Guidelines for Inclusion of Clinical Practice Compensation in Institutional Base Salary Charged to NIH Grants and Contracts

Notice Number: NOT-OD-05-061

Key Dates
Release Date: August 4, 2005

Issued by
National Institutes of Health (NIH), (http://www.nih.gov/)

This Notice provides guidance and policy to address requests for revision of established NIH requirements for the inclusion of Clinical Practice Compensation (CPC) in Institutional Base Salary (IBS) to provide enhanced clarity and flexibility in implementation while maintaining appropriate stewardship and accountability for the utilization of NIH funds.

IBS is the salary used to determine amounts requested for personnel in applications and proposals and charged to NIH grants and contracts.

IBS is defined in the NIH Grants Policy Statement (12/03) http://grants.nih.gov/grants/policy/nihgps_2003/NIHGPS_Part2.htm
as:

The annual compensation paid by an organization for an employee's appointment, whether that individual's time is spent on research, teaching, patient care, or other activities. Base salary excludes any income that an individual is permitted to earn outside of duties for the applicant/grantee organization. Base salary may not be increased as a result of replacing organizational salary funds with NIH grant funds. (See “ Allowability of Costs/Activities—Selected Items of Cost—Salaries and Wages”).

CPC is the compensation provided for the clinical service activities of an individual. Institutions manage CPC in a wide array of arrangements and the purpose of this guidance is neither to proscribe nor encourage a specific approach to the provision of this compensation or its inclusion in IBS.

Whether CPC should be included in IBS is most often a question related to faculty appointments at a University. In these settings the inclusion of CPC in IBS must be established consistent with the provisions of OMB Circular A-21 (Cost Principles for Colleges and Universities) http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html. These requirements are addressed under ‘Compensation for personal services' Section J.10, which in part states; “ Compensation for personal services covers all amounts paid currently or accrued by the institution for services of employees rendered during the period of performance under sponsored agreements. ” and that payroll distribution “will (i) be incorporated into the official records of the institution, (ii) reasonably reflect the activity for which the employee is compensated by the institution, and (iii) encompass both sponsored and all other activities on an integrated basis…”

Based on these principles and the input of the extramural community, the NIH in consultation with other HHS and other Federal officials has revised the requirements to be used as guidance in the determination of when it is appropriate to include CPC in the IBS. All these criteria must be met for CPC to be included in the IBS used to charge salary and personnel costs to NIH grants.

The previous criteria are provided in the NIH Grants Policy Statement http://grants.nih.gov/grants/policy/nihgps_2003/NIHGPS_Part6.htm:

“For investigators with university and clinical practice plan appointments, compensation from both sources may be considered the base salary if the following criteria are met:

These criteria have been revised to more clearly recognize when it is appropriate to include CPC in situations when the CPC is paid by a separately organized source. The revised criteria are as follows:

For investigators receiving compensation from the institution (grantee/contractor) and separately organized clinical practice plans, compensation from such sources may be included in the institutional base salary (IBS) budgeted and charged to NIH sponsored agreements if all of the following criteria are met:

Set by the institution means that the grantee/contractor institution must be in a position to document and certify that the specified amount of clinical practice compensation is being paid in essentially the same manner as other specified amounts of the committed IBS (compensation) of the investigator. Further, this requires that the IBS not vary based on the specific clinical services provided by the investigator within the periods for which total IBS is certified by the grantee institution.

The NIH recognizes that reimbursement for investigator effort on grants must be provided consistent with the actual institutional costs of these services in accord with applicable Federal Cost Principles and other limitations for such reimbursement, such as the legislative cap on salary reimbursement. The revised criteria support conformance with applicable cost principles and consistency in the treatment of compensation across the institution regardless of the source of support for compensated activities.

Inquiries

For additional information concerning this change contact:

Office of Policy for Extramural Research Administration
Office of Extramural Research
National Institutes of Health
Phone: 301-435-0938
FAX: 301-435-3059
E-mail: grantspolicy@mail.nih.gov


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