Ryan White Care Act
First-Year Experiences under the Part D Administrative Expense Cap Gao ID: GAO-09-140 December 19, 2008The Ryan White Comprehensive AIDS Resources Emergency Act of 1990 (CARE Act) makes federal funds available to assist those infected and affected by HIV/AIDS. Through the CARE Act, the Health Resources and Services Administration (HRSA), part of the Department of Health and Human Services (HHS), awards grants (known as Part D grants) to provide services to women, infants, children, and youth with HIV/AIDS and their families. These grantees incur administrative expenses and indirect costs, such as rent and utilities. The Ryan White HIV/AIDS Treatment and Modernization Act of 2006 (RWTMA), which took effect in fiscal year 2007, capped at 10 percent the amount that Part D grantees could spend on administrative expenses. According to HRSA, there is no cap on indirect costs, but grantees must have an indirect cost rate to use funds for indirect costs. RWTMA directed GAO to examine Part D spending. In this report GAO describes (1) the services that Part D grantees provide and what effect, if any, the administrative expense cap has had on those services and on grantee programs; (2) how Part D grantees report on administrative expenses, indirect costs, and compliance with the cap; and (3) how HRSA implemented the cap and grantees' views on that implementation. GAO surveyed all Part D grantees, interviewed selected grantees, reviewed Part D grant applications and guidance, and interviewed HRSA officials.
Part D grantees reported in our survey that they provide a range of services to clients, and the majority of these grantees reported that they have not made changes to services in response to the administrative expense cap implemented in fiscal year 2007. These services included both medical services, such as outpatient health services, as well as support services, such as child care. The majority of the 83 grantees that responded to our survey reported that the cap has not affected the services they provide. However, 4 grantees reported increasing services and 3 grantees reported reducing client services in response to the cap. In addition, the majority of grantees also reported that the cap has had a negative effect on their Part D programs, even if it has not changed client services, because it has, for example, made it necessary for clinical staff to perform administrative tasks. In addition, about half of the grantees reported that not all of their Part D administrative expenses were covered by the 10 percent allowance. Part D grantees report planned administrative expenses and indirect costs to HRSA and, starting in fiscal year 2009, HRSA will require additional reporting. In their grant applications, Part D grantees provide HRSA with budgets that include administrative expenses and indirect costs. Grantees must then update HRSA on any changes to that information, and some provide the results of independent financial audits. Starting in fiscal year 2009, HRSA will require all Part D grantees to report more detailed budget information at both the beginning and end of each year. In fiscal year 2007, the first year of the administrative expense cap, grantees reported to HRSA that they were in compliance with the cap. Grantees with approved indirect cost rates could include expenses such as rent and utilities in their indirect costs rather than in their administrative expenses and so were able to spend more than 10 percent of their Part D grants on such expenses. Beginning in fiscal year 2007, HRSA took multiple steps to implement the administrative expense cap but, while some grantees reported that HRSA's guidance on how to implement the cap was helpful, others reported difficulties in implementing the cap due to unclear guidance from HRSA. HRSA reported revising its grant application guidance and developing training for both its staff and grantees in response to the cap. HRSA also included additional revisions related to the administrative expense cap in the fiscal year 2008 grant application guidance and plans to provide grantees with further guidance in the fiscal year 2009 application. While some grantees reported that HRSA's guidance was helpful, others reported receiving conflicting information. In the first year of the cap, some grantees also indicated a need for additional guidance on the administrative expense cap and reported that they sought such guidance from sources other than HRSA. HHS provided technical comments on a draft of the report, which GAO incorporated as appropriate.
GAO-09-140, Ryan White Care Act: First-Year Experiences under the Part D Administrative Expense Cap
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
December 2008:
Ryan White Care Act:
First-Year Experiences under the Part D Administrative Expense Cap:
GAO-09-140:
GAO Highlights:
Highlights of GAO-09-140, a report to congressional committees.
Why GAO Did This Study:
The Ryan White Comprehensive AIDS Resources Emergency Act of 1990 (CARE
Act) makes federal funds available to assist those infected and
affected by HIV/AIDS. Through the CARE Act, the Health Resources and
Services Administration (HRSA), part of the Department of Health and
Human Services (HHS), awards grants (known as Part D grants) to provide
services to women, infants, children, and youth with HIV/AIDS and their
families. These grantees incur administrative expenses and indirect
costs, such as rent and utilities. The Ryan White HIV/AIDS Treatment
and Modernization Act of 2006 (RWTMA), which took effect in fiscal year
2007, capped at 10 percent the amount that Part D grantees could spend
on administrative expenses. According to HRSA, there is no cap on
indirect costs, but grantees must have an indirect cost rate to use
funds for indirect costs.
RWTMA directed GAO to examine Part D spending. In this report GAO
describes (1) the services that Part D grantees provide and what
effect, if any, the administrative expense cap has had on those
services and on grantee programs; (2) how Part D grantees report on
administrative expenses, indirect costs, and compliance with the cap;
and (3) how HRSA implemented the cap and grantees‘ views on that
implementation.
GAO surveyed all Part D grantees, interviewed selected grantees,
reviewed Part D grant applications and guidance, and interviewed HRSA
officials.
What GAO Found:
Part D grantees reported in our survey that they provide a range of
services to clients, and the majority of these grantees reported that
they have not made changes to services in response to the
administrative expense cap implemented in fiscal year 2007. These
services included both medical services, such as outpatient health
services, as well as support services, such as child care. The majority
of the 83 grantees that responded to our survey reported that the cap
has not affected the services they provide. However, 4 grantees
reported increasing services and 3 grantees reported reducing client
services in response to the cap. In addition, the majority of grantees
also reported that the cap has had a negative effect on their Part D
programs, even if it has not changed client services, because it has,
for example, made it necessary for clinical staff to perform
administrative tasks. In addition, about half of the grantees reported
that not all of their Part D administrative expenses were covered by
the 10 percent allowance.
Part D grantees report planned administrative expenses and indirect
costs to HRSA and, starting in fiscal year 2009, HRSA will require
additional reporting. In their grant applications, Part D grantees
provide HRSA with budgets that include administrative expenses and
indirect costs. Grantees must then update HRSA on any changes to that
information, and some provide the results of independent financial
audits. Starting in fiscal year 2009, HRSA will require all Part D
grantees to report more detailed budget information at both the
beginning and end of each year. In fiscal year 2007, the first year of
the administrative expense cap, grantees reported to HRSA that they
were in compliance with the cap. Grantees with approved indirect cost
rates could include expenses such as rent and utilities in their
indirect costs rather than in their administrative expenses and so were
able to spend more than 10 percent of their Part D grants on such
expenses.
Beginning in fiscal year 2007, HRSA took multiple steps to implement
the administrative expense cap but, while some grantees reported that
HRSA‘s guidance on how to implement the cap was helpful, others
reported difficulties in implementing the cap due to unclear guidance
from HRSA. HRSA reported revising its grant application guidance and
developing training for both its staff and grantees in response to the
cap. HRSA also included additional revisions related to the
administrative expense cap in the fiscal year 2008 grant application
guidance and plans to provide grantees with further guidance in the
fiscal year 2009 application. While some grantees reported that HRSA‘s
guidance was helpful, others reported receiving conflicting
information. In the first year of the cap, some grantees also indicated
a need for additional guidance on the administrative expense cap and
reported that they sought such guidance from sources other than HRSA.
HHS provided technical comments on a draft of the report, which GAO
incorporated as appropriate.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/products/GAO-09-140]. For more
information, contact Marcia Crosse at (202) 512-7114 or
crossem@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Part D Grantees Reported Providing a Range of Services, and Most
Reported That the Administrative Expense Cap Did Not Change These but
Had a Negative Effect on Programs:
Part D Grantees Report Planned Administrative Expenses and Indirect
Costs:
HRSA Took Multiple Steps to Implement the Administrative Expense Cap,
but Grantees' Experiences Implementing the Cap Varied:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Medical and Support Services Part D Grantees Reported
Providing, Fiscal Year 2007:
Table 2: Types of Organizations That Responded to the Survey:
Abbreviations:
AIDS: acquired immunodeficiency syndrome:
CARE Act: Ryan White Comprehensive AIDS Resources Emergency Act of
1990:
CBO: community-based organization:
CDC: Centers for Disease Control and Prevention:
HHS: Department of Health and Human Services:
HIV: human immunodeficiency virus:
HRSA: Health Resources and Services Administration:
OMB: Office of Management and Budget:
RWTMA: Ryan White HIV/AIDS Treatment Modernization Act of 2006:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
December 19, 2008:
The Honorable Edward M. Kennedy:
Chairman:
The Honorable Michael Enzi:
Ranking Member:
Committee on Health, Education, Labor, & Pensions:
United States Senate:
The Honorable John D. Dingell:
Chairman:
The Honorable Joe Barton:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
Since the first cases of what would become known as acquired
immunodeficiency syndrome (AIDS) were reported in the United States in
June 1981, over 1 million people in the United States have been
infected with human immunodeficiency virus (HIV) as of 2006,[Footnote
1] including almost 550,000 who have already died.[Footnote 2] The HIV/
AIDS population has changed over time, with women and youth[Footnote 3]
representing a growing number of cases. More than one quarter of all
new HIV/AIDS diagnoses are in women, according to the Centers for
Disease Control and Prevention (CDC). Additionally, CDC estimated that
almost 5,000 youth received a diagnosis of HIV or AIDS in 2004,
representing about 13 percent of the persons diagnosed during that
year.
Through the Ryan White Comprehensive AIDS Resources Emergency Act of
1990 (CARE Act), federal funds are made available to metropolitan
areas, states, and others to assist with the cost of medical and
support services for individuals and families infected and affected by
HIV/AIDS.[Footnote 4] Each year, CARE Act programs provide assistance
to over 530,000 mostly low-income, underinsured, or uninsured
individuals living with HIV/AIDS. The programs are administered by the
Department of Health and Human Services' (HHS) Health Resources and
Services Administration (HRSA). Under the CARE Act, HRSA also awards
grants to organizations to provide family-centered medical and support
services for women, infants, children, and youth with HIV/AIDS and
their families--including infected and affected family members (known
as Part D grants).[Footnote 5] These Part D grantee organizations
include government entities, community-based organizations (CBO)--
which may or may not be specifically focused on HIV/AIDS--hospitals and
medical centers, university/college hospitals and medical centers, and
universities/colleges.
In providing medical and support services to women, infants, children,
and youth with HIV/AIDS and their families, Part D grantees often incur
administrative expenses and indirect costs. The Ryan White HIV/AIDS
Treatment and Modernization Act of 2006 (RWTMA), which reauthorized
CARE Act programs and defined the term "administrative expenses" for
Part D grants, included a 10 percent cap on the amount of the Part D
grant awards that grantees could spend on administrative expenses
beginning with fiscal year 2007.[Footnote 6] The purpose of this cap is
to maximize the amount of federal funds spent on services for Part D
clients. Prior to this, there was no cap on administrative expenses for
Part D grantees. Both administrative expenses and indirect costs can
include expenses such as those related to rent, utilities, and
photocopying; however, if a grantee does not have a federally
negotiated indirect cost rate, it must charge (account for) such
expenses as administrative expense.[Footnote 7]
RWTMA directed us to determine how funds are used in CARE Act Part D
programs.[Footnote 8] In this report, we describe (1) the services that
Part D grantees provide and what effect, if any, the administrative
expense cap has had on those services and on grantee programs; (2) how
Part D grantees report on administrative expenses, indirect costs, and
compliance with the administrative expense cap; and (3) how HRSA
implemented the Part D administrative expense cap and grantees' views
on that implementation.
To determine what services Part D grantees provide and what effect the
administrative expense cap has had on those services and on grantee
programs, we surveyed all 90 Part D grantees. The survey response rate
was 92 percent based on 83 responses received. The survey covered
fiscal year 2007. We conducted the survey from May 14, 2008, through
July 10, 2008, collecting information and opinions about the
administrative expense cap for fiscal year 2007, the first year the
administrative cap was in effect. Fiscal year 2007 was the only full
year of information we were able to obtain from grantees. Information
for fiscal year 2008 was not available at the time of our review. We
also interviewed selected grantees and officials from AIDS Alliance for
Children, Youth & Families, the Part D grantee member organization, as
well as HRSA officials responsible for overseeing the Part D program,
including 8 of the approximately 30 project officers responsible for
overseeing at least one Part D grant.[Footnote 9] We selected the 8
project officers based on unbiased selection criteria by project
officers' service areas, excluding those hired in 2008.
To determine how Part D grantees report on administrative expenses,
indirect costs, and compliance with the administrative expense cap, we
reviewed grantees' fiscal year 2007 grant applications, which contain
their proposed budgets for their fiscal year 2007 spending.[Footnote
10] From these grant applications we identified the administrative
expenses and indirect costs that grantees reported to HRSA in their
fiscal year 2007 applications. We also collected grantees' indirect
cost rates in the survey of Part D grantees described above. Finally,
we interviewed HRSA officials and reviewed relevant agency documents.
To determine how HRSA implemented the Part D administrative expense cap
and grantees' views on that implementation, we interviewed
representatives of 8 Part D grantees and 1 subgrantee selected as a
nongeneralizable sample based on their size, location, and
organizational structure. We also conducted two group interviews with
representatives of 18 grantees. These grantees volunteered to
participate in the group interviews conducted during an AIDS Alliance
for Children, Youth & Families conference in May 2008. We also
interviewed HRSA officials and reviewed relevant documents, including
HRSA's technical assistance tools and training provided to grantees and
project officers, as well as fiscal year 2007 and 2008 grant
application guidance. See appendix I for a more detailed description of
our methodology.
We conducted this performance audit from January 2008 through November
2008 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Results in Brief:
Part D grantees reported in our survey that they provide a range of
services to clients, and the majority of these grantees reported that
they have not made changes to services in response to the
administrative expense cap implemented in fiscal year 2007. Grantees
reported providing a range of services--both medical and support--to
women, infants, children, and youth infected with HIV/AIDS, as well as
support services for affected family members in fiscal year 2007. These
services included medical services such as ambulatory health services
and HIV counseling and testing, as well as support services such as
transportation and child care. The majority of the 83 grantees reported
that they have not made any changes to the services they provide to
their clients in response to the cap. However, in our survey, 4
grantees reported increasing services and 3 reported reducing client
services in response to the cap. Nevertheless, the majority of the
grantees reported that the cap has had a negative effect on their
programs, even if it has not changed client services, because it has,
for example, made it necessary for clinical staff to perform
administrative tasks. In addition, about half of the grantees reported
that not all of their Part D administrative expenses were covered by
the 10 percent allowance.
Part D grantees report planned administrative expenses and indirect
costs to HRSA in their grant applications. In these applications, Part
D grantees provide HRSA with budget documents, such as line-item
budgets and budget justifications. HRSA officials review this
information and any revisions to it to ensure that grantees adhere to
their spending plans. For the 2009 fiscal year, HRSA will require Part
D grantees to report more detailed budget information, including their
administrative expenses, at both the beginning and end of each fiscal
year. We found that grantees reported to HRSA that they were in
compliance with the administrative expense cap--having spent 10 percent
or less on administrative expenses such as rent and utilities in fiscal
year 2007. However, grantees with approved indirect cost rates could
spend more of their Part D grants on expenses that would otherwise be
covered by the administrative expense cap, such as rent and utilities.
These grantees reported spending up to 26 percent of their Part D
grants on such expenses, in addition to the 10 percent allowed under
the cap.
Beginning in fiscal year 2007, HRSA took multiple steps to implement
the administrative expense cap but, while 33 of the 83 grantees
surveyed reported that HRSA's guidance on how to implement the cap was
helpful, some reported difficulties in implementing the cap due to
unclear guidance from HRSA. HRSA reported revising its grant
application guidance, approving grants with the condition that the
grantee comply with the cap, and developing training for both its staff
and grantees in response to the cap. For example, in fiscal year 2007,
HRSA issued grant guidance for Part D grantees that included how to
define and calculate administrative expenses. HRSA also included
additional revisions related to the administrative expense cap in the
fiscal year 2008 grant application guidance and plans to provide
grantees with further guidance in the fiscal year 2009 application.
While some grantees reported that HRSA's guidance was helpful, a
roughly equal number of grantees reported that it was not helpful. Some
grantees also indicated a need for additional guidance on the
administrative expense cap and reported that they sought such guidance
from sources other than HRSA, such as the AIDS Alliance for Children,
Youth & Families, in fiscal year 2007.
HHS provided technical comments on a draft of the report, which we
incorporated as appropriate.
Background:
RWTMA reauthorized CARE Act programs for fiscal years 2007 through
2009. Part D grants--one of the types of grants under the act--are for
entities that provide HIV/AIDS services to women, infants, children,
and youth. In fiscal year 2007, HRSA provided $68,500,000 in Part D
grants to 90 grantees, ranging from about $230,000 to over $2 million
per grant. This represented about 3 percent of all CARE Act funding.
CARE Act Part D Grantees:
Part D grantees compete for grant funding to provide a range of
services--both medical and support--to women, infants, children, and
youth in a variety of settings. Medical services are those outpatient
and ambulatory care services that are part of essential medical care.
They can include, for example, primary medical care and HIV/AIDS drug
assistance. Support services are nonmedical services necessary to use
the medical services. They can include, for example, client
transportation to medical appointments, child care, or food assistance
services.[Footnote 11]
Applicants generally submit applications to HRSA for 5-year project
periods. Grantees receive funding for the first year and then submit
annual noncompeting applications to HRSA to receive the remaining
funding and to update HRSA on their projects' spending and services.
Although the grant applications and federal funds are released by
fiscal year, HRSA refers to grantee spending in each of the 5 years
constituting a project period as budget years. Within Part D, there are
two types of grants, each of which has a slightly different budget
year. For example, in 2007, one Part D budget year ran from August 1,
2007, until July 31, 2008, and another budget year ran from September
1, 2007, until August 31, 2008. Because the Part D grants discussed in
this report are from fiscal year 2007 funds and the grant applications
and accompanying guidances use the term fiscal year, we use the term
throughout this report.
Part D grantees include state and local government entities, CBOs--
which may or may not be specifically focused on HIV/AIDS--hospitals and
medical centers, university/college hospitals and medical centers, and
universities/colleges. (See appendix I for additional information.)
Part D grantees can (1) operate a network of Part D subgrantees that
provide services, (2) directly provide the services, or, as most do,
(3) both operate a network of subgrantee service providers as well as
directly provide services.
Administrative Expenses and Indirect Costs:
In addition to spending Part D funds on medical and support services
for clients, Part D grantees may also use their Part D grant funds to
pay for certain administrative expenses and indirect costs. Indirect
costs differ from administrative expenses in that indirect cost rates
for specific activities are typically negotiated with the federal
agency from which the grantee receives the greatest amount of federal
awards and that rate then applies to all relevant federal award
programs that permit indirect costs, unless it conflicts with a
legislative indirect cost cap. The Office of Management and Budget
(OMB) cost principles provide guidance as to the expenses that can be
included in indirect costs to the cognizant agencies and grantees
according to entity type. Within HHS, the Division of Cost Allocation
performs this role. HRSA, following OMB cost principles, defines
indirect costs as costs "incurred for common or joint objectives, which
cannot be readily identified but are necessary to the operations of the
organization." HRSA defines administrative expenses as "funds that are
to be used by grantees for grant management and monitoring activities,
including costs related to any staff or activity unrelated to services
or indirect costs."[Footnote 12]
Some expenses can be considered to be either administrative or
indirect. For example, rent and utilities could be considered either
administrative expenses or indirect costs. However, for a grantee to
claim any expenses as indirect costs, it must have an approved indirect
cost rate.[Footnote 13] Smaller organizations or ones that receive only
one federal grant may not have approved indirect cost rates, but
organizations that receive multiple federal grants would need to have
approved rates. For example, a university that receives multiple
federal grants would have an indirect cost rate to cover different
grants' shares of costs such as rent, utilities, as well as library
expenses. However, a small organization that receives only one federal
grant might not have an indirect cost rate since it may be able to
account for all of those expenses for the single federal grant it
receives. If a grantee does not have an approved indirect cost rate
agreement, the grantee must charge (account for) expenses such as rent
and utilities as administrative expenses in order to pay for those
expenses with grant funds. This means that grantees with approved
indirect cost rates have greater latitude than those without such rates
to pay for expenses that might otherwise be considered administrative
expenses as they can spend more than 10 percent of their Part D grant
on expenses such as rent and utilities.
The CARE Act now caps at 10 percent the amount of the Part D grant
awards that grantees can spend on administrative expenses. HRSA reports
that the purpose of this cap is to maximize the amount of federal funds
spent on services for Part D clients. HRSA reports that the cap only
applies to grantees' administrative expenses; there is no cap on
indirect costs. Prior to RWTMA, there was no cap on administrative
expenses for Part D grantees.
Oversight of CARE Act Part D Grantees:
HRSA project officers[Footnote 14] are responsible for overseeing the
Part D program by reviewing grant applications; writing and revising
grant application guidance; responding to grantees' questions;
providing technical assistance and training to grantees; monitoring
grantees' performance and compliance with grant guidance, program
expectations, and legislative requirements; and recommending approval
on program budget submissions. Project officers are Part D grantees'
primary contact with HRSA, and they are expected to contact their
assigned grantees at least once every 3 months.
Required audits assist HRSA in providing financial oversight of some
Part D grantees' spending. Organizations that receive Part D grants are
generally subject to the requirements of the Single Audit Act, as
amended, and the implementing OMB guidance.[Footnote 15] These
provisions require grantees that expend $500,000 or more in federal
awards in a year to have either single or program-specific audits for
that year conducted by an independent auditor. Single audits are
organizationwide audits, not intended to focus specifically on an
individual grant awarded by a particular agency. They include a review
of the grantee's financial statements, schedule of federal
expenditures, internal controls, and compliance with laws and
regulations pertaining to major programs that affect all federal
funding, including grants--defined with reference to dollar thresholds-
-for which the grantee expends federal funds. Generally, grantees that
expend federal funds under only one federal program may choose to have
a program-specific audit. Among other things, such an audit includes a
review of compliance with laws and regulations that affect that
program.
Part D Grantees Reported Providing a Range of Services, and Most
Reported That the Administrative Expense Cap Did Not Change These but
Had a Negative Effect on Programs:
Grantees reported providing a range of medical and support services to
women, infants, children, and youth infected with HIV/AIDS, as well as
support services for affected family members. The majority of survey
respondents reported that they have not made any changes to the
services they provide to their clients in response to the cap, which,
according to HRSA, was meant to maximize the amount of federal funds
spent on services for Part D clients. However, four grantees reported
increasing services and three grantees reported reducing client
services. While most grantees reported not making changes to client
services, the majority reported that the administrative expense cap, by
reducing administrative services, has had a negative effect on their
programs. Some grantees, however, reported experiencing positive
effects on their programs as a result of the cap.
Part D Grantees Reported Providing Both Support and Medical Services to
Women, Infants, Children, and Youth with HIV/AIDS and Their Families:
Grantees reported providing a range of medical and support services to
women, infants, children, and youth infected with HIV/AIDS, as well as
their families (see table 1). Survey respondents reported providing
medical services[Footnote 16] such as outpatient and ambulatory health
services, medical case management--including treatment adherence
services--mental health services, and HIV counseling and testing. They
also reported providing support services such as referrals to health
care and supportive services, outreach services,[Footnote 17]
transportation, family advocacy,[Footnote 18] case management services,
[Footnote 19] and child care.
Table 1: Medical and Support Services Part D Grantees Reported
Providing, Fiscal Year 2007:
Type of service: Medical services:
Type of service: Medical services: Outpatient and ambulatory health
services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 81.
Type of service: Medical services: Medical case management, including
treatment adherence services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 78.
Type of service: Medical services: Mental health services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 69.
Type of service: Medical services: HIV counseling and testing;
Grantees providing the service (of the 83 grantees that responded to
our survey): 57.
Type of service: Medical services: Other core medical services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 57.
Type of service: Medical services: Medical nutrition therapy;
Grantees providing the service (of the 83 grantees that responded to
our survey): 38.
Type of service: Medical services: Substance abuse outpatient care;
Grantees providing the service (of the 83 grantees that responded to
our survey): 28.
Type of service: Medical services: Oral health care;
Grantees providing the service (of the 83 grantees that responded to
our survey): 27.
Type of service: Medical services: AIDS pharmaceutical assistance;
Grantees providing the service (of the 83 grantees that responded to
our survey): 18.
Type of service: Medical services: Home-and community-based health
services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 14.
Type of service: Medical services: Home health care;
Grantees providing the service (of the 83 grantees that responded to
our survey): 9.
Type of service: Medical services: Health insurance premium and cost-
sharing assistance;
Grantees providing the service (of the 83 grantees that responded to
our survey): 8.
Type of service: Medical services: Hospice services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 2.
Type of service: Support services: Referrals to health care/supportive
services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 74.
Type of service: Support services: Outreach services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 71.
Type of service: Support services: Transportation;
Grantees providing the service (of the 83 grantees that responded to
our survey): 69.
Type of service: Support services: Family advocacy;
Grantees providing the service (of the 83 grantees that responded to
our survey): 63.
Type of service: Support services: Case management services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 59.
Type of service: Support services: Child care;
Grantees providing the service (of the 83 grantees that responded to
our survey): 43.
Type of service: Support services: Linguistics services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 34.
Type of service: Support services: Emergency financial assistance;
Grantees providing the service (of the 83 grantees that responded to
our survey): 23.
Type of service: Support services: Food bank/home-delivered meals;
Grantees providing the service (of the 83 grantees that responded to
our survey): 14.
Type of service: Support services: Housing services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 12.
Type of service: Support services: Legal services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 12.
Type of service: Support services: Respite care;
Grantees providing the service (of the 83 grantees that responded to
our survey): 11.
Type of service: Support services: Rehabilitation services;
Grantees providing the service (of the 83 grantees that responded to
our survey): 6.
Source: GAO analysis of survey data.
Note: Eighty-three of the 90 Part D grantees responded to our survey.
[End of table]
Grantees reported in our survey that they spent an average of 53
percent of their fiscal year 2007 Part D grants on medical services for
clients, ranging from 0 percent to 95 percent. They also reported
spending an average of about 33 percent of their fiscal year 2007 Part
D grants on support services for their clients, ranging from 1 percent
to 90 percent. Grant money not spent on medical and support services
was used to pay for administrative expenses, indirect costs, and other
services not directly related to clients.
Grantees reported serving a range of clients with their Part D funds,
including affected family members of HIV-infected individuals. Grantees
reported serving varying numbers of clients ranging from 75 to over
10,000 clients. Of those clients, grantees reported serving an average
of 37 infants less than 24 months of age; an average of 59 children
from 2 to 12 years old; an average of 194 youths from 13 to 24 years
old; and an average of 443 adults over 25 years of age. The number of
clients served varied by type of grantee, with CBOs and universities/
colleges serving fewer clients on average (667 and 554, respectively)
and government entities, hospital/medical centers, and university/
college hospital/medical centers serving more clients on average
(1,047, 1,471, and 1,125, respectively). In addition, grantees varied
in the types of clients they served. For example, several grantees had
no infant or child clients, while one grantee served over 300 infants
and another served over 1,100 children.
Representatives of Part D grantees, including the AIDS Alliance for
Children, Youth & Families, stated that providing both HIV-infected
individuals and their uninfected family members with medical and
support services makes grantees of the Part D program unique compared
to other CARE Act programs. Some grantees stated that this family-
centered care can include educating the family members of HIV-infected
individuals and providing prevention information, medical care, and HIV
counseling and testing to family members. These grantees told us that
by providing medical and support services to uninfected family members,
Part D programs help to keep the infected family member's support
system intact and help to eliminate barriers to the infected family
member receiving care.
Grantees Generally Reported That the Administrative Expense Cap Has Not
Changed the Services They Provide but Has Created a Negative Effect on
Their Programs:
The majority of survey respondents (63 of the 83) reported that they
have not altered the amount or type of services that they provide to
their clients in response to the administrative expense cap. In
addition, all eight of the HRSA project officers we interviewed
reported that they were aware of only minor or no changes to the
services that their Part D grantees provided in response to the
administrative expense cap. Of the 19 grantees that said they made
changes to their services in response to the cap (1 grantee did not
respond to this question), 4 described spending more on client
services, such as oral health care. However, 3 described reducing
client services. For example, 1 grantee reported that, because of the
cap, the grantee has been unable to upgrade older computers, causing
delays in services, and reducing staff time spent on client services.
[Footnote 20]
Grantees also reported effects that the administrative expense cap had
on their programs other than changes to services. In our survey, 57 of
the 83 respondents reported that the administrative expense cap has had
a negative effect on their programs that did not involve reducing
client services. Fifty-two of the 57 provided specific examples of how
the cap has had a negative effect at a time when some commented they
are seeing more clients. For example, one grantee commented that the
cap has reduced its ability to fund necessary administrative services,
such as data tracking and program management, and another commented
that clinical staff must now perform administrative duties. However, 19
grantees reported that the administrative expense cap has had positive
effects on their programs, while not necessarily changing their
services. These survey respondents reported that the administrative
expense cap has led them to review how they spend their Part D funds or
take steps to save money or change staff roles.
Some grantees reported that they were unable to pay for all of their
Part D programs' administrative expenses with their Part D grants
because of the administrative expense cap. Almost all grantees charged
administrative expenses to their Part D grants (82 of the 83 survey
respondents). However, about half (41 of the 83) of the grantees that
responded to the survey reported that not all of their administrative
expenses for the Part D program were covered by the 10 percent
allowance. Grantees that needed additional funding to cover their Part
D administrative expenses reported using money from their
organizations' general operating budgets (26 of the 41 grantees), funds
from other government grants (17 of the 41), and in-kind donations (14
of the 41). HRSA officials told us that Part D funding is not intended
to cover all of a program's expenses and that the agency encourages
Part D grantees to seek other sources of funding to pay for any
administrative expenses that are not covered by the 10 percent
allowance.
Part D Grantees Report Planned Administrative Expenses and Indirect
Costs:
Part D grantees report their planned administrative expenses and
indirect costs in their grant applications, budget revisions, and other
documents they submit to HRSA. HRSA officials review that information
to ensure that grantees adhere to their spending plans. Starting in
fiscal year 2009, Part D grantees will complete standardized budget
forms that will provide information to HRSA on the grantees' final
spending on administrative expenses and indirect costs. Documents
submitted to HRSA by grantees indicated that grantees complied with the
administrative expense cap. However, responses to our survey indicate
that the amount grantees spent on the types of items that would
generally be covered by the administrative expense cap if a grantee did
not have an approved indirect cost rate was up to 36 percent of their
grants in fiscal year 2007, with grantees with approved indirect cost
rates spending more on those expenses.
Part D Grantees Report Planned Administrative Expenses and Indirect
Costs to HRSA but Will Provide Additional Information in Fiscal Year
2009:
Part D grantees report planned administrative expenses and indirect
costs to HRSA in their grant applications, which the agency uses to
oversee grantees' compliance with the Part D program. Part D grantees
submit grant applications to HRSA that include planned expenses in line-
item budgets and budget justifications. Grantees are required to
include in the grant applications explanations of how they plan to
spend their Part D grant funds. They do this using line-item budgets,
in which each expense is shown on one line. They also provide budget
justifications, which are narratives of how the grantee plans to spend
its grant money. These budgets and justifications show a range of
expenses, such as the grantee's estimated expenses for medical services
and support services, as well as the grantee's estimated indirect costs
and--starting in fiscal year 2007, the first year of the administrative
expense cap--administrative expenses for the year.
HRSA uses the budget information grantees submit to oversee their
spending. Grantees must report to HRSA any changes to the budgets they
submitted in their grant applications and HRSA must review and approve
those changes before a grantee can change how it spends its Part D
grant funds. HRSA also receives the annual audits of Part D grantees
conducted under the Single Audit Act.[Footnote 21] Among other things,
these audits examine grantees' Part D spending, which may include
whether the grantees comply with the administrative expense cap. HRSA
officials reported that the project officers and other HRSA staff
review all of the grantees' budget information to ensure that the
grantees are meeting the obligations of the Part D program.
Starting in fiscal year 2009, HRSA will require Part D grantees to
report more detailed information, including administrative expenses, at
the beginning and end of each fiscal year. HRSA officials stated that,
starting in fiscal year 2009, Part D grantees will be required to
complete forms at both the beginning (planned allocation report) and
end (final expenditure report) of the fiscal year.[Footnote 22] In the
planned allocation reports, grantees will be required to report their
expected administrative expenses and indirect costs at the beginning of
the fiscal year. In the final expenditure reports, grantees will be
required to report the actual administrative expenses and indirect
costs they incurred by the end of the fiscal year. Both reports note
that administrative expenses cannot exceed 10 percent of the Part D
grant award. The reports will also require grantees to provide detailed
information about the services they provide with their Part D funding.
The reports include a list of possible Part D medical and support
services--such as outpatient services, mental health services, case
management, and child care--and the grantees will be required to note
what amount, if any, they spent on each of those. The reports also
state that HRSA will use the information from the allocation and
expenditure reports to prepare an annual report to Congress on the use
of Part D funds.[Footnote 23]
Grantees Reported Complying with the Administrative Expense Cap:
Grantees reported to HRSA that they spent 10 percent or less of their
Part D grants on administrative expenses, but those with approved
indirect cost rates were able to spend more on the types of expenses
that could otherwise be considered administrative expenses. In the
fiscal year 2007 grant applications, grantees reported administrative
expense estimates that ranged from 0 to the maximum allowed 10 percent.
However, 60 of the 83 grantees reported in our survey that they had
federally approved indirect cost rates[Footnote 24] and that, with
these rates, they charged to their Part D grants an average of 10
percent for indirect costs in addition to the 10 percent allowed for
administrative expenses. In our survey, the highest rate grantees
reported charging to the Part D grant was 26 percent, although the
maximum approved indirect cost rate was 66 percent.[Footnote 25] Taking
into account the maximum approved indirect cost rate in our survey, as
well as the 10 percent that all grantees are allowed for administrative
expenses, some grantees could use as much as 76 percent of their Part D
grants to pay for items that could qualify as indirect costs or
administrative expenses, such as rent, utilities, and photocopying.
[Footnote 26] In our survey, while most of the grantees reported using
their full rate for the Part D program (46 of the 60), the highest
reported combined percentage of a Part D grant spent on administrative
expenses and indirect costs was 36 percent. The primary reason grantees
reported for not charging their full indirect cost rate was because
they chose to use a greater portion of their grant award to pay for
medical and support services for clients, rather than for indirect
costs.
HRSA Took Multiple Steps to Implement the Administrative Expense Cap,
but Grantees' Experiences Implementing the Cap Varied:
To implement the fiscal year 2007 administrative expense cap, HRSA
reported revising its grant application guidance, approving grants with
the condition that the grantee comply with the cap, and developing
training for both its staff and grantees to implement the
administrative expense cap. While 33 of the 83 grantees reported that
the new guidance was helpful, others suggested that their project
officers could have been more helpful in assisting them to meet the new
administrative expense cap and some grantees expressed interest in
receiving additional guidance.
HRSA Took Multiple Steps to Implement the Administrative Expense Cap:
To implement the administrative expense cap, HRSA revised and issued
new written grant application guidance, approved grants with the
condition that the grantee comply with the cap, and developed training
for both its staff and grantees.
HRSA Revised the Part D Grant Guidance to Reflect the Administrative
Expense Cap:
To implement the administrative expense cap, HRSA revised its Part D
grant application guidance. In 2007, the first year of the
administrative expense cap, HRSA issued grant guidance for Part D
grantees that included guidance on how to define and calculate
administrative expenses. Prior to RWTMA, there was no cap on Part D
grantees' administrative expenses so there was no guidance on
administrative expenses specific to Part D grantees. The fiscal year
2007 grant application guidance stated that "a grantee may not use more
than 10 percent of amounts received under a grant award under Part D
for administrative expenses." That guidance also defined administrative
expenses as the CARE Act does as "funds that are to be used by grantees
for grant management and monitoring activities, including costs related
to any staff or activity unrelated to services and indirect costs."
HRSA included additional revisions related to the administrative
expense cap in the fiscal year 2008 grant application guidance and
plans to provide grantees with further guidance in the fiscal year 2009
application. In fiscal year 2008, HRSA added the following sentences to
its definition of administrative expenses in its Part D grant
application guidance: "Administrative costs also include rent,
utilities and telephone services, as well as other costs not directly
related to patient care. Administrative expenses are separate from
those of indirect costs." HRSA officials reported that the fiscal year
2009 grant guidance will be further revised to include more detail
about how grantees should categorize their expenses, including
administrative expenses. HRSA officials stated that the fiscal year
2009 grant guidance will be available to grantees in January 2009.
In addition to the revised grant application guidance, HRSA issued a
letter to all Part D grantees in May 2008 clarifying the definition of
administrative expenses that appeared in the fiscal year 2008 guidance.
The letter stated that the following are administrative expenses that
are subject to the administrative expense cap: routine grant
administration and monitoring activities, contracts for services
awarded as part of the grant, and "costs which could qualify as either
indirect or direct costs but are charged as direct costs," such as
rent, utilities, and telecommunications. The letter also described
activities that are not subject to the administrative expense cap, such
as indirect costs.
HRSA Conditionally Approved Fiscal Year 2007 Part D Grants to Ensure
Compliance with the Administrative Expense Cap:
HRSA officials reported that they placed conditions[Footnote 27] on all
fiscal year 2007 Part D grant awards to ensure that all grantees met
certain new requirements mandated in RWTMA, including the
administrative expense cap, in order to avoid having their grant funds
restricted. Some grantees reported that HRSA's conditions required them
to revise multiple documents, such as their budgets and work plans, in
order to comply with the Part D program requirements. HRSA officials
reported that, before they awarded the fiscal year 2008 grants, they
had removed the conditions on all fiscal year 2007 Part D grant awards
because the grantees had met all of the necessary requirements for the
Part D grant awards, including the administrative expense cap. The
amount of time grantees reported having conditions on their awards
varied. In their survey responses, grantees reported that it took from
over 2 weeks to almost 11 months to have the conditions removed.
HRSA Trained Project Officers and Grantees about the Administrative
Expense Cap:
Following the enactment of RWTMA, HRSA provided its project officers
and grantees with training on the changes resulting from the law. The
training for project officers included briefing slides, a handout
highlighting changes due to RWTMA, the creation of a model budget form,
and additional guidance for responding to grantee questions about the
administrative expense cap. The eight project officers we interviewed
reported receiving the training, consistently defining administrative
expenses as they are defined by HRSA, and rarely requiring their
supervisors to provide additional guidance to their grantees on
administrative expenses. In addition to training the project officers,
HRSA provided training for grantees. HRSA officials reported conducting
multiple telephone and Internet technical assistance training sessions
with grantees.
Grantees' Experiences with the HRSA Guidance Implementing the
Administrative Expense Cap Varied:
In our survey, grantees reported both positive and negative reviews of
the guidance HRSA provided related to the administrative expense cap.
In addition, some grantees indicated the need for additional guidance
from HRSA on the administrative expense cap.
Grantees Reported Both Positive and Negative Reactions to HRSA's Grant
Guidance:
Grantees reported receiving various types of guidance from HRSA on the
administrative expense cap. In addition to the grant application
guidance that is included in the grant application that all grantees
must complete, grantees that responded to our survey reported receiving
verbal (63 of 83) and written (43 of 83) guidance from their project
officers on the administrative expense cap. Fewer reported receiving
technical assistance (6 of 83) and verbal (13 of 83) and written (19 of
83) guidance from other HRSA officials.
Some grantees reported that HRSA's guidance was helpful when
implementing the administrative expense cap. Specifically, 33 of 83
grantees reported that the guidance on administrative expenses was very
or somewhat helpful.[Footnote 28] In written comments on the survey,
grantees that reported that HRSA's guidance was helpful commented that
the guidance made clear how to categorize expenses, their project
officers could answer any questions, and what was required of the
grantees to comply with the cap was clear. We also heard similar
comments during our interviews. For example, one grantee reported that
its project officer provided specific advice and was very helpful and
explicit, speaking with the grantee daily when necessary. Another
grantee stated that its project officer was "knowledgeable and
helpful."
Some grantees, however, reported that HRSA's guidance was not helpful
when implementing the administrative expense cap. Thirty of the 83
survey respondents reported that they found the guidance not at all
helpful or somewhat unhelpful. In written comments on the survey,
grantees that reported that HRSA's guidance was unhelpful commented
that the guidance did not provide clear definitions of allowable
expenses and that the guidance was unclear or poorly written. Twelve of
the 30 commented that they had received conflicting guidance from HRSA.
Five of the grantees commented that the project officers could not
answer questions or provide explanations regarding the grant
application guidance or that the project officers provided different
information to different grantees. A poll of the group interview
participants showed that none thought that either the formal guidance
or the informal guidance, such as guidance from project officers, was
adequate.
Some Grantees Indicated a Need for Additional Guidance on the
Administrative Expense Cap, and HRSA Officials Reported Revising the
Guidance in Response to Feedback:
Some grantees reported seeking more detailed guidance about what should
be considered an administrative expense. For example, during the group
interviews, an official from one grantee stated that she would like to
receive a list of approved administrative expenses from HRSA. In an
interview with an official of a grantee, the official reported that
there are "several gray areas" between what is considered an
administrative expense and an indirect cost and HRSA had provided few
definitions of those expenses. In addition, 16 of the 83 survey
respondents sought guidance from sources other than HRSA on
administrative expenses and the cap, such as from the AIDS Alliance for
Children, Youth & Families.
HRSA officials reported that the agency has received feedback from
grantees about the grant application guidance and has worked to improve
the guidance each year. These officials explained that the agency's
latitude is somewhat limited when revising the grant guidance. One
official explained that the agency does not have complete control over
the Part D guidance because all HRSA grant applications and guidance
must follow a standard template. Moreover, one official stated that
grantees often do not carefully read the guidance. Officials stated
that in response to questions about the grant application guidance,
project officers will often refer grantees back to the grant
application guidance and might not provide additional clarification to
ensure fairness in the application process by not providing existing
grantees with information unavailable to new applicants.
Agency Comments:
HHS provided technical comments on a draft of the report, which we
incorporated as appropriate.
We are sending copies of this report to the Secretary of Health and
Human Services and the Administrator of HRSA. This report also is
available at no charge on GAO's Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me on (202) 512-7114 or crossem@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs can be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix II.
Signed by:
Marcia Crosse:
Director, Health Care:
[End of section]
Appendix I: Scope and Methodology:
We examined the administrative expense cap, which took effect in fiscal
year 2007, placed on grants for family-centered medical and support
services for women, infants, children, and youth with HIV/AIDS and
their families (Part D grants) under the Ryan White Comprehensive AIDS
Resources Emergency Act of 1990 (CARE Act).[Footnote 29] Specifically,
we examined (1) the services that Part D grantees provide and what
effect, if any, the administrative expense cap has had on those
services and on grantee programs; (2) how Part D grantees report on
administrative expenses, indirect costs, and compliance with the
administrative expense cap; and (3) how the Department of Health and
Human Services' Health Resources and Services Administration (HRSA)
implemented the Part D administrative expense cap and grantees' views
on that implementation.
To determine what services Part D grantees provide and what effect the
administrative expense cap has had on those services; how Part D
grantees report on administrative expenses, indirect costs, and
compliance with the administrative expense cap; and how HRSA has
implemented the Part D administrative expense cap, we analyzed data
from our Web-based survey sent to all 90 Part D grantees. We obtained
the e-mail addresses and the names of grantee contacts from HRSA. The
survey contained questions on grantees' services and clients,
administrative expenses and indirect costs, and HRSA's implementation
of the administrative expense cap. The questions focused on changes
that occurred in fiscal year 2007, the first year the administrative
expense cap was in effect. Fiscal year 2007 was the only full year of
information we were able to obtain from grantees. Because the Part D
grants are generally awarded in August of each year--the beginning of
what HRSA officials refer to as the budget year--a full year of
information was not available for fiscal year 2008. Of the 90 Part D
grantees, 83 completed the survey for a 92 percent response rate (see
table 2).
Table 2: Types of Organizations That Responded to the Survey:
Organization type: Community-based organization;
Number responding: 27.
Organization type: Government entity;
Number responding: 13.
Organization type: Hospital/medical center;
Number responding: 14.
Organization type: University/college hospital/medical center;
Number responding: 18.
Organization type: University/college;
Number responding: 11.
Organization type: Total;
Number responding: 83.
Source: GAO analysis of survey data.
Note: Eighty-three of the 90 Part D grantees responded to our survey.
[End of table]
During the development of our survey, we pretested it with three Part D
grantees from New York, Washington, D.C., and Maryland. We opened the
survey on May 14, 2008. During the course of the survey, we sent two
follow-up e-mails to each nonrespondent and then made telephone follow-
up calls to remaining nonrespondents to address any problems they had
and to encourage them to complete the survey. We closed the survey on
July 10, 2008. Because this survey was conducted with all of the Part D
grantees, it is not subject to sampling error. However, the practical
difficulties of conducting any survey may introduce other errors. For
example, difficulties in interpreting a particular question or sources
of information available to respondents can introduce unwanted
variability or bias into the survey results. We took steps to minimize
such nonsampling errors in developing the questionnaire and collecting
and analyzing the data. While the response rate of 92 percent is high,
if those not responding differed materially from those responding on
any particular question we analyzed, our analysis may not accurately
represent the group surveyed. Our results therefore best represent only
those responding to our survey. However, given our analysis of the
nonresponders, we determined that we could generalize our findings to
all Part D grantees.
To obtain information on grantees' fiscal year 2007 spending, including
administrative expenses and indirect costs, we reviewed the grantees'
2007 Part D grant applications that contain their proposed budgets.
Because the Part D grant applications did not contain standardized
spending information that met our reporting objectives, we also
included questions in the survey on grantees' fiscal year 2007 Part D
spending.
To gain further information on Part D grantees and the administrative
expense cap, we visited two Part D grantees and one Part D subgrantee
in the Washington, D.C., metropolitan area and conducted telephone
interviews with officials from six Part D grantees. We selected the
grantees for visits and interviews through a nongeneralizable sample
based on their size, location, and organizational structure. We also
conducted two group interviews held at the AIDS Alliance for Children,
Youth & Families conference in May 2008. The 18 grantees that
participated were self-selected volunteers representing universities,
hospitals, community-based organizations, and government entities.
To determine how HRSA has implemented the Part D administrative expense
cap, we interviewed HRSA officials and reviewed relevant documents. We
interviewed HRSA officials responsible for overseeing the Part D
program. We also conducted one-on-one interviews with 8 of the
approximately 30 project officers who oversee at least one Part D
grant.[Footnote 30] These project officers write program guidance that
defines the grant program objectives, monitor grantees' performance,
and evaluate grantee achievements. We selected the 8 project officers
based on unbiased selection criteria by project officers' service
areas. We excluded project officers who were hired in 2008 because
those officers did not oversee grantees during the entire first year of
the administrative expense cap. Finally, we reviewed HRSA's technical
assistance tools and training provided to grantee staff and project
officers, including fiscal years 2007 and 2008 grant application
guidance, and reviewed Part D fiscal year 2007 grant applications. We
did not consider how HRSA's treatment of administrative expenses
differed from other programs.
We conducted this performance audit from January 2008 through November
2008 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: GAO Contact and Staff Acknowledgments:
GAO Contact:
Marcia Crosse, (202) 512-7114 or crossem@gao.gov:
Acknowledgments:
In addition to the contact named above, Tom Conahan, Assistant
Director; Stefanie A. Bzdusek; Shaunessye Curry; Kelly L. DeMots; Cathy
Hamann; Christopher Howard; Martha Kelly; and Eden Savino made key
contributions to this report.
[End of section]
Footnotes:
[1] Data for 2006 are the most recent available data as of the time of
this report.
[2] HIV is the virus that causes AIDS. In this report, we use the
common term HIV/AIDS to refer to HIV disease, inclusive of cases that
have progressed to AIDS.
[3] CDC defines youth as individuals aged 13 through 24 years.
[4] Pub. L. No. 101-381, 104 Stat. 576 (codified as amended at 42
U.S.C. §§ 300ff through 300ff-121). Unless otherwise indicated,
references to the CARE Act are to current law.
[5] 42 U.S.C. § 300ff-71. The 1990 CARE Act added a new title XXVI to
the Public Health Service Act and the CARE Act provisions authorizing
these grants are found at Part D of title XXVI. Therefore, they are
referred to as Part D grants.
[6] RWTMA Pub. L. No. 109-415, § 401, 120 Stat. 2767, 2811. The CARE
Act programs were previously reauthorized by the Ryan White CARE Act
Amendments of 1996 (Pub. L. No. 104-146, 110 Stat. 1346) and the Ryan
White CARE Act Amendments of 2000 (Pub. L. No. 106-345, 114 Stat.
1319). Administrative expenses and indirect costs are both capped for
certain other CARE Act programs.
[7] RWTMA defines administrative expenses for Part D grantees as grant
management and monitoring activities, including costs related to any
staff or activity unrelated to services or indirect costs, and indirect
costs as costs included in a Federally negotiated indirect rate. 42
U.S.C. § 300ff-71(h)(1-2). HRSA interprets administrative costs as
excluding indirect costs. The legislative history indicates that in
defining administrative expenses, Congress departed from the standard
definition of the term. H.R. Rep. No. 109-695, at 11 (2006), reprinted
in 2006 U.S.C.C.A.N. 1650, 1660.
[8] Pub. L. No. 109-415, § 402, 120 Stat. 2767, 2812.
[9] During the course of our audit work, because some project officers
resigned or were reassigned, the number of project officers overseeing
at least one Part D grant fluctuated between 25 and 34.
[10] Although the grant applications and federal funds are released by
fiscal year, HRSA refers to grantee spending in each of the 5 years
constituting a project period as budget years. Within Part D, there are
two types of grants, each of which has a slightly different budget
year. For example, in 2007, one Part D budget year ran from August 1,
2007, through July 31, 2008, and another budget year ran from September
1, 2007, through August 31, 2008. The federal fiscal year is from
October 1 through September 30. In its grant applications and
accompanying guidances, HRSA uses the term fiscal year to refer to the
period for which the grantee is funded. For this report, we follow the
same practice.
[11] Part D grantees also provide information to their clients about
opportunities to participate in HIV/AIDS-related clinical research.
[12] This is the definition in the CARE Act, added by RWTMA. 42 U.S.C.
§ 300ff-71(h)(1).
[13] See 42 U.S.C. § 300ff-71(h)(2) and [hyperlink,
http://rates.psc.gov/].
[14] Roughly 30 of HRSA's project officers oversee at least one Part D
grant in addition to grants made under other parts of the CARE Act.
[15] 31 U.S.C. §§ 7501-7507; OMB Circular A-133, Audits of States,
Local Governments, and Non-Profit Organizations (June 27, 2003). 45
C.F.R. § 74.26. Organizations that are exempt from these requirements
generally must make their records available for review by federal
officials. Every 2 years grantees must also submit audits regarding
funds expended to the state agency responsible for coordinating all
CARE Act programs within each state. 42 U.S.C. § 300ff-71(c)(3).
[16] In a May 2008 letter to all Part D grantees, HRSA stated that all
grantees are required to provide primary medical care either directly
or through contracts with Part D subgrantees. A HRSA official said that
the focus of the Part D program is moving from support services to
medical care. HRSA officials reported that there is no minimum amount
or percentage of a Part D grant that HRSA requires grantees to spend on
primary medical care.
[17] CARE Act outreach services help to identify persons at high risk
for HIV and to bring HIV-infected persons into care. Outreach services
include services to both HIV-infected persons who know their status and
are not in care and HIV-infected persons who do not know their status
and are not in care.
[18] According to HRSA, family advocacy is "the process and provision
of assistance used for obtaining needed services for family members of
infected individuals not to include follow-up on medical treatment."
[19] Case management includes the provision of advice and assistance in
obtaining medical, social, community, legal, financial, and other
needed services. It does not involve coordination and follow-up of
medical treatments as medical case management does.
[20] The remaining 12 grantees described actions that did not affect
client services.
[21] According to a HRSA official, 47 of the 90 Part D grantees receive
grants of less than $500,000 from the Part D program and therefore may
not meet the threshold to require a Single Audit Act audit. However, if
those grantees expend additional federal funds that, combined with the
Part D grants, total more than $500,000 then they must submit to a
single audit.
[22] Grantees already must also include with their Part D grant
application an SF-424A and submit to HRSA within 90 days of the end of
the grant period an SF-269. 45 C.F.R. § 74.52. These are governmentwide
standard forms developed by OMB that allow entities to submit
standardized data sets to the federal government.
[23] These new reports are similar to ones required of CARE Act Part A
and B grantees that result in annual allocation and expenditure
reports.
[24] Over 90 percent of the grantees that are universities/colleges (17
of the 18) and university/college hospitals/medical centers (10 of the
11) reported having approved indirect cost rates. CBOs were least
likely to have indirect cost rates, with 52 percent of such grantees
(14 of the 27) reporting having an approved rate. Grantees that are
government entities reported the lowest average indirect cost rate of
around 15 percent, while those that are hospital/medical centers
reported the highest average indirect cost rate of 33 percent and
included the institution with the highest rate, at 66 percent.
[25] In our survey, grantees reported that their approved indirect cost
rates ranged from 5 to 66 percent, with an average of around 22
percent.
[26] Grantees with indirect cost rates can pay for expenses such as
rent and utilities as indirect costs and pay for other items, such as
administrative personnel and office supplies, as administrative
expenses under Part D. Grantees without indirect cost rates may only
charge such expenses as administrative expenses.
[27] HRSA places conditions on a grant award when the agency decides to
only conditionally approve a grantee's application. To remove the
condition, a grantee must submit revised or additional information to
HRSA, such as a revised budget. Failure to submit this information
could result in HRSA restricting the grantee's funds or denying the
grantee future funding.
[28] Universities/colleges had the highest percentage of grantees
reporting that the guidance was helpful compared to other types of
organizations, with 11 of the 18 reporting that the guidance was very
or somewhat helpful. Twenty grantees reported that they were either
neutral on the guidance or had no basis to judge the guidance.
[29] Pub. L. No. 101-381, 104 Stat. 576 (codified as amended at 42
U.S.C. §§ 300ff through 300ff-121). Unless otherwise indicated,
references to the CARE Act are to current law.
[30] During the course of our audit work, because some project officers
resigned or were reassigned, the number of project officers overseeing
at least one Part D grant fluctuated between 25 and 34.
[End of section]
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