[Federal Register Volume 68, Number 155 (Tuesday, August 12, 2003)]
[Notices]
[Pages 47923-47925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20439]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Resources and Services Administration


Report on the Relationship Between the Costs of Administrative, 
Program Support, and Direct Service-Related Activities and Access of 
Eligible Individuals to Services and Research Opportunities

AGENCY: Health Resources and Services Administration, HHS.

ACTION: Notice of request for comments.

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SUMMARY: The Health Resources and Services Administration (HRSA) 
invites comments on the proposed establishment of a limitation on 
administrative expenses for Ryan White Comprehensive AIDS Resources 
Emergency (CARE) Act Title IV Grants for Coordinated Services and 
Access to Research for Women, Infants, Children, and Youth. In 
addition, HRSA invites comments on determining a definition of what 
costs are to be included in administrative expenses, and on the 
specific percentage limitation to be applied.

DATES: Comments must be postmarked by September 11, 2003.

ADDRESSES: Written comments should be submitted to the Division of 
Community Based Programs, HIV/AIDS Bureau (HAB), HRSA, Room 7A-30, 
Parklawn Building, 5600 Fishers Lane, Rockville, Maryland 20857. 
Respondents should provide a clear rationale for their suggested 
changes or additions. All comments will be available for public 
inspection and copying at the Division of Community Based Programs, 
HAB, Room 7A-30, Parklawn Building weekdays between 8:30 a.m. and 5 
p.m. and responses to the comments will be addressed in the final 
notice.

FOR FURTHER INFORMATION: Wayne E. Sauseda, Director, Division of 
Community Based Programs, HAB, at (301) 443-0493.

SUPPLEMENTARY INFORMATION: Title IV of the Ryan White CARE Act of 1990, 
as amended by the Ryan White CARE Act Amendments of 2000, authorizes 
Grants for Coordinated Services and Access to Research for Women, 
Infants, Children and Youth. Title IV of the CARE Act appears in 
section 2671 of the Public Health Service Act, 42 U.S.C. 300ff-71. 
Section 2671(i)(1) requires ``the Secretary, in consultation with 
grantees under this part, to conduct a review of the administrative, 
program support, and direct service-related activities that are carried 
out under this part to ensure that eligible individuals have access to 
quality, HIV-related health and support services and research 
opportunities under this part, and to support the provision of such 
services.'' Section 2671(i)(2) further requires that ``the Secretary, 
in consultation with grantees under this part, shall determine the 
relationship between the costs of the activities referred to in 
paragraph (1) and the access of eligible individuals to the services 
and research opportunities described in such paragraph.'' The proposed 
limitation on administrative expenses is based on a collaborative 
review process conducted by HRSA. The proposed limitation on 
administrative expenses is based on the following:
    1. An analysis of the current expenditures of Title IV grantees and 
their relationship to access to services and research opportunities.
    [sbull] It was determined from an external and internal review that 
the current administrative expenditures by Title IV grantees of record 
are an average of 14 percent of the total budget. Currently, of

[[Page 47924]]

the 63 grantee budgets analyzed, 24 (38 percent) expend 10 percent or 
less of their total grant award for administrative expenses; 11 (17.5 
percent) expend over 10 percent but less than 15 percent; 10 (16 
percent) expend over 15 percent but less than 20 percent; and, 18 (28.6 
percent) expend over 20 percent up to 36.6 percent. It was determined 
that the lower the amount of administrative expenses allocated, the 
higher the amount of direct services provided to program clients.
    [sbull] The average Title IV project served 512 HIV-infected 
clients, 273 uninfected clients, and 198 clients whose serostatus is 
unknown. The number of HIV infected clients served was not associated 
with the number of contractors in a Title IV network, receipt of Title 
I funds, or the organizational type of the lead agency. The number of 
HIV infected clients served is positively correlated with the number of 
years of Title IV funding, and of funds received from other Ryan White 
CARE Act Title sources.
    2. In exercising its responsible stewardship of public funds, HRSA 
seeks to assure that limited Federal dollars will be maximized to the 
greatest extent possible to fund direct client services. The Title IV 
program's current absence of a limitation on administrative expenses 
should not be used to absorb administrative expenses of other related 
programs that have limitations.
    3. HRSA has an established goal of enhancing access to care for 
HIV-infected women, infants, children, and youth and their affected 
family members under the Title IV program. We have determined that a 
limitation on administrative expenses will not diminish the ability of 
grantees to provide access to appropriate HIV/AIDS services and 
research opportunities. Furthermore, we believe that the establishment 
of a limitation on administrative expenses will maximize the dollars 
available for direct care services and access to research 
opportunities. With a total of $64,759,964 of funds currently being 
provided to the 90 fiscal year (FY) 2002 Title IV grantees, we have 
determined that reducing the administrative expenditure from the 
current average of 14 percent to 10 percent would result in a shift of 
$2,590,399 in administrative disbursements to direct services to 
clients. This increase in available services to Title IV clients is 
equivalent to the addition of approximately 10 new projects.
    4. HRSA has had years of experience in managing other Ryan White 
CARE Act grantees with legislatively imposed administrative expenses. 
Titles I, II, and III of the CARE Act limit grantees to 10 percent for 
administrative costs. Many of the current Title IV programs are also 
recipients of Title III grant funds and are effectively implementing 
their Title III programs with a 10 percent limitation on administrative 
expenses. Although Title IV provides some services that Title III does 
not, both are expected to assure the provision of health care services 
to HIV-infected clients and must meet the same standards for quality 
primary HIV care. HRSA is confident that Title IV grantees can maintain 
the highest quality of services and provide access to research for 
clients while expending no more than ten percent on administrative 
expenses.
    5. Although there are a variety of Title IV program models, each of 
the Title IV programs provides an extensive array of services either 
directly or through contractual relationships. The proportion of total 
Title IV grant funds allocated by lead agencies for administrative 
services is strongly associated with the organizational type of the 
lead agency. Of the agencies whose administrative expenses exceed 20 
percent of the total grant award, the majority were university-based 
health systems. Of the agencies whose administrative expenses were 10 
percent or less, the majority were community-based programs. When 
comparing similar grantee models on amount allocated for administrative 
expenses, we found that an administrative budget allocation over 10 
percent was not a requisite for serving a greater number of Title IV 
clients.

Implementation

    The limitation on administrative expenses is proposed for 
implementation as follows:
    5.1 The limitation on administrative expenses will be proposed as a 
specific percent. This limitation also would apply to any contractors 
of the Grantee who provide client services.
    5.2 Recognizing that some grantees may exceed the specified percent 
limitation at present, we propose that beginning with FY 2004 funding, 
administrative expenses shall not exceed the specified percentage 
limitation plus 10 percent of the total grant award to the Grantee. 
These administrative costs include all administrative costs of the 
grantee and all payments to contractors or consultants who provide 
administrative services to the Grantee. The administrative costs of 
individual client service contractors of the grantee would not be 
considered part of this limitation to the grantee. Notwithstanding this 
provision, no Grantee shall claim administrative expenses in excess of 
the percentage received in FY 2002, if such administrative expenses 
exceeded 10 percent of the total grant award.
    5.3 For FY 2005, no Grantee shall claim administrative expenses in 
excess of the specified percentage limitation plus 5 percent. 
Notwithstanding this provision, no Grantee shall claim administrative 
expenses in excess of the percentage received in FY 2004.
    5.4 For FY 2006 and in each succeeding year, no Grantee shall claim 
administrative expenses in excess of the specified percent limit.
    5.5 It is the Grantee's responsibility to enforce the percent 
limitation on administrative expenses of contractors of the Grantee who 
provide direct services. This administrative limitation will apply to 
all contractor payments made in FY 2004 and each succeeding year.
    5.6 Administrative expenditures under this section for grant awards 
shall be clearly specified and documented in grantee applications and 
budgets in the following categories: direct services; program support; 
and administrative costs. Direct services are those services that are 
provided to the patients/clients to meet the goals and objectives of 
the program. This includes the provision of professional, diagnostic, 
and therapeutic services rendered by a primary care provider. Also 
included are referrals to and provision of specialty care. Program 
support services are services that sustain program activities and 
contribute to or help to improve direct service delivery. Such services 
include capacity building initiatives, prevention and education 
materials and translation services among others. Administrative costs 
are funds to be used by the grantee for grant management and monitoring 
activities. This includes costs related to any staff or activity 
unrelated to direct or support services. Also, indirect costs are 
included as administrative costs. Indirect costs will be allowed only 
if the applicant has a Federal negotiated indirect cost rate. All 
indirect costs are considered administrative and subject to the 
specified percent limitation. The categorization of all services as 
direct, program support, and administrative is further addressed in the 
Title IV Ryan White CARE Act program guidance which can be obtained 
from HAB at the address noted above.
    As required in the Act, ``the Secretary may not make a grant under 
this part unless the grantee complies with such requirements as may be 
included in such determination.'' Accordingly, all Ryan White CARE Act 
Title IV recipients of Grants for Coordinated

[[Page 47925]]

Services and Access to Research for Women, Infants, Children, and Youth 
will be required to comply with the limitation on administrative 
expenses to be established in the final notice that will follow this 
comment period.

    Dated: August 5, 2003.
Elizabeth M. Duke,
Administrator.
[FR Doc. 03-20439 Filed 8-11-03; 8:45 am]
BILLING CODE 4165-15-P