Ryan White CARE Act
Effects of Certain Funding Provisions on Grant Awards Gao ID: GAO-09-894 September 18, 2009Funds are made available under the Ryan White Comprehensive AIDS Resources Emergency Act of 1990 (CARE Act) for individuals affected by HIV/AIDS. Part A provides for grants to metropolitan areas and Part B provides for grants to states and territories and associated jurisdictions for HIV/AIDS services and for AIDS Drug Assistance Programs (ADAP). The Ryan White HIV/AIDS Treatment Modernization Act of 2006 (RWTMA) reauthorized CARE Act programs for fiscal years 2007 through 2009. RWTMA requires name-based HIV case counts for determining CARE Act funding, but an exemption allows the use of code-based case counts through fiscal year 2009. RWTMA formulas include hold-harmless provisions that protect grantees' funding at specified levels. RWTMA also included provisions under which Part A and B grantees with unobligated balances over 2 percent at the end of the grant year incur a penalty in future funding. GAO was asked to examine CARE Act funding provisions. This report provides information on (1) how many Part B grantees collect and use name-based HIV case counts for CARE Act funding; (2) the distribution of Part A hold-harmless funding; and (3) reductions in Part B grantees' funding due to unobligated balance provisions. GAO reviewed agency documents and analyzed data on CARE Act funding. GAO interviewed 19 grantees chosen by geography, number of HIV/AIDS cases, and other criteria. GAO also interviewed federal government officials and other experts.
Forty-seven of the total 59 Part B grantees had the Health Resources and Services Administration (HRSA) use their name-based HIV case counts to determine CARE Act formula funding for fiscal year 2009. The remaining 12 grantees had HRSA use their code-based HIV case counts to determine fiscal year 2009 CARE Act funding. If the exemption permitting code-based reporting is not extended, it is likely that future fiscal year funding will be based exclusively on name-based counts. Any Part B grantees who currently have name-based HIV reporting systems, but that had not been collecting name-based HIV case counts long enough to include all cases, could face a reduction in fiscal year 2010 funding. Part A hold-harmless funding was more widely distributed among eligible metropolitan areas (EMA) in fiscal year 2009 than in fiscal year 2004, the last year for which we reported this information. Seventy-one percent of EMAs received hold-harmless funding in fiscal year 2009, whereas 41 percent received hold-harmless funding in fiscal year 2004. In fiscal year 2009, $24,836,500 in hold-harmless funding was distributed compared to $8,033,563 in fiscal year 2004. However, the range of CARE Act hold-harmless funding among EMAs, as measured by funding per case, was smaller in 2009 than in 2004. In fiscal year 2009, EMAs received from $0 to $208 in hold-harmless funding per case. In fiscal year 2004, EMAs received between $0 and $1,020 in hold-harmless funding per case. The hold-harmless funding resulted in EMAs receiving formula funding ranging from $645 to $854 per case in fiscal year 2009 and from $1,221 to $2,241 per case in fiscal year 2004. Sixteen Part B grantees had reductions in their grant year 2009 funding due to their unobligated balances at the end of grant year 2007. Part B base grant penalties ranged from $6,433 in Palau to $1,493,935 in Ohio. ADAP base grant penalties ranged from $26,233 in Maine to $12,670,248 in Pennsylvania. Part B grantees with unobligated funds provided various reasons for these balances, and said that some of these reasons were beyond their control. Grantees and HRSA stated that a requirement to spend drug rebate funds before obligating federal funds makes it more difficult to avoid unobligated balances. Twenty- seven ADAPs purchase drugs exclusively through a federal drug discount program, under which they pay full price and receive a rebate at some point in the future. HRSA sought to address the interaction between drug rebate funds and the RWTMA unobligated balance provisions by requesting from the Department of Health and Human Services (HHS) permission to seek an exemption for grantees from the relevant regulations from the Office of Management and Budget. However, HHS denied this request, stating that the justification HRSA presented for requesting the exemption was "not compelling." HHS provided technical comments on a draft of this report, which GAO incorporated as appropriate.
GAO-09-894, Ryan White CARE Act: Effects of Certain Funding Provisions on Grant Awards
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
September 2009:
Ryan White Care Act:
Effects of Certain Funding Provisions on Grant Awards:
GAO-09-894:
GAO Highlights:
Highlights of GAO-09-894, a report to congressional requesters.
Why GAO Did This Study:
Funds are made available under the Ryan White Comprehensive AIDS
Resources Emergency Act of 1990 (CARE Act) for individuals affected by
HIV/AIDS. Part A provides for grants to metropolitan areas and Part B
provides for grants to states and territories and associated
jurisdictions for HIV/AIDS services and for AIDS Drug Assistance
Programs (ADAP). The Ryan White HIV/AIDS Treatment Modernization Act of
2006 (RWTMA) reauthorized CARE Act programs for fiscal years 2007
through 2009. RWTMA requires name-based HIV case counts for determining
CARE Act funding, but an exemption allows the use of code-based case
counts through fiscal year 2009. RWTMA formulas include hold-harmless
provisions that protect grantees‘ funding at specified levels. RWTMA
also included provisions under which Part A and B grantees with
unobligated balances over 2 percent at the end of the grant year incur
a penalty in future funding.
GAO was asked to examine CARE Act funding provisions. This report
provides information on (1) how many Part B grantees collect and use
name-based HIV case counts for CARE Act funding; (2) the distribution
of Part A hold-harmless funding; and (3) reductions in Part B grantees‘
funding due to unobligated balance provisions. GAO reviewed agency
documents and analyzed data on CARE Act funding. GAO interviewed 19
grantees chosen by geography, number of HIV/AIDS cases, and other
criteria. GAO also interviewed federal government officials and other
experts.
What GAO Found:
Forty-seven of the total 59 Part B grantees had the Health Resources
and Services Administration (HRSA) use their name-based HIV case counts
to determine CARE Act formula funding for fiscal year 2009. The
remaining 12 grantees had HRSA use their code-based HIV case counts to
determine fiscal year 2009 CARE Act funding. If the exemption
permitting code-based reporting is not extended, it is likely that
future fiscal year funding will be based exclusively on name-based
counts. Any Part B grantees who currently have name-based HIV reporting
systems, but that had not been collecting name-based HIV case counts
long enough to include all cases, could face a reduction in fiscal year
2010 funding.
Part A hold-harmless funding was more widely distributed among eligible
metropolitan areas (EMA) in fiscal year 2009 than in fiscal year 2004,
the last year for which we reported this information. Seventy-one
percent of EMAs received hold-harmless funding in fiscal year 2009,
whereas 41 percent received hold-harmless funding in fiscal year 2004.
In fiscal year 2009, $24,836,500 in hold-harmless funding was
distributed compared to $8,033,563 in fiscal year 2004. However, the
range of CARE Act hold-harmless funding among EMAs, as measured by
funding per case, was smaller in 2009 than in 2004. In fiscal year
2009, EMAs received from $0 to $208 in hold-harmless funding per case.
In fiscal year 2004, EMAs received between $0 and $1,020 in hold-
harmless funding per case. The hold-harmless funding resulted in EMAs
receiving formula funding ranging from $645 to $854 per case in fiscal
year 2009 and from $1,221 to $2,241 per case in fiscal year 2004.
Sixteen Part B grantees had reductions in their grant year 2009 funding
due to their unobligated balances at the end of grant year 2007. Part B
base grant penalties ranged from $6,433 in Palau to $1,493,935 in Ohio.
ADAP base grant penalties ranged from $26,233 in Maine to $12,670,248
in Pennsylvania. Part B grantees with unobligated funds provided
various reasons for these balances, and said that some of these reasons
were beyond their control. Grantees and HRSA stated that a requirement
to spend drug rebate funds before obligating federal funds makes it
more difficult to avoid unobligated balances. Twenty-seven ADAPs
purchase drugs exclusively through a federal drug discount program,
under which they pay full price and receive a rebate at some point in
the future. HRSA sought to address the interaction between drug rebate
funds and the RWTMA unobligated balance provisions by requesting from
the Department of Health and Human Services (HHS) permission to seek an
exemption for grantees from the relevant regulations from the Office of
Management and Budget. However, HHS denied this request, stating that
the justification HRSA presented for requesting the exemption was ’not
compelling.“
HHS provided technical comments on a draft of this report, which GAO
incorporated as appropriate.
View [hyperlink, http://www.gao.gov/products/GAO-09-894] or key
components. For more information, contact Marcia Crosse at (202) 512-
7114 or crossem@gao.gov.
[End of section]
Contents:
Letter:
Background:
Not All Grantees Had HRSA Use Their Name-Based HIV Case Counts for
Fiscal Year 2009 Formula Funding, but Most Part B Grantees Are
Collecting Name-Based HIV Case Counts in Their Reporting Systems:
Hold-Harmless Funding Was More Widely Distributed among EMAs in Fiscal
Year 2009 Than in Fiscal Year 2004, but the Range of Funding
Differences per Case Decreased:
Sixteen Grantees Had Reductions in Their 2009 Grants Due to Their
Unobligated Part B Balances at the End of Grant Year 2007:
Agency Comments:
Appendix I: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: RWTMA Unobligated Balance Provision Triggers and Penalties as
Applied by HRSA:
Table 2: Grantees That Had HRSA Use Code-Based HIV Case Counts to
Determine CARE Act Formula Funding, Fiscal Year 2009:
Table 3: EMA Base Grant and Hold-Harmless Funding, Fiscal Years 2009
and 2004:
Table 4: EMA Base Grant and Hold-Harmless Funding per Case, Fiscal
Years 2009 and 2004:
Table 5: Hold-Harmless Funding as a Percent of EMA's Base Grants in
Fiscal Year 2009 and 2004:
Table 6: Part B Grantees' Unobligated Balances in Grant Year 2007:
Table 7: Part B Grantees with Unobligated Part B Base Grant Penalties
in Grant Year 2009:
Table 8: Part B ADAP Base Grant Penalties in Grant Year 2009:
Figure:
Figure 1: Time Line for 2007 Part B Grants and Unobligated Balance
Provisions:
Abbreviations:
ADAP: AIDS Drug Assistance Program:
AIDS: acquired immunodeficiency syndrome:
CARE Act: Ryan White Comprehensive AIDS Resources Emergency Act of
1990:
CDC: Centers for Disease Control and Prevention:
EMA: eligible metropolitan area:
FSR: Financial Status Report:
HHS: Department of Health and Human Services:
HIV: human immunodeficiency virus:
HRSA: Health Resources and Services Administration:
OIG: Office of Inspector General:
RWTMA: Ryan White HIV/AIDS Treatment Modernization Act of 2006:
TGA: transitional grant area:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 18, 2009:
The Honorable Michael B. Enzi:
Ranking Member:
Committee on Health, Education, Labor, and Pensions:
United States Senate:
The Honorable Richard Burr:
United States Senate:
The Honorable Tom A. Coburn:
United States Senate:
The Honorable Lisa Murkowski:
United States Senate:
It has been more than 28 years since the first cases of acquired
immunodeficiency syndrome (AIDS) in the United States were reported in
June 1981. Since then, approximately 1.7 million Americans have been
infected with human immunodeficiency virus (HIV), including more than
580,000 who have died.[Footnote 1] The Centers for Disease Control and
Prevention (CDC) estimates that approximately 1.1 million people were
living with HIV infection in the United States at the end of 2006, and
that there were 56,300 new HIV infections in that year.[Footnote 2] CDC
estimates HIV/AIDS case counts based on information it receives from
states, the District of Columbia, and the U.S. territories and
associated jurisdictions.
The Ryan White Comprehensive AIDS Resources Emergency Act of 1990 (CARE
Act), administered by the Department of Health and Human Services's
(HHS) Health Resources and Services Administration (HRSA), was enacted
to address the needs of jurisdictions, health care providers, and
people with HIV/AIDS and their family members.[Footnote 3] 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 in fiscal year
2009. CARE Act programs have been reauthorized three times (1996, 2000,
and 2006) and are scheduled to be reauthorized again in 2009.[Footnote
4]
The Ryan White HIV/AIDS Treatment Modernization Act of 2006 (RWTMA)
reauthorized CARE Act programs for fiscal year 2007 through fiscal year
2009, including grants for jurisdictions through Part A and Part B.
[Footnote 5] Part A of the CARE Act 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 6] Most CARE Act funding is
distributed either as base or supplemental grants. Base grants are
distributed by formula.[Footnote 7] Supplemental grants are generally
awarded through a competitive process based on the demonstration of
severe need and other criteria. Base grants for EMAs, but not TGAs, are
protected by a hold-harmless provision that protects grantees' funding
at specified levels. Base grants for EMAs are distributed among
grantees according to each grantee's share of HIV/AIDS cases among all
EMAs resulting in equal funding per case for all grantees. After the
preliminary funding level for an EMA is calculated based on its
percentage of HIV/AIDS cases, the amount is compared to the funding
levels guaranteed by the hold-harmless provision. If the preliminary
funding level is less than the guaranteed amount, the base grant is
increased to the guaranteed amount and results in funding not being
distributed equally per case. The funds used to meet the EMA hold-
harmless requirement are deducted from the funds that would otherwise
be available to EMAs and TGAs as supplemental grants before these
grants are awarded. Part B provides for grants to states, the District
of Columbia, and U.S. territories and associated jurisdictions to
improve quality, availability, and organization of HIV/AIDS services.
RWTMA required that, beginning in fiscal year 2007, CARE Act Part A and
Part B formula funding be based on the number of living HIV and AIDS
cases in a grantee's jurisdiction. Previously, formula funding was
based solely on the number of living AIDS cases reported in that
jurisdiction. CDC provides HRSA with the number of living name-based
HIV/AIDS cases in each jurisdiction and HRSA uses these counts to
determine CARE Act Part A and Part B formula funding.[Footnote 8] While
prior to RWTMA all grantees collected AIDS counts by name, not all
grantees collected HIV counts by name. Instead, some collected HIV
counts by code; that is, using a coded identifier. Code-based case
counts are not accepted by CDC because CDC does not consider them to be
accurate and reliable, primarily because they include duplicate case
counts.[Footnote 9] RWTMA required Part B grantees to report name-based
HIV case counts to be used by HRSA when determining the amount of base
grants.[Footnote 10] However, RWTMA provided for a transition period
from a code-based to a name-based system. States without an accurate
and reliable name-based HIV reporting system are exempt from the name-
based reporting requirement if they can show specified progress toward
such reporting. RWTMA provided for such an exemption through 2009, the
period for which it reauthorized CARE Act programs.[Footnote 11]
Another change in RWTMA concerned the obligation of funds by Part A and
Part B grantees. In the past, some CARE Act grantees did not obligate
all of their funds in some years, while others obligated all of their
funds.[Footnote 12] RWTMA provided that base and supplemental grant
funds were available for obligation by the grantee for a 1-year period
beginning on the date awarded funds first became available to the
grantee (i.e., the grant year). It also required HRSA to cancel any
unobligated balances at the end of the grant year, recover funds that
had been disbursed to grantees, and redistribute these funds to
grantees in need as supplemental grants.[Footnote 13] These RWTMA
unobligated balance provisions apply to base and supplemental grants
under Parts A and B.[Footnote 14]
As Congress prepares to reauthorize CARE Act programs, you asked us to
examine how various elements of the law affect CARE Act awards. In this
report, we provide information on (1) how many Part B grantees had HRSA
use their name-based HIV case counts to determine fiscal year 2009 CARE
Act formula funding and how many Part B grantees are collecting name-
based HIV case counts in their reporting systems; (2) the distribution
of CARE Act hold-harmless funding among EMAs and the extent of funding
differences per case in EMAs in fiscal years 2009 and 2004 resulting
from hold-harmless provisions; and (3) the reductions in Part A and
Part B grantees' funding due to the RWTMA unobligated balance
provisions based on grantees' unobligated balances at the end of grant
year 2007.
To examine how many Part B grantees had HRSA use their name-based HIV
case counts to determine fiscal year 2009 CARE Act formula funding and
how many Part B grantees are collecting name-based HIV case counts in
their reporting systems, we obtained and reviewed data from CDC and
HRSA on the number of Part B grantees that have such systems and the
dates they began collecting name-based HIV case counts. We also
obtained data from CDC and HRSA on which grantees had name-based HIV
reporting systems used to generate the case counts for determining CARE
Act formula funding. We reviewed published information on HIV reporting
systems. We also reviewed descriptions of steps CDC and HRSA are taking
to help grantees convert to a name-based reporting system. We
interviewed CDC and HRSA officials knowledgeable about the data
reporting practices of grantees and the use of these data for CARE Act
funding. We also interviewed officials from the National Alliance of
State and Territorial AIDS Directors, the Kaiser Family Foundation, and
other organizations.
To examine the distribution of CARE Act Part A hold-harmless funding
among EMAs and determine the extent of formula funding differences per
case in fiscal years 2009 and 2004 resulting from hold-harmless
provisions, we obtained and reviewed data from HRSA on Part A grants
for fiscal year 2009. We reviewed the amount of funding distributed to
each EMA based on its share of HIV/AIDS cases, amount of hold-harmless
funding for each EMA, and HIV/AIDS case counts used by HRSA to
determine fiscal year 2009 funding. We compared the funding per HIV/
AIDS case received by each EMA to determine whether funding departs
from equal funding per case. We also determined the effect of the hold-
harmless provision on each EMA by comparing funding with the hold-
harmless provision in place to what it would be without the hold-
harmless provision in place. To determine how the distribution of hold-
harmless funding and funding differences per case have changed over
time, we compared EMAs' funding for fiscal year 2009 to fiscal year
2004 funding. We chose fiscal year 2004 because we reported on 2004 in
an earlier study and because it preceded RWTMA in 2006.[Footnote 15] We
interviewed HRSA officials knowledgeable about Part A grants and the
funding formula. We reviewed the data and asked HRSA officials follow-
up questions about the hold-harmless provision and funding
calculations, and determined that the data were sufficiently reliable
for our purposes.
To determine the reductions in Part A and Part B grantees' funding due
to the RWTMA unobligated balance provisions, we reviewed HRSA
documentation on grantees' unobligated balances at the end of the 2007
grant year. We also reviewed the effect of these 2007 balances on
grantees' funding for fiscal year 2009. We interviewed HRSA officials
and others knowledgeable about the unobligated balance provisions. We
also interviewed 6 Part A grantees and 13 Part B grantees, which we
chose based on their geographic location, number of HIV/AIDS cases,
whether the grantee had an unobligated balance over 2 percent at the
end of the 2007 grant year, and how the grantee purchases drugs for its
clients with HIV/AIDS.[Footnote 16] We reviewed the data provided by
HRSA and asked follow-up questions related to the calculation of
unobligated balances, and determined that the data were sufficiently
reliable for our purposes.
We conducted this performance audit from April 2009 through September
2009 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.
Background:
CARE Act base grants are distributed through a formula that includes
HIV/AIDS case counts. Through its HIV/AIDS surveillance system, CDC
receives case counts from states, the District of Columbia, and U.S.
territories and associated jurisdictions.[Footnote 17] CDC provides
these case counts to HRSA so that HRSA may determine CARE Act formula
grant amounts. In fiscal year 2009, HRSA distributed approximately $410
million by formula under Part A of the CARE Act and about $1.1 billion
by formula under Part B.
Fifty-six metropolitan areas received Part A funds in fiscal year 2009.
Twenty-four of the metropolitan areas were classified by HRSA as EMAs
and 32 as TGAs.[Footnote 18] For fiscal years 2008 and 2009, the hold-
harmless provision provided that an EMA receive at least 100 percent of
the amount it had received as its base grant, including hold harmless
funding, for fiscal year 2007.[Footnote 19]
Part B of the CARE Act provides funds to all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the U.S. Virgin
Islands, and 5 other territories and associated jurisdictions.[Footnote
20] Part B grants include grants for HIV/AIDS services that are awarded
by formula, AIDS Drug Assistance Program (ADAP) grants that are awarded
by formula,[Footnote 21] emerging community grants that are awarded by
formula for HIV/AIDS services,[Footnote 22] Part B supplemental grants
for HIV/AIDS services, and ADAP supplemental grants. RWTMA contained a
hold-harmless provision that protects funding for Part B base grants
and ADAP base grants. For fiscal years 2008 and 2009, a grantee's total
Part B base and ADAP base grants would be at least 100 percent of the
total of such grants in fiscal year 2007.
One condition of an ADAP grant is that grantees use every means at
their disposal to secure the best price available for all products on
their formularies. Best prices are determined by the prices that can be
obtained under the 340B drug pricing program.[Footnote 23] Generally,
an ADAP purchasing drugs through the 340B program can use a direct
purchasing option or rebate option. Under the 340B direct purchase
option, ADAPs purchase drugs from drug manufacturers or through a third-
party such as a drug purchasing agent. Using the 340B direct purchase
option, ADAPs receive the 340B price discount up front. Under the
rebate option, ADAPs typically contract with entities such as a
pharmacy network or pharmacy benefits manager for purchase of covered
drugs. ADAPs later request a rebate consistent with the section 340B
price from the drug manufacturers.
Due to RWTMA's requirement that CARE Act formula funding be determined
by using name-based HIV/AIDS counts, grantees collecting HIV case
counts by code must transition to such a reporting system. Although all
grantees had name-based AIDS reporting systems, at the time of RWTMA
seven grantees still used code-based HIV reporting systems, while 17
others had recently transitioned to a name-based HIV reporting system.
[Footnote 24] It can take several years to transition to a name-based
system because grantees must identify by name each case originally
reported by code and then enter each case into the new, name-based
reporting system. During the transition period from a code-based to a
name-based system, a grantee can report its code-based HIV counts
directly to HRSA and have these counts used to determine funding for
fiscal years 2007 through 2009. However, in accordance with RWTMA, for
each grantee relying on a code-based system, HRSA made a 5 percent
reduction in the number of living HIV cases to adjust for potential
duplicate reporting in systems that collect code-based case counts,
thus reducing the award. RWTMA allowed the use of code-based HIV case
counts through fiscal year 2009; it also provided that the status of a
grantee under RWTMA for purposes of the transition period may not be
considered after fiscal year 2009. Grantees that are transitioning to a
name-based HIV reporting system determine when their name-based counts
will be used by HRSA to calculate CARE Act formula funding. If the
exemption permitting code-based reporting is not extended, it is likely
that future fiscal year funding will be based exclusively on name-based
counts. A grantee that had not completed the transition from code-to
name-based case counts could face a reduction in funding because its
name-based HIV reporting system could contain fewer cases than its code-
based system.[Footnote 25]
Once a grantee has transitioned to a name-based HIV reporting system,
its system must be determined to be operational, as well as accurate
and reliable, in order for a grantee's name-based case counts to be
used for funding purposes. To be operational, CDC, in consultation with
the grantee's HIV/AIDS surveillance program and epidemiologist,
considers several factors, such as the grantee's process for ensuring
HIV-positive individuals are only counted once and the number of
providers and laboratories within the grantee's jurisdiction diagnosing
and reporting HIV positive diagnoses to the grantee.[Footnote 26] The
date CDC allows grantees to report name-based HIV cases to it is
considered the date the reporting system becomes operational. Once the
name-based HIV reporting system is declared operational, a grantee can
determine that its reporting system is accurate and reliable (i.e., its
case counts are complete), and can elect to have CDC send HRSA its name-
based case counts to determine CARE Act formula funding. A grantee may
declare its system to be accurate and reliable anytime after the system
has been determined to be operational. However, regardless of the
grantee's assessment, CDC considers a HIV reporting system to be
accurate and reliable no later than 4 years after the grantee began
collecting name-based HIV case counts. After a grantee determines that
its system is accurate and reliable, or after the 4-year period, CDC
transmits the HIV case counts to HRSA to be used in the funding
formulas.
RWTMA required HRSA to cancel funds from grantees' awards that are
unobligated at the end of the grant year, recover funds that had been
disbursed, and redistribute these funds to other grantees. These
unobligated balance provisions apply to base and supplemental grant
awards under Parts A and B. For 2007 grants, HRSA required grantees to
estimate and report their unobligated balance to HRSA 60 days prior to
the end of the grant year. Grantees were also required to submit a
Financial Status Report (FSR) to HRSA 90 days after the grant year
ends. Grantees must report their actual unobligated balance on the FSR
and the unobligated balance can be updated by the grantee for up to 6
months after the FSR is due.[Footnote 27] Unobligated balances of grant
awards are canceled (with disbursed funds recovered) and then
redistributed to grantees who apply for them as additional amounts for
supplemental grants under Part A and Part B in the next fiscal year
after the unobligated funds were reported.
For base grant funds, the impact of unobligated balances differs based
on whether the unobligated amount is more than 2 percent of the grant.
All unobligated base grant funds must be canceled and recovered by HRSA
if the grantee has not been granted a carryover waiver.[Footnote 28]
HRSA takes this step following receipt of the FSR. In addition to
having unobligated funds canceled and recovered unless a carryover
waiver is granted, grantees with unobligated Part A, Part B, and ADAP
base grant funds in excess of 2 percent of the grant award incur a
penalty--a corresponding reduction in grant funds for the first fiscal
year beginning after the fiscal year in which the Secretary receives
the FSR.[Footnote 29] Grantees are assessed the reduction even if they
were granted a waiver. Because FSRs are submitted 90 days after the
grant year ends, grants for the next year have already been made by the
time HRSA has received the information necessary to determine which
grantees have an unobligated balance greater than 2 percent. As a
result, there is a 1 year lag time between when the unobligated balance
occurs and when the penalty is assessed. For example, if a grantee had
an unobligated balance of 3 percent in grant year 2007, the grantee's
FSR would have been filed in grant year 2008, and the dollar amount of
the 2007 unobligated balance would have been deducted from the
grantee's award in grant year 2009. Figure 1 shows such a time line for
2007 Part B grant distribution and the unobligated balance provisions.
Figure 1: Time Line for 2007 Part B Grants and Unobligated Balance
Provisions:
[Refer to PDF for image: illustration]
Federal fiscal year: 2007;
Part B grant year: April, 2007;
April 1: Grantee receives the grant award. The 12-month period to
obligate funds begins.
Federal fiscal year: 2008;
Part B grant year: January 2007;
January 30: 60 days prior to the end of the grant year, grantees file
their projected unobligated balance of Part B base and ADAP base
awards. Grantees may file a carryover waiver application to retain any
unobligated Part B base and ADAP base grants.
Federal fiscal year: 2008;
Part B grant year: June, 2008;
June 29: 90 days after the Part B grant year ends, grantees must file a
Financial Status Report (FSR), which includes the exact amount of the
grantee‘s unobligated balance. Any unobligated balances at this point
are canceled and amounts disbursed are returned to the Secretary,
unless the grantee has applied for a carryover waiver and it has been
approved. The FSR is the basis for determining the applicability of the
unobligated balances provisions.
Federal fiscal year: 2009;
Part B grant year: April, 2009;
April 1: Grantees with unobligated balances over 2% in 2007 are
assessed a corresponding penalty in 2009.
Source: GAO analysis of HRSA guidance.
[End of figure]
In addition, grantees with unobligated balances of greater than 2
percent of Part A or Part B base grants are ineligible to receive
supplemental grants for the year in which the reduction takes place.
For Part A grantees this means that they are not eligible to receive
Part A supplemental grants. For Part B base grantees this results in
ineligibility to receive Part B supplemental grants. For Part B ADAP
grantees, an unobligated balance of greater than 2 percent does not
result in ineligibility for ADAP supplemental grants. Instead,
ineligibility for the ADAP supplemental grant is based on a grantee not
obligating at least 75 percent of its entire Part B grant award within
120 days.[Footnote 30] Table 1 lists the triggers and penalties for the
unobligated balance provisions.
Table 1: RWTMA Unobligated Balance Provision Triggers and Penalties as
Applied by HRSA:
RWTMA Part: Part A Base Grant;
Trigger: Grantee reports unobligated balance of greater than 2 percent
of base grant on the FSR, which is due 90 days after conclusion of the
grant year;
Unobligated balance penalty:
1. Reduction in base grant equal to the amount of the unobligated
balance;
2. Ineligibility for Part A supplemental award.
RWTMA Part: Part B Base and ADAP Base Grant;
Trigger: Grantee reports unobligated balance of greater than 2 percent
of total Part B base and ADAP base grant funding on the FSR, which is
due 90 days after conclusion of the grant year;
Unobligated balance penalty:
1. Reduction in base grants equal to the amount of the unobligated
balance (with reductions from Part B base and ADAP base grants as
applicable);
2. Ineligibility for Part B supplemental award.
Source: GAO analysis of HRSA guidance.
Note: Although there were unobligated balances for grant year 2007, the
penalties were applied to the 2009 grants because HRSA does not require
grantees' FSRs until 90 days after the grant year has ended, at which
time the grants for 2008 had already been awarded.
Since its inception, the CARE Act has required Part B grantees to
obligate 75 percent of their entire Part B grant within certain time
frames and repay any unobligated balance to HRSA for reallocation as
supplemental grants. States had 150 days to meet this requirement in
the first year of the program and have had 120 days in all subsequent
years. HRSA requires Part B grantees to report this obligation within
150 days on an FSR. In addition, grantees that do not obligate this 75
percent are ineligible for ADAP supplemental grants.
[End of table]
Not All Grantees Had HRSA Use Their Name-Based HIV Case Counts for
Fiscal Year 2009 Formula Funding, but Most Part B Grantees Are
Collecting Name-Based HIV Case Counts in Their Reporting Systems:
Most Part B grantees were collecting name-based HIV case counts in
their reporting systems as of December 31, 2007, but not all grantees
had HRSA use these case counts to determine fiscal year 2009 CARE Act
funding.[Footnote 31] For 47 of the 59 Part B grantees, HRSA used name-
based HIV case counts, as provided by CDC, to determine CARE Act
funding. The remaining 12 grantees had HRSA use their code-based HIV
case counts to determine fiscal year 2009 CARE Act funding. Seven of
the 12 grantees--California, the District of Columbia, Illinois,
Maryland, Massachusetts, Oregon, and Rhode Island--were collecting name-
based HIV case counts as of December 31, 2007, but submitted their code-
based case counts to HRSA to determine CARE Act funding.[Footnote 32]
Five of the 12 grantees--Hawaii, Vermont, the Federated States of
Micronesia, Palau, and the Republic of the Marshall Islands--were not
collecting name-based case counts as of December 31, 2007.[Footnote 33]
Table 2 lists the 12 grantees for which code-based HIV case counts were
used for fiscal year 2009 CARE Act formula funding, and the month and
year that they began collecting name-based case counts. Each of these
12 grantees could require 4 years from the date they began collecting
name-based HIV case counts for their name-based HIV reporting systems
to be considered accurate and reliable. However, grantees can determine
that their reporting systems are accurate and reliable in less than 4
years.[Footnote 34]
Table 2: Grantees That Had HRSA Use Code-Based HIV Case Counts to
Determine CARE Act Formula Funding, Fiscal Year 2009:
Part B grantee: California;
Month and year grantee began collecting name-based HIV case counts:
April 2006.
Part B grantee: District of Columbia;
Month and year grantee began collecting name-based HIV case counts:
November 2006.
Part B grantee: Hawaii;
Month and year grantee began collecting name-based HIV case counts:
March 2008.
Part B grantee: Illinois;
Month and year grantee began collecting name-based HIV case counts:
January 2006.
Part B grantee: Maryland;
Month and year grantee began collecting name-based HIV case counts:
April 2007.
Part B grantee: Massachusetts;
Month and year grantee began collecting name-based HIV case counts:
January 2007.
Part B grantee: Oregon;
Month and year grantee began collecting name-based HIV case counts:
April 2006.
Part B grantee: Rhode Island;
Month and year grantee began collecting name-based HIV case counts:
July 2006.
Part B grantee: Vermont;
Month and year grantee began collecting name-based HIV case counts:
April 2008.
Part B grantee: Federated States of Micronesia;
Month and year grantee began collecting name-based HIV case counts: NA.
Part B grantee: Palau;
Month and year grantee began collecting name-based HIV case counts: NA.
Part B grantee: Republic of the Marshall Islands;
Month and year grantee began collecting name-based HIV case counts: NA.
Source: CDC.
Note: The Federated States of Micronesia, Palau, and the Republic of
the Marshall Islands are not currently collecting HIV cases by name. If
the exemption permitting code-based reporting is not extended, it is
likely that future fiscal year funding will be based exclusively on
name-based counts. Consequently, the Federated States of Micronesia,
Palau, and the Republic of the Marshall Islands' fiscal year 2010 base
funding would be based solely on their AIDS case counts.
[End of table]
Although 56 of the 59 Part B grantees are currently collecting name-
based HIV case counts,[Footnote 35] some grantees could face a
reduction in fiscal year 2010 funding if HRSA uses these counts to
determine fiscal year 2010 funding. RWTMA allows grantees to submit
code-based case counts to HRSA to determine funding for fiscal years
2007 through 2009; without an extension as part of the upcoming
reauthorization, it is likely that HRSA would determine CARE Act
funding for fiscal year 2010 using name-based case counts collected
through December 2008. However, this could be problematic for some
grantees. For example, as of December 2008, Vermont had only been
collecting name-based case counts for 8 months. If Vermont's system is
not considered to be accurate and reliable--which could take up to 4
years--but its December 2008 name-based case count is nevertheless used
to determine fiscal year 2010 funding, Vermont may not actually receive
funding commensurate with the number of HIV/AIDS cases in the state,
which is the intended basis for the formula grant. Further, its funding
may be a reduction from what it received for fiscal year 2009.
CDC has provided assistance for grantees transitioning from a code-
based to a name-based HIV reporting system. CDC has provided grantees
with technical assistance materials, ongoing assistance via conference
calls, and additional assistance upon request. According to CDC, the
District of Columbia and Massachusetts were the only Part B grantees
that requested additional assistance in transitioning to a name-based
system. CDC and HRSA plan to meet with grantee officials from the
Federated States of Micronesia, Palau, and the Republic of the Marshall
Islands to discuss HIV reporting.
Hold-Harmless Funding Was More Widely Distributed among EMAs in Fiscal
Year 2009 Than in Fiscal Year 2004, but the Range of Funding
Differences per Case Decreased:
Part A hold-harmless funding was more widely distributed among EMAs in
fiscal year 2009 than in fiscal year 2004. A larger percentage of EMAs
qualified for hold-harmless funding in fiscal year 2009 than in fiscal
year 2004, the last year for which we reported this information.
[Footnote 36] About 71 percent of EMAs received hold-harmless funding
in fiscal year 2009, while 41 percent received hold-harmless funding in
fiscal year 2004.[Footnote 37] Furthermore, the percentage of the total
hold-harmless funding received by the EMA with the most hold-harmless
funding was smaller in fiscal year 2009 than in fiscal year 2004. In
fiscal year 2009, New York received 52.7 percent of the hold-harmless
funding, while in fiscal year 2004, San Francisco received 91.6 percent
of the hold-harmless funding. In addition to hold-harmless funding
being more widely distributed in fiscal year 2009 than in fiscal year
2004, the total amount of hold-harmless funding provided to EMAs was
larger in fiscal year 2009 than in fiscal year 2004. In fiscal year
2009, $24,836,500 in hold-harmless funding was distributed compared to
$8,033,563 in fiscal year 2004.[Footnote 38] Table 3 lists the EMAs and
their base grant and hold-harmless funding in fiscal years 2009 and
2004.
Table 3: EMA Base Grant and Hold-Harmless Funding, Fiscal Years 2009
and 2004:
EMA: New York, New York;
Base grant (including hold-harmless funding), FY 2009[A]: $74,871,159;
Hold-harmless funding, FY 2009: $13,098,284;
Percent of hold-harmless funding, FY 2009: 52.7%;
Base grant (including hold-harmless funding), FY 2004: $60,276,790;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Los Angeles, California;
Base grant (including hold-harmless funding), FY 2009[A]: $24,264,522;
Hold-harmless funding, FY 2009: $0;
Percent of hold-harmless funding, FY 2009: 0%;
Base grant (including hold-harmless funding), FY 2004: $18,540,316;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Washington, D.C.;
Base grant (including hold-harmless funding), FY 2009[A]: $18,764,167;
Hold-harmless funding, FY 2009: $0;
Percent of hold-harmless funding, FY 2009: 0%;
Base grant (including hold-harmless funding), FY 2004: $14,431,645;
Hold-harmless funding, FY 2004: v0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Chicago, Illinois;
Base grant (including hold-harmless funding), FY 2009[A]: $17,524,988;
Hold-harmless funding, FY 2009: $0;
Percent of hold-harmless funding, FY 2009: 0%;
Base grant (including hold-harmless funding), FY 2004: $12,801,123;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Miami, Florida;
Base grant (including hold-harmless funding), FY 2009[A]: $16,015,311;
Hold-harmless funding, FY 2009: $587,606;
Percent of hold-harmless funding, FY 2009: 2.4%;
Base grant (including hold-harmless funding), FY 2004: $12,806,009;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Philadelphia, Pennsylvania;
Base grant (including hold-harmless funding), FY 2009[A]: $14,921,528;
Hold-harmless funding, FY 2009: $268,926;
Percent of hold-harmless funding, FY 2009: 1.1%;
Base grant (including hold-harmless funding), FY 2004: $12,038,992;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: San Francisco, California;
Base grant (including hold-harmless funding), FY 2009[A]: $14,672,553;
Hold-harmless funding, FY 2009: $3,571,649;
Percent of hold-harmless funding, FY 2009: 14.4%;
Base grant (including hold-harmless funding), FY 2004: $16,171,607;
Hold-harmless funding, FY 2004: $7,358,239;
Percent of hold-harmless funding, FY 2004: 91.6%.
EMA: Baltimore, Maryland;
Base grant (including hold-harmless funding), FY 2009[A]: $13,826,195;
Hold-harmless funding, FY 2009: $0;
Percent of hold-harmless funding, FY 2009: 0%;
Base grant (including hold-harmless funding), FY 2004: $10,195,952;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Houston, Texas;
Base grant (including hold-harmless funding), FY 2009[A]: $12,781,667;
Hold-harmless funding, FY 2009: $592,067;
Percent of hold-harmless funding, FY 2009: 2.4%;
Base grant (including hold-harmless funding), FY 2004: $9,416,722;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Atlanta, Georgia;
Base grant (including hold-harmless funding), FY 2009[A]: $12,224,515;
Hold-harmless funding, FY 2009: $697,534;
Percent of hold-harmless funding, FY 2009: 2.8%;
Base grant (including hold-harmless funding), FY 2004: $9,268,937;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: San Juan, Puerto Rico;
Base grant (including hold-harmless funding), FY 2009[A]: $9,415,738;
Hold-harmless funding, FY 2009: $2,271,091;
Percent of hold-harmless funding, FY 2009: 9.1%;
Base grant (including hold-harmless funding), FY 2004: $8,139,880;
Hold-harmless funding, FY 2004: $41,011;
Percent of hold-harmless funding, FY 2004: 0.5%.
EMA: Dallas, Texas;
Base grant (including hold-harmless funding), FY 2009[A]: $9,654,841;
Hold-harmless funding, FY 2009: $0;
Percent of hold-harmless funding, FY 2009: 0%;
Base grant (including hold-harmless funding), FY 2004: $6,425,600;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Fort Lauderdale, Florida;
Base grant (including hold-harmless funding), FY 2009[A]: $9,444,694;
Hold-harmless funding, FY 2009: $100,799;
Percent of hold-harmless funding, FY 2009: 0.4%;
Base grant (including hold-harmless funding), FY 2004: $7,330,631;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Boston, Massachusetts;
Base grant (including hold-harmless funding), FY 2009[A]: $9,091,554;
Hold-harmless funding, FY 2009: $30,093;
Percent of hold-harmless funding, FY 2009: 0.1%;
Base grant (including hold-harmless funding), FY 2004: $7,434,884;
Hold-harmless funding, FY 2004: $60,284;
Percent of hold-harmless funding, FY 2004: 0.8v.
EMA: Newark, New Jersey;
Base grant (including hold-harmless funding), FY 2009[A]: $9,090,344;
Hold-harmless funding, FY 2009: $747,165;
Percent of hold-harmless funding, FY 2009: 3.0%;
Base grant (including hold-harmless funding), FY 2004: $8,151,371;
Hold-harmless funding, FY 2004: $10,975;
Percent of hold-harmless funding, FY 2004: 0.1%.
EMA: San Diego, California;
Base grant (including hold-harmless funding), FY 2009[A]: $7,463,078;
Hold-harmless funding, FY 2009: $0;
Percent of hold-harmless funding, FY 2009: 0v;
Base grant (including hold-harmless funding), FY 2004: $5,201,792;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Tampa-St. Petersburg, Florida;
Base grant (including hold-harmless funding), FY 2009[A]: $6,330,428;
Hold-harmless funding, FY 2009: $357,808;
Percent of hold-harmless funding, FY 2009: 1.4%;
Base grant (including hold-harmless funding), FY 2004: $4,777,696;
Hold-harmless funding, FY 2004: $44,908;
Percent of hold-harmless funding, FY 2004: 0.6%.
EMA: West Palm Beach, Florida;
Base grant (including hold-harmless funding), FY 2009[A]: $5,769,721;
Hold-harmless funding, FY 2009: $989,815;
Percent of hold-harmless funding, FY 2009: 4.0%;
Base grant (including hold-harmless funding), FY 2004: $4,577,648;
Hold-harmless funding, FY 2004: $8,523;
Percent of hold-harmless funding, FY 2004: 0.1%.
EMA: Detroit, Michigan;
Base grant (including hold-harmless funding), FY 2009[A]: $5,649,097;
Hold-harmless funding, FY 2009: $103,139;
Percent of hold-harmless funding, FY 2009: 0.4%;
Base grant (including hold-harmless funding), FY 2004: $4,382,256;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Orlando, Florida;
Base grant (including hold-harmless funding), FY 2009[A]: $5,503,874;
Hold-harmless funding, FY 2009: $7,048;
Percent of hold-harmless funding, FY 2009: 0%;
Base grant (including hold-harmless funding), FY 2004: $4,021,954;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: Phoenix, Arizona;
Base grant (including hold-harmless funding), FY 2009[A]: $5,367,535;
Hold-harmless funding, FY 2009: $0;
Percent of hold-harmless funding, FY 2009: 0%;
Base grant (including hold-harmless funding), FY 2004: $3,480,889;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: New Orleans, Louisiana;
Base grant (including hold-harmless funding), FY 2009[A]: $4,944,359;
Hold-harmless funding, FY 2009: $158,635;
Percent of hold-harmless funding, FY 2009: 0.6%;
Base grant (including hold-harmless funding), FY 2004: $3,852,184;
Hold-harmless funding, FY 2004: $0;
Percent of hold-harmless funding, FY 2004: 0%.
EMA: New Haven, Connecticut[B];
Base grant (including hold-harmless funding), FY 2009[A]: $4,604,295;
Hold-harmless funding, FY 2009: $717,147;
Percent of hold-harmless funding, FY 2009: 2.9%;
Base grant (including hold-harmless funding), FY 2004: $3,639,492;
Hold-harmless funding, FY 2004: $42,573;
Percent of hold-harmless funding, FY 2004: 0.5%.
EMA: Nassau-Suffolk, New York[B];
Base grant (including hold-harmless funding), FY 2009[A]: $4,091,917;
Hold-harmless funding, FY 2009: $537,694;
Percent of hold-harmless funding, FY 2009: 2.2%;
Base grant (including hold-harmless funding), FY 2004: $3,182,104;
Hold-harmless funding, FY 2004: $21,212;
Percent of hold-harmless funding, FY 2004: 0.3%.
EMA: Metropolitan areas that were EMAs in FY 2004 but not in FY 2009;
Base grant (including hold-harmless funding), FY 2009[A]: NA;
Hold-harmless funding, FY 2009: NA;
Percent of hold-harmless funding, FY 2009: NA;
Base grant (including hold-harmless funding), FY 2004: $55,158,431;
Hold-harmless funding, FY 2004: $445,838;
Percent of hold-harmless funding, FY 2004: 5.5%.
EMA: Total[C];
Base grant (including hold-harmless funding), FY 2009[A]: $316,288,080;
Hold-harmless funding, FY 2009: $24,836,500;
Percent of hold-harmless funding, FY 2009: 100%;
Base grant (including hold-harmless funding), FY 2004: $305,704,561;
Hold-harmless funding, FY 2004: $8,033,563;
Percent of hold-harmless funding, FY 2004: 100%.
Source: GAO analysis of HRSA data.
Note: In fiscal year 2009, an EMA's base funding was determined
according to its proportion of living HIV/AIDS cases. If an EMA
qualified for hold-harmless funding, that amount was added to the base
funding and distributed together as the base grant.
In fiscal year 2004, an EMA's base funding was determined according to
its proportion of estimated living AIDS cases, not its proportion of
living HIV/AIDS cases. If an EMA qualified for hold-harmless funding,
that amount was added to the base funding and distributed together as
the base grant.
[A] Funding amounts for fiscal year 2009 base grants do not include
funding that resulted from the stop-loss provision contained in the
Omnibus Appropriations Act, 2009, Pub. L. No. 111-8, div. F, title II,
123 Stat. 524, 763-64. For more information on stop loss, see GAO, Ryan
White CARE Act: Estimated Effect of Proposed Stop-Loss Provision on
Urban Areas, GAO-09-472R (Washington, D.C.: March 6, 2009).
[B] Two EMAs, Nassau-Suffolk and New Haven, were classified as TGAs by
HRSA after the enactment of RWTMA. As a result, Nassau-Suffolk
petitioned a federal district court to prevent HRSA from changing its
status from EMA to TGA. The request for a preliminary injunction to
this effect was denied by the district court. On appeal, the U.S. Court
of Appeals for the Second Circuit reversed, finding that Nassau-Suffolk
had established a likelihood of success on the merits. County of Nassau
v. Leavitt, 524 F.3d 408 (2d Cir. 2008). In anticipation of another
possible claim, HRSA elected to reclassify New Haven as an EMA because
New Haven is also located within the geographic boundaries of the
Second Circuit. Nassau-Suffolk's claim with respect to fiscal years
2007 and 2008 is still pending.
[C] Individual entries do not sum to total because of rounding.
[End of table]
The range of CARE Act funding differences among EMAs, as measured by
funding per case, was smaller in 2009 than in 2004. In fiscal year
2009, EMA base funding per case ranged from $645 to $854, a range of
$209. In fiscal year 2004, the funding per case ranged from $1,221 to
$2,241, a range of $1,020. The smaller funding range resulted from San
Francisco receiving less hold-harmless funding in fiscal year 2009 than
in fiscal year 2004. In both years, San Francisco received the most
hold-harmless funding per case. However, in fiscal year 2009, San
Francisco received $208 in hold-harmless funding per case[Footnote 39],
while in fiscal year 2004 it received $1,020 in hold-harmless funding
per case.[Footnote 40] Table 4 lists the 24 EMAs and their base grant
and hold-harmless funding per case in fiscal years 2009 and 2004.
Table 4: EMA Base Grant and Hold-Harmless Funding per Case, Fiscal
Years 2009 and 2004:
EMA: San Francisco, California;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $854;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $208;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$2,241;
Hold-harmless funding per AIDS case, FY 2004[D]: $1,020.
EMA: San Juan, Puerto Rico;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $852;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $205;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,228;
Hold-harmless funding per AIDS case, FY 2004[D]: $6.
EMA: New York, New York;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $784;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $137;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: West Palm Beach, Floria;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $780;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $134;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,224;
Hold-harmless funding per AIDS case, FY 2004[D]: $2.
EMA: New Haven, Connecticut[E];
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $766;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $119;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,236;
Hold-harmless funding per AIDS case, FY 2004[D]: $14.
EMA: Nassau-Suffolk, New York[E];
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $744;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $98;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,230;
Hold-harmless funding per AIDS case, FY 2004[D]: $8.
EMA: Newark, New Jersey;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $704;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $58;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,223;
Hold-harmless funding per AIDS case, FY 2004[D]: $2.
EMA: Atlanta, Georgia;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $686;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $39;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Tampa-St. Petersburg, Florida;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $685;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $39;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,233;
Hold-harmless funding per AIDS case, FY 2004[D]: $12.
EMA: Houston, Texas;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $678;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $31;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Miami, Florida;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $671;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]:$25;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: New Orleans, Louisiana;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $668;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $21;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Philadelphia, Pennsylvania;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $658;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $12;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Detroit, Michigan;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $658;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $12;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Ft. Lauderdale, Florida;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $653;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $7;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Boston, Massachusetts;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $649;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $2;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,231;
Hold-harmless funding per AIDS case, FY 2004[D]: $10.
EMA: Orlando, Florida;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $647;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $1;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Baltimore, Maryland;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $646;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $0;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Chicago, Illinois;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $646;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $0;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Dallas, Texas;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $646;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $0;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Los Angeles, California;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $646;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $0;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Phoenix, Arizona;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $646;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $0;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: Washington, D.C.;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $646;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $0;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
EMA: San Diego, California;
Base grant (including hold-harmless funding) per HIV/AIDS case, FY
2009[A]: $645;
Hold-harmless funding per HIV/AIDS case, FY 2009[B]: $0;
Base grant (including hold-harmless funding) per AIDS case, FY 2004[C]:
$1,221;
Hold-harmless funding per AIDS case, FY 2004[D]: $0.
Source: GAO analysis of HRSA data.
Note: This table lists only the 24 metropolitan areas that were EMAs in
fiscal year 2009. In fiscal year 2004, there were a total of 51 EMAs,
including the 24 listed here.
In fiscal year 2009, an EMA's base funding was determined according to
its proportion of living HIV/AIDS cases. If an EMA qualified for hold-
harmless funding, that amount was added to the base funding and
distributed together as the base grant.
In fiscal year 2004, an EMA's base funding was determined according to
its proportion of estimated living AIDS cases, not its proportion of
living HIV/AIDS cases. If an EMA qualified for hold-harmless funding,
that amount was added to the base funding and distributed together as
the base grant.
[A] This amount was calculated by dividing the base grant, including
any hold-harmless funding, received by each EMA by the number of living
HIV/AIDS cases in the EMA.
[B] This amount was calculated by dividing the hold-harmless funding
received by each EMA by the number of living HIV/AIDS cases in the EMA.
[C] This amount was calculated by dividing the base grant, including
any hold-harmless funding, received by each EMA by the number of living
AIDS cases in the EMA.
[D] This amount was calculated by dividing the hold-harmless funding
received by each EMA by the number of living AIDS cases in the EMA.
[E] Two EMAs, Nassau-Suffolk and New Haven, were classified as TGAs by
HRSA after the enactment of RWTMA. As a result, Nassau-Suffolk
petitioned a federal district court to prevent HRSA from changing its
status from EMA to TGA. The request for a preliminary injunction to
this effect was denied by the district court. On appeal, the U.S. Court
of Appeals for the Second Circuit reversed, finding that Nassau-Suffolk
had established a likelihood of success on the merits. County of Nassau
v. Leavitt, 524 F.3d 408 (2d Cir. 2008). In anticipation of another
possible claim, HRSA elected to reclassify New Haven as an EMA because
New Haven is also located within the geographic boundaries of the
Second Circuit. Nassau-Suffolk's claim with respect to fiscal years
2007 and 2008 is still pending.
[End of table]
Hold-harmless funding accounted for a larger percentage of San
Francisco's total base funding than it did for any other EMA in fiscal
years 2009 and 2004, but the percentage was smaller in fiscal year 2009
than in fiscal year 2004. In fiscal year 2004, hold-harmless funding
accounted for approximately 46 percent of San Francisco's base grant
while in fiscal year 2009 hold-harmless funding accounted for
approximately 24 percent of San Francisco's base grant. Table 5 lists
the 24 EMAs and their hold-harmless funding as a percent of their base
grants in fiscal years 2009 and 2004.
Table 5: Hold-Harmless Funding as a Percent of EMA's Base Grants in
Fiscal Year 2009 and 2004:
EMA: San Francisco, California;
Hold-harmless as a percent of base grant, FY 2009: 24.3%;
Hold-harmless as a percent of base grant, FY 2004: 45.5%.
EMA: San Juan, Puerto Rico;
Hold-harmless as a percent of base grant, FY 2009: 24.1%;
Hold-harmless as a percent of base grant, FY 2004: 0.5%.
EMA: New York, New York;
Hold-harmless as a percent of base grant, FY 2009: 17.5%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: West Palm Beach, Florida;
Hold-harmless as a percent of base grant, FY 2009: 17.2%;
Hold-harmless as a percent of base grant, FY 2004: 0.2%.
EMA: New Haven, Connecticut[A];
Hold-harmless as a percent of base grant, FY 2009: 15.6%;
Hold-harmless as a percent of base grant, FY 2004: 1.2%.
EMA: Nassau-Suffolk, New York[A];
Hold-harmless as a percent of base grant, FY 2009: 13.1%;
Hold-harmless as a percent of base grant, FY 2004: 0.7%.
EMA: Newark, New Jersey;
Hold-harmless as a percent of base grant, FY 2009: 8.2%;
Hold-harmless as a percent of base grant, FY 2004: 0.1%.
EMA: Atlanta, Georgia;
Hold-harmless as a percent of base grant, FY 2009: 5.7%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Tampa-St. Petersburg, Florida;
Hold-harmless as a percent of base grant, FY 2009: 5.7%;
Hold-harmless as a percent of base grant, FY 2004: 0.9%.
EMA: Houston, Texas;
Hold-harmless as a percent of base grant, FY 2009: 4.6%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Miami, Florida;
Hold-harmless as a percent of base grant, FY 2009: 3.7%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: New Orleans, Louisiana;
Hold-harmless as a percent of base grant, FY 2009: 3.2%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Detroit, Michigan;
Hold-harmless as a percent of base grant, FY 2009: 1.8%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Philadelphia, Pennsylvania;
Hold-harmless as a percent of base grant, FY 2009: 1.8%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Ft. Lauderdale, Florida;
Hold-harmless as a percent of base grant, FY 2009: 1.1%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Boston, Massachusetts;
Hold-harmless as a percent of base grant, FY 2009: 0.3%;
Hold-harmless as a percent of base grant, FY 2004: 0.8%.
EMA: Orlando, Florida;
Hold-harmless as a percent of base grant, FY 2009: 0.1%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Baltimore, Maryland;
Hold-harmless as a percent of base grant, FY 2009: 0.0%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Chicago, Illinois;
Hold-harmless as a percent of base grant, FY 2009: 0.0%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Dallas, Texas;
Hold-harmless as a percent of base grant, FY 2009: 0.0%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Los Angeles, California;
Hold-harmless as a percent of base grant, FY 2009: 0.0%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Phoenix, Arizona;
Hold-harmless as a percent of base grant, FY 2009: 0.0%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: San Diego, California;
Hold-harmless as a percent of base grant, FY 2009: 0.0%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
EMA: Washington, D.C.;
Hold-harmless as a percent of base grant, FY 2009: 0.0%;
Hold-harmless as a percent of base grant, FY 2004: 0.0%.
Source: GAO analysis of HRSA data.
Note: This table lists only the 24 metropolitan areas that were EMAs in
fiscal year 2009. In fiscal year 2004, there were a total of 51 EMAs,
including the 24 listed here.
[A] Two EMAs, Nassau-Suffolk and New Haven, were classified as TGAs by
HRSA after the enactment of RWTMA. As a result, Nassau-Suffolk
petitioned a federal district court to prevent HRSA from changing its
status from EMA to TGA. The request for a preliminary injunction to
this effect was denied by the district court. On appeal, the U.S. Court
of Appeals for the Second Circuit reversed, finding that Nassau-Suffolk
had established a likelihood of success on the merits. County of Nassau
v. Leavitt, 524 F.3d 408 (2d Cir. 2008). In anticipation of another
possible claim, HRSA elected to reclassify New Haven as an EMA because
New Haven is also located within the geographic boundaries of the
Second Circuit. Nassau-Suffolk's claim with respect to fiscal years
2007 and 2008 is still pending.
[End of table]
In some cases, hold-harmless funding in fiscal year 2009 accounted for
a significant portion of a grantee's Part A base funding. For example,
San Francisco, which received the most hold-harmless funding per HIV/
AIDS case in fiscal year 2009, received a total of $14,672,553 in base
funding. Of this amount, $3,571,649 or 24.3 percent was due to the hold-
harmless provision. Because of its hold-harmless funding, San
Francisco, which had 17,173 HIV/AIDS cases, received a base grant
equivalent to what an EMA with approximately 22,713 HIV/AIDS cases (32
percent more) would have received without hold-harmless funding.
A significant portion of the differences in funding per case between
San Francisco and the other EMAs results from how the San Francisco
case counts are determined. The San Francisco EMA continues to be the
only metropolitan area whose formula funding is based on both living
and deceased AIDS cases. In February 2006 and October 2007, we reported
that the San Francisco EMA was the only EMA still receiving CARE Act
formula funding based on the number of living and deceased cases in a
metropolitan area.[Footnote 41] All other EMAs received formula funding
based on an estimate of the number of living cases. We showed that the
fiscal year 2004 CARE Act formula funding for the San Francisco EMA was
determined in part with reference to its fiscal year 1995 funding,
which was based on both living and deceased AIDS cases. Because the San
Francisco EMA also received hold-harmless funding in fiscal years 2005,
2006, 2007, and 2009, its fiscal year 2009 CARE Act formula funding
continues to be based, in part, on the number of deceased cases in the
San Francisco EMA as of 1995.[Footnote 42] Hold-harmless funding for
other EMAs does not trace back to 1995 or earlier, a period when CARE
Act funding was based on cumulative counts of AIDS cases, both living
and deceased.
If there had been no hold-harmless provision in fiscal year 2009, most
grantees would have received more funding in fiscal year 2009 than they
did. Seventeen of the 24 EMAs would have received more funding if there
had been no hold-harmless provision and if the $24.8 million that was
used for hold-harmless funding had instead been distributed across all
EMAs as supplemental grants, that is, in the same proportions as the
supplemental grants.[Footnote 43] The funds used to meet the EMA hold-
harmless requirement are deducted from the funds that would otherwise
be available for supplemental grants before these grants are awarded.
As a consequence, the pool of funds for supplemental grants is reduced
by the amount of funding needed to meet the hold-harmless provision.
Although 17 EMAs received hold-harmless funding in fiscal year 2009,
only 7 (New York, San Francisco, San Juan, West Palm Beach, Newark, New
Haven, and Nassau-Suffolk) received more funding because of the hold-
harmless provision than they would have received through supplemental
grants in the absence of the hold-harmless provision.
Sixteen Grantees Had Reductions in Their 2009 Grants Due to Their
Unobligated Part B Balances at the End of Grant Year 2007:
Sixteen Part B grantees received reduced funding in grant year 2009
because they had unobligated balances over 2 percent in grant year
2007. Grantees we interviewed provided reasons why it is difficult to
obligate all but 2 percent of their grant award. Grantees and HRSA said
that drug rebates complicate grantees' efforts to obligate grant funds.
Sixteen Part B Grantees Were Assessed Penalties Under the RWTMA
Unobligated Balance Provisions Because They Had Unobligated Balances
over 2 Percent:
Nine states and seven territories and associated jurisdictions were
assessed penalties in grant year 2009 because they had unobligated
balances over 2 percent in grant year 2007. Arizona, Arkansas,
Colorado, Delaware, Idaho, Maine, Nebraska, Ohio, and Pennsylvania were
all assessed penalties along with seven of the U.S. territories and
associated jurisdictions (American Samoa, Commonwealth of the Northern
Mariana Islands, the Federated States of Micronesia, Guam, Palau, the
Republic of Marshall Islands, and the U.S. Virgin Islands). Table 6
shows the Part B grant year 2007 unobligated balances. No Part A
grantees had unobligated balances over 2 percent.
Table 6: Part B Grantees' Unobligated Balances in Grant Year 2007:
Part B grantee: Arizona;
Total grant year 2007 Part B unobligated balance: $1,065,435;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 7.9%.
Part B grantee: Arkansas;
Total grant year 2007 Part B unobligated balance: $614,033;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 7.8%.
Part B grantee: Colorado;
Total grant year 2007 Part B unobligated balance: $1,099,874;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 8.2%.
Part B grantee: Delaware;
Total grant year 2007 Part B unobligated balance: $713,904;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 14.3%.
Part B grantee: Idaho;
Total grant year 2007 Part B unobligated balance: $41,018;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 3.7%.
Part B grantee: Maine;
Total grant year 2007 Part B unobligated balance: $33,971;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 2.4%.
Part B grantee: Nebraska;
Total grant year 2007 Part B unobligated balance: $285,982;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 12.0%.
Part B grantee: Ohio;
Total grant year 2007 Part B unobligated balance: $2,315,763;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 10.2%.
Part B grantee: Pennsylvania;
Total grant year 2007 Part B unobligated balance: $12,936,735;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 33.7%.
Part B grantee: American Samoa;
Total grant year 2007 Part B unobligated balance: $18,720;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 36.0%.
Part B grantee: Commonwealth of the Northern Mariana Islands;
Total grant year 2007 Part B unobligated balance: $10,319;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 19.1%.
Part B grantee: Federated States of Micronesia;
Total grant year 2007 Part B unobligated balance: $18,525;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 33.7%.
Part B grantee: Guam;
Total grant year 2007 Part B unobligated balance: $52,975;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 18.2%.
Part B grantee: Palau;
Total grant year 2007 Part B unobligated balance: $6,433;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 12.9%.
Part B grantee: Republic of the Marshall Islands;
Total grant year 2007 Part B unobligated balance: $27,998;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 52.9%.
Part B grantee: U.S. Virgin Islands;
Total grant year 2007 Part B unobligated balance: $435,798;
Grant year 2007 Part B unobligated balance as a percentage of Part B
base and ADAP base grants: 38.1%.
Source: GAO analysis of HRSA data.
Note: Although unobligated balances were attributable to the 2007
grants, the reduction occurred in the 2009 Part B grants because HRSA
does not require grantees' FSRs until 90 days after the grant year has
ended, at which time the 2008 grants had already been awarded.
[End of table]
To establish if an unobligated balance penalty applied to a grantee's
2009 grant, HRSA summed the Part B base and ADAP base unobligated
balances to determine if the total was more than 2 percent of the
grantee's total award (Part B base and ADAP base) for grant year 2007.
As the provisions were applied by HRSA, Part B grantees can incur a
penalty in both their Part B base and ADAP base grants even if the
unobligated balance for one of these grants is less than 2 percent as
long as the sum of the Part B base and ADAP base balances is greater
than 2 percent. HRSA assesses unobligated balance penalties based on
the sum of the Part B base and ADAP base unobligated balances.[Footnote
44] For example, in grant year 2007 Maine had an unobligated balance of
more than 2 percent in its ADAP base grant but less than 2 percent in
its Part B base grant. The total unobligated funding was 2.4 percent.
Because the total was above 2 percent, HRSA reduced both the Part B
base and ADAP base grants in grant year 2009.
While 16 Part B grantees incurred unobligated balance penalties, some
incurred penalties in both their Part B base grants and ADAP base
grants and others only had penalties in their Part B base grants
because they did not have unobligated ADAP balances. In grant year
2009, six states and one territory were assessed penalties in both
their Part B base and ADAP base grants. Because penalties apply to both
base grants only when grantees have unobligated balances in both
grants, three states and six territories and associated jurisdictions
had penalties assessed only on their Part B base grants, because they
did not have unobligated ADAP base balances. Part B base funding
penalties ranged from $6,433 in Palau to $1,493,935 in Ohio. (See table
7.) ADAP base funding penalties ranged from $26,233 in Maine to
$12,670,248 in Pennsylvania. (See table 8.) Pennsylvania's ADAP base
grant penalty accounted for 84 percent of the total amount of penalties
for unobligated ADAP funds levied on 2009 grants.
Table 7: Part B Base Grant Penalties in Grant Year 2009:
Part B grantee: Arizona;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $4,006,304;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$325,240;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $3,681,064.
Part B grantee: Arkansas;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $3,634,977;
Grant Year 2009 Part B base grant: Hold-harmless amount: $21,615;
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$411,984;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $3,244,608.
Part B grantee: Colorado;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $3,666,928;
Grant Year 2009 Part B base grant: Hold-harmless amount: $166,716;
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$734,240;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $3,099,404.
Part B grantee: Delaware;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $2,453,761;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$223,319;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $2,230,442.
Part B grantee: Idaho;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $532,766;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$41,018;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $491,748.
Part B grantee: Maine;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $762,807;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty: $7,738;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $755,069.
Part B grantee: Nebraska;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $1,169,371;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$285,982;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $883,389.
Part B grantee: Ohio;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $7,739,752;
Grant Year 2009 Part B base grant: Hold-harmless amount: $347,714;
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$1,493,935;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $6,593,531.
Part B grantee: Pennsylvania;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $12,225,623;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$266,487;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $11,959,136.
Part B grantee: American Samoa;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $50,000;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$18,720;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $31,280.
Part B grantee: Commonwealth of the Northern Mariana Islands;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: 50,000;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty: 10,319;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: 39,681.
Part B grantee: Federated States of Micronesia;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $50,000;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$18,525;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $31,475.
Part B grantee: Guam;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $200,000;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$52,975;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $147,025.
Part B grantee: Palau;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $50,000;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty: $6,433;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $43,567.
Part B grantee: Republic of the Marshall Islands;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $50,000;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$27,998;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $22,002.
Part B grantee: U.S. Virgin Islands;
Grant Year 2009 Part B base grant: Preliminary grant year 2009 Part B
base grant: $500,000;
Grant Year 2009 Part B base grant: Hold-harmless amount: [Empty];
Grant Year 2009 Part B base grant: Unobligated balance penalty:
$308,201;
Grant Year 2009 Part B base grant: Final grant year 2009 Part B base
grant: $191,799.
Source: HRSA.
Note: Although unobligated balances were attributable to the 2007
grants, the reduction occurred in the 2009 Part B base grant because
HRSA does not require grantees' FSRs until 90 days after the grant year
has ended, at which time the 2008 grants had already been awarded.
[End of table]
In order to calculate the final Part B base and ADAP base grant awards,
the penalty attributable to an unobligated balance is applied after
other calculations are made, including hold harmless funding. If hold-
harmless funds were added after the unobligated balance penalties were
applied, hold-harmless funds would negate the effect of the unobligated
balance penalties because they would increase funding. For example,
Colorado had a preliminary 2009 Part B base grant award of $3,666,928.
Under the hold-harmless provision in RWTMA, Colorado was guaranteed
Part B base grant funding of $3,683,544. Application of the RWTMA
unobligated balance provision reduced the amount of its Part B base
grant award (after the addition of hold harmless funding) by $734,240,
leaving Colorado with a final Part B base grant award of $3,099,404. In
comparison, if hold-harmless funding had been added after the
application of the unobligated balance penalty, Colorado would have
received $3,683,544, the same as if it had incurred no unobligated
balance penalty.
Table 8: ADAP Base Grant Penalties in Grant Year 2009:
ADAP grantee: Arizona;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $10,398,958;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: $740,195;
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$9,658,763.
ADAP grantee: Arkansas;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $4,376,738;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: $202,049;
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$4,174,689.
ADAP grantee: Colorado;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $9,612,191;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$9,612,191.
ADAP grantee: Delaware;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $2,870,482;
Grant year 2009 ADAP base grant: Hold-harmless amount: $441,676;
Grant year 2009 ADAP base grant: Unobligated balance penalty: $490,585;
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$2,821,573.
ADAP grantee: Idaho;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $623,246;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$623,246.
ADAP grantee: Maine;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $892,354;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: $26,233;
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$866,121.
ADAP grantee: Nebraska;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $1,367,964;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$1,367,964.
ADAP grantee: Ohio;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $14,627,126;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: $821,828;
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$13,805,298.
ADAP grantee: Pennsylvania;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $29,011,307;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty:
$12,670,248;
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$16,341,059.
ADAP grantee: American Samoa;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $2,803;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$2,803.
ADAP grantee: Commonwealth of the Northern Mariana Islands;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $5,606;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$5,606.
ADAP grantee: Federated States of Micronesia;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $7,475;
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$7,475.
ADAP grantee: Guam;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $84,096;
Grant year 2009 ADAP base grant: Hold-harmless amount: $6,988;
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$91,084.
ADAP grantee: Palau;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: [Empty];
Grant year 2009 ADAP base grant: Hold-harmless amount: [Empty];
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
[Empty].
ADAP grantee: Republic of the Marshall Islands;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $934;
Grant year 2009 ADAP base grant: Hold-harmless amount: $2,034;
Grant year 2009 ADAP base grant: Unobligated balance penalty: [Empty];
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$2,968.
ADAP grantee: U.S. Virgin Islands;
Grant year 2009 ADAP base grant: Preliminary grant year 2009 ADAP base
grant: $532,609;
Grant year 2009 ADAP base grant: Hold-harmless amount: $112,668;
Grant year 2009 ADAP base grant: Unobligated balance penalty: $127,597;
Grant year 2009 ADAP base grant: Final grant year 2009 ADAP base grant:
$517,680.
Source: HRSA.
Note: Although unobligated balances were attributable to the 2007
grants, the reduction occurred in the 2009 ADAP base grant because HRSA
does not require grantees' FSRs until 90 days after the grant year has
ended, at which time the 2008 grants had already been awarded.
[End of table]
Grantees Provided Reasons Why Obligating All but 2 Percent of Their
Grant Awards Is Difficult:
Five of the 13 Part B grantees we interviewed had unobligated balances
over 2 percent; these 5 grantees told us that they had varying reasons
for their unobligated balances, some of which they said were beyond
their control. For example, Arizona explained that it had an
unobligated balance from its ADAP base grant, in part, because it had a
dispute with a vendor it had contracted with to provide prescription
drugs to clients. The vendor claimed that it had not been paid for
services. According to state officials, to settle the dispute and
comply with applicable state rules Arizona had to pay the vendor twice.
When the vendor realized that it had been overpaid, it reimbursed
Arizona in the amount of $670,000. Arizona received the reimbursement
at the end of the grant year. Arizona was unable to spend this amount,
leaving it with an unobligated balance of over 2 percent and a
subsequent penalty.
Grantees we interviewed, which included those that had unobligated
balances of over 2 percent and those that did not, explained that they
experienced difficulty obligating grant funds within the grant year.
Three of the 13 Part B grantees we interviewed explained that they are
currently dealing with economic factors such as state hiring freezes,
spending caps, and furloughs of staff. One grantee explained that
because of economic difficulties, his state has implemented new
procedures as a means to limit state spending, including reclaiming
state funding balances that are not spent quickly. Because of this new
procedure, the grantee must allocate state funding, federal funding,
and program income simultaneously, which he finds difficult. One
grantee said the existence of the state hiring freeze has limited the
amount of grant funding that could be obligated to fund staff
positions. The grantee stated that the hiring freeze has been
implemented as a means to limit state spending, but the state has
imposed the hiring freeze on all programs, including those that receive
federal funds.
One Part B grantee explained that, while the grantee can to some extent
control the contracts that are entered into and types of services that
are provided, the grantee cannot control factors that affect the demand
for program services. For example, the grantee cannot control the
number of people who become infected; those who will lose their jobs
and private health insurance and need to receive services supported
with grant funds; and changes that occur with Medicaid and Medicare
that can affect clients. Additionally, two grantees stated that because
the grant awards can arrive after April 1, it can be helpful to carry
over funds from the previous year's grant award so that they can award
contracts, rather than delay them until HRSA awards grant funds. These
grantees said that they would like to be able to carry over funds
without risking a reduction in future funding.
One grantee explained that because grant awards are based on a formula
and can fluctuate from year to year, it is helpful for the grantee to
have funding on hand to maintain consistent service levels even if
formula funding is decreased without risking a penalty. Six grantees
expressed concern that the level of oversight required to obligate all
but 2 percent of their grants leaves them unable to deal with
unpredictable situations, such as a contractor going out of business.
Six of the 13 grantees we interviewed said that they consider the 2
percent threshold too low, and some suggested that a 5 percent
threshold would be more reasonable. Two of these grantees told us that
if grantees had to obligate all but 5 percent of their funding, they
would have more room to manage their budgets. However, only 2 of the 16
Part B grantees that received penalties for unobligated balances had
unobligated balances of less than 5 percent.
Grantees and HRSA Said Drug Rebates Make It Difficult for Grantees to
Obligate Grant Funds:
According to information provided by HRSA, 7 of the 13 Part B grantees
we interviewed received drug rebates. In addition, Delaware informed us
that they also receive rebates. Four of the eight grantees that
received rebates said that the requirement that they spend drug rebates
before spending grant funds makes it more difficult for them to
obligate all but 2 percent of their grant awards, even though drug
rebates are not subject to the unobligated balance provisions. The 27
Part B grantees that exclusively use the federal 340B rebate option to
purchase their ADAP drugs typically contract with pharmacy networks or
pharmacy benefit managers for the purchase of covered drugs who then
request rebates from the pharmaceutical companies in order to obtain
the 340B drug price and pass these savings on to the grantee. Under
RWTMA, drug rebates that grantees receive are not considered part of
the grant award and are not subject to the unobligated balance
provisions.[Footnote 45] However, federal regulations generally
applicable to state and local government grantees require them to
disburse rebates (along with program income and certain other amounts)
before requesting additional cash payments.[Footnote 46] Accordingly,
HRSA requires rebates to be spent before grantees obligate additional
grant funds. Thus, grantees receiving drug rebates must prioritize
spending these funds and several grantees said that this makes it more
difficult to obligate grant funds in the grant year.
While only three of the nine states that had a reduction in their ADAP
base grants for grant year 2009 due to an unobligated balance received
rebates, five of the eight grantees we interviewed that received
rebates expressed concern about the requirement that drug rebate funds
be spent before grant funds.[Footnote 47] One grantee explained that
though it did not have an unobligated balance for grant year 2007, it
took a great deal of effort to avoid one. Before RWTMA and the budget
challenges in this state, this grantee saved state funds to spend at
the end of the grant year so it could ensure that Part B funds were
obligated and rebate funds were spent. However, because of state
spending requirements put in place due to economic factors this state
is currently facing, the grantee can no longer do this. In addition,
spending rebates first can be difficult because rebate states often do
not know when they will receive rebates; the state may send out
requests every quarter, but may not receive the rebates until well into
the next quarter or grant year. Rebate states may also not know the
rebate amount beyond what they can estimate based on trends over the
past year. Several grantees said that because of the variability of the
rebate amounts and their timing, they could receive a large rebate
check late in the year. They then could have unobligated balances of
grant funds of greater than 2 percent at that time because they use the
rebate amounts when they become available rather than grant funds.
Pennsylvania had an unobligated ADAP base grant balance of $12,670,248
in grant year 2007, and state officials said that a large part of the
reason was its ADAP drug rebates. In grant year 2007, Pennsylvania
received $11 million in rebates. These rebate funds had to be spent
before it could obligate its ADAP base funding for grant year 2007.
According to Pennsylvania officials, the Pennsylvania grantee has an
administrative structure that only allows it to spend its rebates on
the purchase of drugs, limiting how it could spend its rebate funds.
Other states we spoke to can use rebate funds to provide Part B medical
services as well, providing them with greater flexibility in spending
these funds. Pennsylvania officials told us that they also had an
unobligated balance of its ADAP base grant of over $2.4 million in
grant year 2008. The Pennsylvania state government is working to revise
its current structure.
HRSA sought to address the interaction between drug rebate funds and
the RWTMA unobligated balance provisions by requesting from HHS
permission to seek an exemption from the regulation for grantees from
the Office of Management and Budget. HRSA told us that requiring ADAP
rebate funds to be spent before grant funds increases the risk of
unobligated balance penalties, and that the loss of grant funding and
ineligibility for supplemental funding can pose difficulties for
grantees. HRSA requested permission to seek an exemption from the
otherwise applicable federal regulations for drug rebate states from
HHS. HRSA believes the unobligated balance requirements were intended
to ensure that federal funds are spent promptly, not to create a
mechanism through which federal grants would be reduced. However,
HRSA's request for permission to seek an exemption for drug rebate
states was denied by HHS in November 2007. HHS stated that while
federal regulations and the unobligated balance provisions create
significant challenges for rebate states, the justification HRSA
presented for the class deviation was "not compelling."
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. The report is also available at no charge on GAO's Web
site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions, please contact me at (202)
512-7114 or crossem@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may found on the last page
of this report. Other staff who made major contributions to this report
are listed in appendix I.
Signed by:
Marcia Crosse:
Director, Health Care:
[End of section]
Appendix I: GAO Contact and Staff Acknowledgments:
GAO Contact:
Marcia Crosse, (202) 512-7114 or crossem@gao.gov:
Staff Acknowledgments:
In addition to the contact above, Thomas Conahan, Assistant Director;
Robert Copeland, Assistant Director; Leonard Brown; Romonda McKinney
Bumpus; Cathleen Hamann; Sarah Resavy; Rachel Svoboda; and Jennifer
Whitworth made key contributions to this report.
[End of section]
Footnotes:
[1] 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. When we use these terms alone, HIV refers to
the disease without the presence of AIDS, and AIDS refers exclusively
to HIV disease that has progressed to AIDS.
[2] These were the most recent estimates available at the time of this
report.
[3] 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.
[4] CARE Act programs were previously reauthorized by the Ryan White
CARE Act Amendments of 1996 (Pub. L. No. 104-146, 110 Stat. 1346), the
Ryan White CARE Act Amendments of 2000 (Pub. L. No. 106-345, 114 Stat.
1319), and the Ryan White HIV/AIDS Treatment Modernization Act of 2006
(Pub. L. No. 109-415, 120 Stat. 2767).
[5] Title XXVI of the Public Service Act contains several parts which
provide for grants for various HIV/AIDS-related services. In addition
to Parts A and B, the other primary sections of the CARE Act under
which HRSA awards grants are Parts C, D, and F. 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 private nonprofit and public entities for family-
centered comprehensive care to children, youth, and women and their
families. Part F provides for grants for demonstration and evaluation
of innovative models of HIV/AIDS care delivery for hard-to-reach
populations, training of health care providers, and for Minority AIDS
Initiative (MAI) grants. Part E does not provide for funding for
HIV/AIDS services but rather includes provisions to address various
administrative functions.
[6] EMAs are areas that have a population of 50,000 persons or more and
had a cumulative total of more than 2,000 new AIDS cases during the
most recent 5-year period. TGAs are areas that have a population of
50,000 persons or more and had a cumulative total of 1,000 to 1,999 new
AIDS cases during the most recent 5-year period. Prior to RWTMA, all
metropolitan areas that received Part A funding were classified as
EMAs.
[7] HRSA uses a grantee's share of living HIV/AIDS cases to determine
the amount of base grants.
[8] Individuals with HIV/AIDS are included in the case count of the
jurisdiction where they are diagnosed. These case counts are not
adjusted to remove individuals who no longer reside in the
jurisdiction.
[9] Since 1999, CDC has advised that all states and territories and
associated jurisdictions adopt name-based HIV reporting systems. In
2005, CDC strengthened this advice to a recommendation. CDC has noted
that name-based systems are more cost-effective and achieve higher
levels of accuracy and reliability than systems based on other types of
identifiers.
[10] RWTMA also required that name-based HIV case counts be used for
determining the amount of Part A base grants. Part A grantees' HIV case
counts are included in the cases reported to CDC by Part B grantees,
with the exception of New York City, which reports directly to CDC.
[11] RWTMA provided for a similar transition period for EMAs and TGAs.
[12] In this report, we use the term obligate to refer to funds that
have been committed for a specific purpose and will require payment
during the same or a future period. Unobligated refers to funds that
have not been committed.
[13] RWTMA permits a Part A or Part B grantee to request a waiver from
HRSA to allow the grantee to carry forward and use for a period of 1
year all (or a portion) of any unobligated balance from their base
grant.
[14] The unobligated balance provisions do not apply to Part A and Part
B Minority AIDS Initiative grants. These grants are available to all
Part A and B grantees as competitive, supplemental funding. For more
information on Minority AIDS Initiative grants, see 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.: March 27, 2009).
[15] See GAO, HIV/AIDS: Changes Needed to Improve the Distribution of
Ryan White CARE Act and Housing Funds, [hyperlink,
http://www.gao.gov/products/GAO-06-332] (Washington, D.C.: Feb. 28,
2006), 31-35.
[16] We interviewed the following Part A grantees: Houston, TX;
Indianapolis, IN; Memphis, TN; New York, NY; Phoenix, AZ; and
Sacramento, CA. We also interviewed the following Part B grantees:
Arizona, California, Delaware, Florida, Hawaii, Missouri, Nebraska,
North Carolina, Ohio, Pennsylvania, Rhode Island, and Washington.
[17] Surveillance is an ongoing, systematic collection, analysis,
interpretation, and dissemination of data regarding a health-related
event. CDC's HIV/AIDS surveillance system observes, records, and
disseminates reports about cases of HIV and AIDS.
[18] Two EMAs, Nassau-Suffolk and New Haven, were classified as TGAs by
HRSA after the enactment of RWTMA. As a result, Nassau-Suffolk
petitioned a federal district court to prevent HRSA from changing its
status from EMA to TGA. The request for a preliminary injunction to
this effect was denied by the district court. On appeal, the U.S. Court
of Appeals for the Second Circuit reversed, finding that Nassau-Suffolk
had established a likelihood of success on the merits. County of Nassau
v. Leavitt, 524 F.3d 408 (2d Cir. 2008). In anticipation of another
possible claim, HRSA elected to reclassify New Haven as an EMA because
New Haven is also located within the geographic boundaries of the
Second Circuit. Nassau-Suffolk's claim with respect to fiscal years
2007 and 2008 is still pending.
[19] There were also hold-harmless provisions in the 1996 and 2000
reauthorizations of CARE Act programs.
[20] The five other grantees are American Samoa, the Commonwealth of
the Northern Mariana Islands, the Federated States of Micronesia,
Palau, and the Republic of the Marshall Islands.
[21] ADAPs provide medications for the treatment of HIV disease.
Program funds may also be used to purchase health insurance for
eligible clients and for services that enhance access to, adherence to,
and monitoring of drug treatments.
[22] Emerging communities are those metropolitan areas that do not
qualify as EMAs or TGAs, but have 500-999 cumulative reported AIDS
cases during the most recent 5-year period. Emerging community grants
are distributed to states, which then pass them through to emerging
communities.
[23] Under section 340B of the Public Health Service Act (42 U.S.C. §
256b), drug manufacturers provide discounts on certain outpatient drugs
to covered entities including community health centers, hemophilia
treatment centers, and HIV early intervention projects; a 340B price,
sometimes referred to as a 340B ceiling price, is established for each
covered drug that these entities purchase. ADAPs are allowed to
purchase drugs through the section 340B program and are required to
submit quarterly HIV/AIDS drug pricing reports to HRSA that indicate
what they pay for drugs. However, an ADAP's participation in the 340B
program is voluntary--they may choose, for example, to negotiate drug
prices themselves with drug companies.
[24] RWTMA identified 35 Part B grantees, of 59 total, that had name-
based HIV reporting systems in place that could be used to determine
CARE Act formula funding on the grounds that they had systems in place,
as of December 31, 2005, that provided sufficiently accurate and
reliable reporting of cases. The 35 grantees were: Alabama, Alaska,
Arizona, Arkansas, Colorado, Florida, Idaho, Indiana, Iowa, Kansas,
Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska,
Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota,
Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah,
Virginia, West Virginia, Wisconsin, Wyoming, Guam, and the U.S. Virgin
Islands. It also provided for the recognition of additional grantees
with name-based reporting systems determined to provide accurate and
reliable reporting.
[25] There is a time lag between when HIV/AIDS cases are reported and
when they are used for determining CARE Act funding. For example, funds
distributed in fiscal year 2010 will be based on case counts collected
through December 2008.
[26] A reporting system being "operational" is not the same as a
reporting system being "mature." CDC requires that a grantee's name-
based reporting system be mature before the grantee's data can be
included in CDC's national HIV estimates. Four full years are required
for a reporting system to be considered mature so that CDC can adjust
the case counts to take reporting delays into consideration. In CDC's
2007 HIV/AIDS Surveillance Report, CDC used only the name-based HIV
case counts from 34 states and 5 U.S. territories and associated
jurisdictions in its national estimates. Name-based HIV reporting had
been in place in these jurisdictions since at least the end of 2003.
See Centers for Disease Control and Prevention, HIV/AIDS Surveillance
Report, 2007, Vol. 19. (Atlanta: U.S. Department of Health and Human
Services, Centers for Disease Control and Prevention; 2009).
[27] A grantee may request an extension in writing if it is unable to
close a grant account within the 90-day period, but the extension
cannot exceed 6 months.
[28] Unobligated base grant funds awarded under Parts A and B are
available for expenditure by the grantee for a 1-year period, beginning
at the end of the grant year with HRSA approval of a carryover waiver.
For 2007 grants, HRSA required carryover waivers to be requested 60
days before the end of the grant year. If funds are not expended at the
end of the 1-year waiver period, the funds will be canceled, recovered
and redistributed to Part A and B grantees as supplemental awards.
Grantees cannot carryover supplemental funds.
[29] The amount of the reduction corresponds to the amount of the
grantee's unobligated balance. RWTMA provides for the reduction in
funding for the first fiscal year beginning after the fiscal year in
which the Secretary obtains the information necessary for determining
that the balance was unobligated at the end of the grant year.
[30] Since its inception, the CARE Act has required Part B grantees to
obligate 75 percent of their entire Part B grant within certain time
frames and repay any unobligated balance to HRSA for reallocation as
supplemental grants. States had 150 days to meet this requirement in
the first year of the program and have had 120 days in all subsequent
years. HRSA requires Part B grantees to report this obligation within
150 days on an FSR. In addition, grantees that do not obligate this 75
percent are ineligible for ADAP supplemental grants.
[31] Fiscal year 2009 CARE Act formula funding is based on case counts
as of December 31, 2007.
[32] Six of the seven grantees--California, the District of Columbia,
Illinois, Massachusetts, Oregon, and Rhode Island--could have had HRSA
use their name-based HIV case counts to determine CARE Act funding but
instead had HRSA use their code-based counts. The seventh grantee--
Maryland--was collecting name-based HIV case counts as of December 31,
2007, but their name-based HIV reporting system had not been determined
to be operational; therefore, Maryland was not yet reporting name-based
case counts to CDC and did not have the option to have HRSA use its
name-based case counts.
[33] Hawaii and Vermont transitioned to a name-based HIV reporting
system in 2008.
[34] Eight grantees--Connecticut, Delaware, Kentucky, Maine, Montana,
New Hampshire, Pennsylvania, and Washington--with systems less than 4
years old determined that their name-based HIV reporting systems were
accurate and reliable such that case counts from these systems were
used by HRSA to determine fiscal year 2009 CARE Act funding.
[35] The Federated States of Micronesia, Palau, and the Republic of the
Marshall Islands have not begun collecting name-based HIV case counts.
[36] [hyperlink, http://www.gao.gov/products/GAO-06-332].
[37] In fiscal year 2009, 17 of the 24 EMAs received hold-harmless
funding. In fiscal year 2004, 21 of the 51 EMAs received hold-harmless
funding. Prior to RWTMA, all metropolitan areas that received Part A
funding were classified as EMAs. RWTMA created a new category of
metropolitan areas called TGAs. As a result, the number of EMAs was
reduced from 51 to 24. The other EMAs were reclassified as TGAs. TGAs
are not eligible for hold-harmless funding.
[38] Total Part A base and supplemental funding were also larger in
2009 than in 2004. In fiscal year 2009, Part A grantees received
$590,290,260 in base and supplemental funding, while in 2004 they
received $552,083,998. However, even with this increased funding, hold-
harmless funding was still a larger percentage of total funding in
fiscal year 2009 than in fiscal year 2004. In fiscal year 2009, hold
harmless was 4.2 percent of total Part A base and supplemental funding,
while it was 1.5 percent in fiscal year 2004. We did not include
Minority AIDS Initiative funding in the calculations of the total
funding because fiscal year 2009 Minority AIDS Initiative grants were
not available at the time of our analysis.
[39] The $1 difference in the range in fiscal year 2009 base funding
per case ($209) and the range in hold-harmless funding per case ($208)
is attributable to rounding error.
[40] Prior to RWTMA, formula funding was determined using the number of
estimated living AIDS cases in a jurisdiction rather than the number of
HIV/AIDS cases. For a description of how this estimate was calculated,
see [hyperlink, http://www.gao.gov/products/GAO-06-332], 5.
[41] [hyperlink, http://www.gao.gov/products/GAO-06-332], 34-35; and
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.: Oct. 5, 2007), 16.
[42] Fiscal year 2009 funding for the San Francisco EMA can be traced
to its fiscal year 1995 funding due to the relationship between the
amount it received in fiscal year 1995 and the amounts it was
guaranteed by law to receive in fiscal years 2000, 2006, 2007, and 2009
due to the operation of the hold-harmless provisions. No other EMA was
held harmless in all these years and, consequently, their funding
cannot be linked back to 1995. In fiscal year 2000, the San Francisco
EMA received 95 percent of the amount it received from its grant in
fiscal year 1995. In fiscal year 2006, it received 85 percent of the
amount it received from its grant in fiscal year 2000. In fiscal year
2007, it received 95 percent of the amount it received from its grant
in fiscal year 2006. In fiscal year 2009, it received 100 percent of
the amount it received in fiscal year 2007. Taken together, the hold-
harmless provisions meant that in fiscal year 2009 the San Francisco
EMA received approximately 76.7 percent of its fiscal year 1995 grant
of $19,126,679, or $14,672,553. We calculated the guaranteed percentage
by multiplying the hold-harmless amounts (95, 85, 95, and 100 percent)
for each year together. For more discussion on how the hold-harmless
provision operates and how it has affected funding for the San
Francisco EMA, see [hyperlink, http://www.gao.gov/products/GAO-06-332],
31-35.
[43] This analysis shows how the hold-harmless funding would have been
distributed if it had been allocated as supplemental grants, that is,
in the same proportions as the supplemental grant funding. For example,
Houston received about 4.4 percent of the funds available for
supplemental grants and, consequently, we allocated 4.4 percent of the
$24,836,500 hold-harmless funding to Houston. It is not possible to
determine the exact effect of the hold-harmless provision on the amount
of supplemental funding for each EMA because it is not known how the
funds would have been distributed in the absence of the hold-harmless
awards.
[44] If the unobligated balances were determined to be greater than 2
percent, HRSA subtracted the grant year 2007 Part B base unobligated
balance amount from the 2009 Part B base award, and the grant year 2007
ADAP base unobligated balance amount from the 2009 ADAP base award.
Some grantees did not incur penalties in their 2009 ADAP base award
because they did not report grant year 2007 ADAP unobligated balances.
HRSA applies unobligated balance penalties to both Part B base grants
and ADAP base grants only when grantees have reported unobligated
balances in both grants.
[45] In August 2007, HRSA provided guidance consistent with RWTMA to
grantees that states "Drug rebate dollars are not considered to be part
of the grant award, therefore any unobligated drug rebate funds are not
subject to the unobligated balance provisions."
[46] HRSA sent a letter in January 2007 to the 27 grantees using the
rebate option stating that rebates are considered program income under
45 C.F.R. § 92.21(f)(2). In a subsequent letter, HRSA advised that
rebates should not be considered program income for purposes of
reporting on the FSR, but, under section 92.21(f)(2), grantees must
disburse rebates before requesting additional cash payments. Cash
payments requested by grantees would be for the purpose of liquidating
or making payments associated with obligations of grant funds.
[47] Maine and Pennsylvania are drug rebate states. Delaware is a
hybrid state; they use direct 340B pricing and participate in a drug
rebate program.
[End of section]
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