Clinical Research Budgets

When considering an industry sponsored-study, all study related expenses should be determined and compared to the overall reimbursement offered by the sponsor to ensure the study is financially feasible. Review the protocol to ensure all tests and procedures are accurately captured in the budget.

• The sponsor of a clinical trial generally sends a protocol and budget overview/template for the trial
• After reviewing the protocol and events schedule, create an internal budget to reflect all costs, including time and effort of all personnel in order to conduct the trial.
• Determine which services are standard of care versus those billed to research.
  • Note: You may not bill insurance for a drug, test, device, or service paid for by the sponsor.
• Determine if the labs and testing procedures will be done in-house or at the sponsor’s site.
• Determine if professional charges are required for any technical tests performed.
• Include a mandatory study start-up fee to cover the following costs: protocol review, staff training, budget preparation, regulatory document preparation and administrative fees.
• If applicable, be certain to include the following one-time costs in the budget: IRB initial and continuing review, IRB modifications and administrative review, investigational drug set-up, MCA  preparation, archiving, and advertising costs.
• PSOM has instituted a clinical trial indirect cost rate of 39%, this additional charge must be applied to the total direct study costs. Note, only IRB fees are exempt from indirect costs.
• As a general rule, for multi-year clinical trials add an annual inflation rate of at least 5% for each out year to the per-completed-subject cost.
• Holdback on a trial should not exceed 10%.

List of potential expenses involved in the conduct of a study

1. Personnel

Estimate the amount of time for the PI, coordinator(s), and any other staff that would be paid out of the study budget (i.e. research assistants, administrative staff, statisticians). This estimate should include salary and fringe benefit costs.

2. Labs, Tests, and Procedures

Technical Fees - A technical fee is the cost incurred for use of the mechanical equipment and processing. Tests/procedures that are study related and are not "standard of care" must be charged to the research budget. All costs should be based on the currently approved technical "research rate".

Professional Fees - The professional fee is the physician's charge for interpretation of diagnostic procedures/tests. It is important to note, if there is a professional fee associated with a test/procedure, you must include that charge in your expenses. A limited number of laboratory tests have professional fees associated with them. All radiology and cardiology procedures have an associated professional fee, as do various other procedures. All costs should be based on the currently approved professional "research rate".

Subject Compensation - These charges may be incurred per visit or per subject. Examples include monetary compensation, meals and parking/transportation costs. The budgeted stipend amount should agree with the amount noted in the Informed Consent Document.

Additional Study Expenses

3. Other Potential Study Expenses to Consider

• Start-up costs
• Training/Seminar/Conference (directly related to the research project) travel expenses
• Institutional Review Board (IRB) fees
• Investigational Drug Service (IDS) fees
• Advertising/Recruitment
• Sub-contracts
  • Clinical Research Computing Unit (CRCU) fees
  • Biostatistics and Epidemiology Consulting Center (BECC) fees
  • External Monitor or Contract Research Organization (CRO)
• Screen failures
• Supplies
  • Blood collection tubes, chemicals, dry ice
  • Centrifuges, mass spectrometers, liquid simulation counters
  • Technology (e.g. telephone, computer)
  • Shipping/Packaging Supplies (e.g. dry ice)
• Service Contracts (e.g. instrument maintenance)
• Monitoring
  • Travel Expenses
• Regulatory document preparation and submission
• Data Management
• Data Safety Monitoring Board
• Medical Director
• Medical Record Retrieval
• Archival fees
• Site Visit & Site Initiation Costs

Federal Budgets

When requesting funding for a study, all study-related costs should be noted in the budget including: personnel, consultants, equipment, supplies, travel, and other expenses. NIH applications have special budget and justification forms that contain detailed instructions. Penn investigators must have their grant budgets approved by the Office of Research Support Services (ORSS). 

Facilities and Administrative Cost

Facilities and Administrative (F&A) cost is the indirect cost associated with the project or study, e.g. space, research administration, facilities, maintenance, etc. The Penn standard approved F&A rate is 39% for industry-sponsored studies (see policy).

The PSOM faculty or research staff member in discussion with an external entity is responsible for notifying the sponsor of the F&A rate at the beginning of the budget negotiation process. OCR Finance is available to assist with any aspect of the budget negotiation process, including informing sponsors of the prevailing F&A rate.

For industry-sponsored studies, F&A is applied to all costs except for IRB fees.

Studies that fall under the following definition use the industry-sponsored clinical trial rate:                                                                                  

Prospective and interventional trials, registry studies, generation of clinical trial protocols, and the provision of clinical services in clinical space in connection with a clinical trial (e.g., core clinical lab services). Any other activity is presumed to be subject to the DOD F&A rate.

If a member of the Penn research community is uncertain as to whether the clinical trial F&A rate applies, s/he should consult with his or her business office before discussing a budget using the clinical trial rate with a sponsor.  If the business office requires guidance, OCR Finance should be consulted. OCR Finance will consult with ORSS in cases of uncertainty.

CostFinder Application

Costfinder is a tool that provides the research rates for the Hospital Billing (HB) and Professional Billing (PB) components of an item/service/procedure. Please update any bookmarks or favorites to reference the new link as the old Costfinder site has been retired. Please note that you must select at least one entity (HUP, PPMC, PAH OR CCH) prior to searching for results as pricing may vary by entity. You are able to search by CPT code (preferred) or procedure name.

You may access the CostFinder tool through https://www.med.upenn.edu/apps/ocr/costfinder

CMS Submissions Overview

All Category A and B Device Studies containing routine care costs to CMS (Centers for Medicare and Medicaid) must have prior approval from Medicare before enrolling and billing a CMS eligible patient. 

The cost of a Category A device may not be billed to CMS or other third-party payors, though the cost of a Category B device may be billed to CMS upon written approval from Medicare.  CMS approval must be granted prior to enrolling and billing any CMS-eligible patient.  Category B devices provided at no cost to the Health System may never be billed to CMS.

If the sponsor is providing the device at no cost and reimbursing UPHS for all associated routine care costs including insertion, monitoring, and treatment of adverse events caused by the device, then Medicare approval is not required.

How to Submit for CMS Approval

Study Teams should work with respective hospital Admission Departments to ensure that all precertification requirements are completed by patients’ third-party insurance companies prior to enrollment

Residual Balances Transfers

Fixed price contract awards are awards in which an agreed upon, set price is determined for the project to be completed. When there is any unspent balance left on the account, the request will be made to OCR to transfer the balance to the designated accounts. Residual Balance Transfers require the completion of the Residual Balance Transfer Request Form  regardless of the residual balance amount.

Current Process

• Department/Study Team will review the account to ensure that all sponsored funds have been received and all award requirements have been met.
• Department/Study Team will confirm a final figure with OCR that indicates all expenditures have been posted to the fund, all effort that has been charged to the project is in line with the work performed, and that the expenses are allocable and allowable.
• Once the final unexpended balance is determined, Department will calculate the amounts of direct and indirect costs based on the agreed upon rate.
• The Department/PI at the time of the closeout; will get the total amount of direct costs of the remaining balance. The indirect costs portion of the balance will be transferred to the school-specific designated fund.
• The PI, Department Chair and Business Administrator will complete, sign and submit the Residual Balance Transfer Request Form to OCR Finance.

Related Policies and Documents

• Residual Balance Transfer Request Form
• Residual Balance Policy

Subject Payment

Instructions by Payment Type

Details about the process for subject payments can be found in the Subject Reimbursement Guidance Document.