Ryan White CARE Act
Program Changes Affecting Minority AIDS Initiative and Part D Grantees
Gao ID: GAO-09-1027T September 9, 2009
Under the Ryan White Comprehensive AIDS Resources Emergency Act of 1990 (CARE Act) federal funds are made available to assist those affected by human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS). The Health Resources and Services Administration (HRSA) awards CARE Act grants to states, territories, metropolitan areas, and others. The Ryan White HIV/AIDS Treatment Modernization Act of 2006 (RWTMA) reauthorized CARE Act programs for fiscal years 2007 through 2009. The CARE Act's Minority AIDS Initiative (MAI) provides for grants through five parts (A, B, C, D, and F) with the goal of reducing HIV-related health disparities among minorities. RWTMA changed how HRSA awards MAI grants under Part A and Part B from a formula based on the demographics of the grantee to a competitive process. Part D provides for grants for services to women, infants, children, and youth with HIV/AIDS and their families. RWTMA capped Part D administrative expenses at 10 percent. GAO was asked to testify about CARE Act changes resulting from RWTMA. This testimony discusses (1) the implementation of the MAI provisions and (2) grantees' experiences under the Part D administrative expense cap. This testimony is based on two GAO reports, Ryan White Care Act: Implementation of the New Minority AIDS Initiative Provisions, GAO-09-315, and Ryan White Care Act: First-Year Experiences under the Part D Administrative Expense Cap, GAO-09-140.
The new competitive process for awarding MAI grants altered funding for grantees, increased administrative requirements for grantees, and resulted in continued funding for existing initiatives. The new competitive application process for Part A grantees--metropolitan areas--and Part B grantees--states and territories and associated jurisdictions--altered MAI grants from what they would have been under the old formula-based process. In determining the award amounts under the new process, HRSA considered the number of minorities with HIV/AIDS living in the grantee jurisdiction, along with the MAI applications grantees were required to file. The new competitive grant applications sometimes resulted in considerable differences in grantees' share of MAI funds from what they would have received under the old process. For example, in fiscal year 2007, Phoenix received $127,578 (39.8 percent) less than it would have received under the old formula, while Houston received $154,018 (10.9 percent) more. In addition, Part A and B grantees that received MAI funding told GAO that the administrative requirements increased significantly because of the new process. These included a new MAI grant application and reporting requirements. All Part A and B grantees that applied for MAI funding received it, but some Part B grantees decided that the administrative requirements, including a separate application for MAI funds, were not worth the amount of funds that they expected to receive and therefore chose not to apply. Moreover, grantees said that they generally funded the same service providers and initiatives to reduce minority health disparities as they had in prior years. MAI grantees continued to fund a range of core medical services, which include essential medical care services, and support services, which are services needed for individuals with HIV/AIDS to achieve their medical outcomes. In a survey of Part D grantees, GAO found that grantees 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 GAO's survey reported that the cap has not affected the services they provide. However, four grantees reported increasing services and three 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.
GAO-09-1027T, Ryan White CARE Act: Program Changes Affecting Minority AIDS Initiative and Part D Grantees
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Testimony:
Before the Subcommittee on Health, Committee on Energy and Commerce,
House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 11:00 a.m. EDT:
Wednesday, September 9, 2009:
Ryan White Care Act:
Program Changes Affecting Minority AIDS Initiative and Part D Grantees:
Statement of Marcia Crosse:
Director, Health Care:
GAO-09-1027T:
GAO Highlights:
Highlights of GAO-09-1027T, a testimony before the Subcommittee on
Health, Committee on Energy and Commerce, House of Representatives.
Why GAO Did This Study:
Under the Ryan White Comprehensive AIDS Resources Emergency Act of 1990
(CARE Act) federal funds are made available to assist those affected by
human immunodeficiency virus/acquired immunodeficiency syndrome
(HIV/AIDS). The Health Resources and Services Administration (HRSA)
awards CARE Act grants to states, territories, metropolitan areas, and
others. The Ryan White HIV/AIDS Treatment Modernization Act of 2006
(RWTMA) reauthorized CARE Act programs for fiscal years 2007 through
2009. The CARE Act‘s Minority AIDS Initiative (MAI) provides for grants
through five parts (A, B, C, D, and F) with the goal of reducing HIV-
related health disparities among minorities. RWTMA changed how HRSA
awards MAI grants under Part A and Part B from a formula based on the
demographics of the grantee to a competitive process. Part D provides
for grants for services to women, infants, children, and youth with
HIV/AIDS and their families. RWTMA capped Part D administrative
expenses at 10 percent. GAO was asked to testify about CARE Act changes
resulting from RWTMA. This testimony discusses (1) the implementation
of the MAI provisions and (2) grantees‘ experiences under the Part D
administrative expense cap. This testimony is based on two GAO reports,
Ryan White Care Act: Implementation of the New Minority AIDS Initiative
Provisions, [hyperlink, http://www.gao.gov/products/GAO-09-315], and
Ryan White Care Act: First-Year Experiences under the Part D
Administrative Expense Cap, [hyperlink, http://www.gao.gov/products/GAO-
09-140].
What GAO Found:
The new competitive process for awarding MAI grants altered funding for
grantees, increased administrative requirements for grantees, and
resulted in continued funding for existing initiatives. The new
competitive application process for Part A grantees”metropolitan areas”
and Part B grantees”states and territories and associated jurisdictions”
altered MAI grants from what they would have been under the old formula-
based process. In determining the award amounts under the new process,
HRSA considered the number of minorities with HIV/AIDS living in the
grantee jurisdiction, along with the MAI applications grantees were
required to file. The new competitive grant applications sometimes
resulted in considerable differences in grantees‘ share of MAI funds
from what they would have received under the old process. For example,
in fiscal year 2007, Phoenix received $127,578 (39.8 percent) less than
it would have received under the old formula, while Houston received
$154,018 (10.9 percent) more. In addition, Part A and B grantees that
received MAI funding told GAO that the administrative requirements
increased significantly because of the new process. These included a
new MAI grant application and reporting requirements. All Part A and B
grantees that applied for MAI funding received it, but some Part B
grantees decided that the administrative requirements, including a
separate application for MAI funds, were not worth the amount of funds
that they expected to receive and therefore chose not to apply.
Moreover, grantees said that they generally funded the same service
providers and initiatives to reduce minority health disparities as they
had in prior years. MAI grantees continued to fund a range of core
medical services, which include essential medical care services, and
support services, which are services needed for individuals with
HIV/AIDS to achieve their medical outcomes.
In a survey of Part D grantees, GAO found that grantees 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 GAO‘s survey reported that the cap
has not affected the services they provide. However, four grantees
reported increasing services and three 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.
View [hyperlink, http://www.gao.gov/products/GAO-09-1027T or key
components. For more information, contact Marcia Crosse at (202) 512-
7114 or crossem@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today as you discuss reauthorization of Ryan
White Comprehensive AIDS Resources Emergency Act of 1990 (CARE Act)
programs and consider the results of some of the changes that were
instituted by the 2006 reauthorization of CARE Act programs. The CARE
Act, administered by the Department of Health and Human Services' (HHS)
Health Resources and Services Administration (HRSA), was enacted to
address the needs of jurisdictions, health care providers, and people
with human immunodeficiency virus/acquired immunodeficiency syndrome
(HIV/AIDS) and their family members.[Footnote 1] In December 2006 the
Ryan White HIV/AIDS Treatment Modernization Act of 2006 (RWTMA)
reauthorized CARE Act programs for fiscal years 2007 through 2009.
[Footnote 2] Each year CARE Act programs provide assistance to over
530,000 mostly low income, underinsured, or uninsured individuals
living with HIV/AIDS. Under the CARE Act, approximately $2.2 billion in
grants were made to states, metropolitan areas, and others in fiscal
year 2009.
There are five primary sections of the CARE Act under which HRSA awards
grants--Parts A, B, C, D, and F. Part A provides for grants to selected
metropolitan areas--known as eligible metropolitan areas (EMA) and
transitional grant areas (TGA)--that have been disproportionately
affected by the HIV/AIDS epidemic.[Footnote 3] Part B provides for
grants to states and territories and associated jurisdictions to
improve the quality, availability, and organization of HIV/AIDS
services. Part C provides for grants to public and private nonprofit
entities to provide early intervention services, such as HIV testing
and ambulatory care. Part D provides for grants to organizations for
family-centered medical and support services for women, infants,
children, and youth with HIV/AIDS and their families--including
infected and affected family members. Part F provides for grants for
demonstration and evaluation of innovative models of HIV/AIDS care
delivery for hard-to-reach populations and training of health care
providers.[Footnote 4]
Most CARE Act funding is distributed to grantees either as base or
supplemental grants. Base grants are distributed by formula, and HRSA
uses a grantee's share of living HIV/AIDS cases to determine the amount
of base grants. Supplemental grants are generally awarded through a
competitive process based on the demonstration of severe need and other
criteria. In addition, Minority AIDS Initiative (MAI) grants are
supplemental grants awarded on a competitive basis to address
disparities in access, treatment, care, and health outcomes.
RWTMA included provisions that changed how certain funding is awarded
to grantees. For example, RWTMA changed the process by which HRSA
awards MAI grants under Part A and Part B from a formula based solely
on demographics of the grantee jurisdiction to a competitive process.
The RWTMA also capped at 10 percent the amount that Part D grantees
could spend on administrative expenses.[Footnote 5]
In 2008 and 2009, we issued two reports on MAI and related issues and
how funds are used in Part D programs and what effect the
administrative expense cap has had on those services and on grantee
programs. Today my remarks are based on our issued reports.[Footnote 6]
Specifically, I will discuss (1) the implementation of the MAI
provisions in RWTMA and (2) grantees' experiences under the Part D
administrative expense cap.
For our work reviewing the implementation of RWTMA's MAI provisions, we
conducted a Web-based survey of fiscal year 2007 Part A and B grantees
to learn how the grantees applied for funds, distributed funds to
service providers, and provided oversight, and what services they
provided prior to and after the enactment of RWTMA. We also analyzed
the effect on funding amounts of the changes made by RWTMA to MAI
grants. Additionally, we reviewed HRSA's policies and reporting
requirements under MAI for Part A and B grantees. We interviewed staff
from selected grantees for Parts A and B to determine how funds were
distributed and how grantees provided oversight. We interviewed staff
from national organizations with HIV/AIDS expertise. We also
interviewed selected grantees under Part A, B, C, D, and F about
services they provided under MAI prior to and after the enactment of
RWTMA. We interviewed HRSA officials about implementation of MAI and
reviewed Part A and B MAI competitive grant applications for fiscal
year 2007.
For our review of grantees' experiences under the Part D administrative
expense cap, we surveyed all 90 Part D grantees, collecting information
and opinions about the administrative expense cap for fiscal year 2007,
the first year the administrative cap was in effect. 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. We reviewed grantees' fiscal year
2007 grant applications, which contained their proposed budgets for
their fiscal year 2007 spending, and identified the administrative
expenses and indirect costs that grantees reported to HRSA in these
applications. We also reviewed HRSA's technical assistance tools and
training provided to grantees and project officers, as well as fiscal
year 2007 and 2008 grant application guidance.
We conducted the work for this statement from January 2008 to February
2009 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient and 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 objectives.
Background:
MAI grants were first distributed in conjunction with CARE Act funding
in fiscal year 1999. The RWTMA added provisions on MAI funding to the
CARE Act, authorizing specific amounts for the purpose of carrying out
activities to evaluate and address the disproportionate impact of HIV/
AIDS on, and the disparities in access, treatment, care, and outcomes
for, racial and ethnic minorities. The amount of CARE Act funds used
for MAI grants has increased from $24 million in fiscal year 1999 to
$131 million in fiscal year 2007. The MAI provides funding through five
parts (A, B, C, D, and F) of the CARE Act. Prior to the enactment of
RWTMA, HRSA awarded Part A and B MAI funds to Part A and B grantees
according to a formula that was solely based on the demographic
characteristics of the grantees' jurisdictions, out of funds otherwise
available for Parts A and B; those that received other Part A and Part
B funds received MAI funds without having to file separate
applications. The CARE Act now requires HRSA to award MAI funds under
Parts A and B according to a competitive process. Under this new
process, HRSA evaluates grantee applications for MAI funds in addition
to the demographic characteristics of the jurisdictions.[Footnote 7]
Through the CARE Act, HRSA 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.[Footnote 8] The 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.[Footnote 9]
Implementation of the MAI Provisions:
The new competitive process for awarding MAI funds to grantees under
Parts A and B, altered MAI funding amounts from what they would have
been under the old formula-based process, increased administrative
requirements for grantees, and resulted in continued funding for
existing initiatives to reduce health disparities for minorities. In
determining the award amounts under the new process, HRSA considered
the number of minorities with HIV/AIDS living in the grantee
metropolitan area, state, or territory or associated jurisdiction,
along with the MAI applications grantees were required to file. The new
competitive grant applications sometimes resulted in considerable
differences in grantees' share of MAI funds from what they would have
received under the old process. For example, in fiscal year 2007,
Phoenix received $127,578 (39.8 percent) less than it would have
received under the old formula, while Houston received $154,018 (10.9
percent) more. Part A and B grantees that received MAI funding told us
that the administrative requirements increased significantly because of
the new process. These included a new MAI grant application and
reporting requirements. All Part A and B grantees that applied for MAI
funding received it, but some Part B grantees decided that the
administrative requirements, including a separate application for MAI
funds, were not worth the amount of funds that they expected to receive
and therefore chose not to apply.
Grantees said that they generally funded the same service providers and
initiatives to reduce minority health disparities after RWTMA as they
had in prior years. MAI grantees continued to fund a range of core
medical services, which include essential medical care services, and
support services, which are services needed for individuals with HIV/
AIDS to achieve their medical outcomes. Consistent with HRSA guidance,
the types of services funded under MAI generally did not differ from
services provided with other CARE Act funds.
Implementation of the Part D Administrative Expense Cap:
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 required 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. 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.
In a survey of Part D grantees, we found that grantees 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.
Mr. Chairman, this completes my prepared remarks. I would be happy to
respond to any questions you or other members of the subcommittee may
have at this time.
GAO Contacts and Staff Acknowledgments:
For more information regarding this testimony, please contact Marcia
Crosse, (202) 512-7114 or crossem@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this statement. In addition, Thomas Conahan, Assistant
Director; Robert Copeland, Assistant Director; Helen Desaulniers; Drew
Long; Eden Savino; and Jennifer Whitworth made key contributions to
this testimony.
[End of section]
Footnotes:
[1] Pub. L. No. 101-381, 104 Stat. 576 (codified as amended at 42
U.S.C. §§ 300ff through 300ff-121). The 1990 CARE Act added Title XXVI
to the Public Health Service Act. Unless otherwise indicated,
references to the CARE Act are to the current Title XXVI.
[2] Pub. L. No. 109-415, 120 Stat. 2767. The CARE Act programs had
previously been 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).
[3] An EMA is a metropolitan area with a population of 50,000 or more
that had more than 2,000 AIDS cases reported in the most recent 5-year
period. The 2,000 AIDS cases criterion does not include cases of HIV
that have not progressed to AIDS. RWTMA created a new program for TGAs.
A TGA is a metropolitan area with a population of 50,000 or more, which
had 1,000 to 1,999 AIDS cases reported in the most recent 5-year
period. In fiscal year 2007, there were 22 EMAs and 34 TGAs according
to HRSA.
[4] Part E does not provide for funding for HIV/AIDS services but
rather includes provisions to address various administrative functions.
[5] Among other things, RWTMA also changed hold-harmless provisions
that protected formula funding for certain metropolitan areas.
Subsequent to RWTMA, appropriations acts also limited the decreases in
total funding (formula and non-formula) for metropolitan areas. See
GAO, Ryan White Care Act: Impact of Legislative Funding Proposal on
Urban Areas, [hyperlink, http://www.gao.gov/products/GAO-08-137R]
(Washington, D.C.: October 5, 2007); GAO, Ryan White CARE Act:
Estimated Effect of Proposed Stop-Loss Provision on Urban Areas,
[hyperlink, http://www.gao.gov/products/GAO-09-472R] (Washington, D.C.:
March 6, 2009); GAO, Ryan White CARE Act: Estimated Effect of Proposed
Stop-Loss Provision in H.R. 3293 on Urban Areas, [hyperlink,
http://www.gao.gov/products/GAO-09-947R] (Washington, D.C.: August 3,
2009).
[6] GAO, Ryan White Care Act: Implementation of the New Minority AIDS
Initiative Provisions, [hyperlink,
http://www.gao.gov/products/GAO-09-315] (Washington, D.C.: Mar. 27,
2009); and GAO, Ryan White Care Act: First-Year Experiences under the
Part D Administrative Expense Cap, [hyperlink,
http://www.gao.gov/products/GAO-09-140] (Washington D.C.: Dec. 19,
2008).
[7] The way HRSA awards MAI funds under Parts C, D, and F remains
unchanged. The Part C, D, and F MAI funds are awarded through a
competitive process as a component of the competitive grant award for
the base parts C, D, and F.
[8] 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. § 300 ff-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.
[9] 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."
[End of section]
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