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-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-703T	

TITLE:     RYAN WHITE CARE ACT: Changes Needed to Improve the 
Distribution of Funding

DATE:   04/27/2006 
				                                                                         
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GAO-06-703T

     

     * Background
     * Multiple CARE Act Provisions Contribute to Disproportionate
          * Provisions in CARE Act Funding Formulas Incorporate Measures
          * CARE Act Funding Provisions for Metropolitan Areas Result in
          * Hold-harmless Provisions and Grandfather Clause Protect Fund
     * Funding Effect of Using HIV Case Counts Would Depend on Mult
     * Concluding Observations
     * Contact and Acknowledgments
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Testimony

Before the Subcommittee on Health, Committee on Energy and Commerce, House
of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 9:00 a.m. EDT

Thursday, April 27, 2006

RYAN WHITE CARE ACT

Changes Needed to Improve the Distribution of Funding

Statement of Marcia Crosse

Director, Health Care

GAO-06-703T

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the Ryan White Comprehensive AIDS
Resources Emergency Act of 1990 (CARE Act).1 I will specifically address
factors that affect CARE Act funding of services for those with the human
immunodeficiency virus (HIV) or acquired immunodeficiency syndrome (AIDS)
and program coverage for individuals served by the CARE Act.2 The Centers
for Disease Control and Prevention (CDC) estimate that between 1,039,000
and 1,185,000 people in the United States were living with HIV/AIDS at the
end of 2003. The number of people infected with HIV/AIDS is likely to have
risen since then, and CDC estimates that, as of December 2004, it included
415,193 individuals with AIDS.

The CARE Act, which is administered by the Department of Health and Human
Services' (HHS) Health Resources and Services Administration (HRSA),
established a number of grant programs through which funds are made
available to states-including the District of Columbia-territories,3 and
metropolitan areas to provide health care, medications, and support
services to individuals and families affected by HIV/AIDS. In fiscal year
2004, more than $2 billion was provided through the CARE Act for these
health care and support services. The majority of these funds were
distributed under Title I and Title II4 of the CARE Act through
formula-driven base grants in fiscal year 2004 based upon a measure of
each grantee's estimated living AIDS cases (ELC).5 Title I provides for
funding to eligible metropolitan areas (EMA) while Title II provides for
funding to states and territories.6 Both Titles I and II contain
hold-harmless provisions that limit how much funding can decline from one
year to the next. Title I also contains a grandfather clause that was
added in 1996, which states that areas eligible for Title I funding at
that time continue to be eligible even if they no longer meet the
eligibility criteria.

1Pub. L. No. 101-381, 104 Stat. 576 (codified as amended at 42 U.S.C. S:S:
300ff-300ff-111 (2000)). Unless otherwise indicated, references to the
CARE Act are to current law.

2HIV is the virus that causes AIDS. Throughout this testimony, 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.

3In addition to the 50 states, the CARE Act authorizes grants to the
District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin
Islands, American Samoa, the Commonwealth of the Northern Mariana Islands,
the Republic of the Marshall Islands, the Federated States of Micronesia,
and the Republic of Palau. Throughout this testimony, the term state
refers to the 50 states and the District of Columbia, and territory refers
to these listed territories.

4The 1990 CARE Act added a new Title XXVI to the Public Health Service
Act. In general, because Part A of that new title, which authorizes grants
to metropolitan areas, was established by Title I of the CARE Act, it is
commonly referred to as Title I, and because Part B, which authorizes
grants to states and territories, was established by Title II of the CARE
Act, it is commonly referred to as Title II.

The use of AIDS cases in the distribution of formula grants was prescribed
because most jurisdictions tracked and reported AIDS cases instead of HIV
cases when the grant programs were established. Because of concerns that a
jurisdiction's disease burden is not adequately reflected by only counting
cases that have progressed to AIDS, the Ryan White CARE Act Amendments of
2000 required the use of HIV/AIDS case counts in the distribution of
formula grants not later than fiscal year 2007.7 We have reported that
because CARE Act grants serve persons who have been diagnosed with HIV
that has not progressed to AIDS as well as those for whom it has, it would
be reasonable to distribute funds on the basis of the total number of
persons living with HIV/AIDS.8 Incorporating HIV data along with AIDS data
would result in targeting funds more accurately according to need.
However, because there is a lack of HIV data that are sufficiently
adequate and reliable to serve as a basis for CARE Act formula grant
allocations, as of December 2005, HIV cases have not been used in the
distribution of formula grants under CARE Act programs.

To assist the subcommittee as it considers the reauthorization of CARE Act
programs, my testimony provides our findings on CARE Act funding formulas.
Specifically, I will discuss

5HRSA calculates a grantee's ELCs by using data from CDC on the reported
AIDS case counts for the last 10 years and weighting those numbers to
account for the likelihood of deaths.

6Under Title I, a metropolitan area with a population of at least 500,000
and more than 2,000 reported AIDS cases in the last 5 calendar years is
eligible to receive Title I funding, and is defined as an EMA.

7Pub. L. No. 106-345, S: 206(b), 114 Stat. 1319, 1334-35.

8GAO, Ryan White CARE Act: Opportunities to Enhance Funding Equity,
GAO/T-HEHS-00-150 (Washington, D.C.: July 11, 2000), 6.

           1. the extent of funding differences among CARE Act grantees, and
           how specific CARE Act funding-formula provisions contribute to
           these differences, and
           2. what distribution differences could result from using HIV cases
           in CARE Act funding formulas.

My testimony today is based on our February 2006 report on CARE Act
funding.9 In carrying out the work for our report, we reviewed the CARE
Act of 1990, as well as the 1996 and 2000 CARE Act amendments, HRSA
documents on CARE Act funding, Institute of Medicine (IOM) reports on the
CARE Act, and other related reports. We interviewed CDC, HRSA, and state
officials, as well as officials from the National Alliance of State and
Territorial AIDS Directors. We analyzed data for fiscal year 2004,
obtained from HRSA and CDC, to examine the effects of funding-formula
provisions and the use of HIV cases with ELCs in making CARE Act funding
allocations.10 We also collected data on HIV case counts from state and
local HIV/AIDS officials. Based on the information HRSA, CDC, and state
and local officials provided regarding verification of the reliability of
these data, we determined these data to be sufficiently reliable for the
purposes of our analyses. We performed our work in accordance with
generally accepted government auditing standards. The report's appendix I
provides a more detailed explanation of our scope and methodology.

In brief, multiple provisions in the CARE Act grant funding formulas as
enacted result in funding not being comparable per AIDS case across
grantees. First, the CARE Act uses measures of AIDS cases that do not
accurately reflect the number of persons living with AIDS. For example,
the statutory funding formulas require the use of cumulative AIDS case
counts, which could include deceased cases. Second, CARE Act provisions
related to metropolitan areas result in variability in the amounts of
funding per AIDS case among grantees. For example, AIDS cases within EMAs
are counted once for determining funding under Title I of the CARE Act for
EMAs and again under Title II for determining funding for the states and
territories in which those EMAs are located. As a result, states with EMAs
receive more total funding per AIDS case than states without EMAs. Third,
CARE Act hold-harmless provisions under Titles I and II and the
grandfather clause for EMAs under Title I sustain funding and eligibility
of CARE Act grantees on the basis of a previous year's measurements of the
number of AIDS cases in these jurisdictions. For example, the CARE Act
Title I hold-harmless provision results in one EMA continuing to have
deceased AIDS cases factored into its allocation because its hold-harmless
funding dates back to the mid-1990s when formula funding was based on a
count of AIDS cases from the beginning of the epidemic.

9GAO, HIV/AIDS: Changes Needed to Improve the Distribution of Ryan White
CARE Act and Housing Funds, GAO-06-332 (Washington, D.C.: Feb. 28, 2006).

10Our analyses of CARE Act funding-formula provisions and the use of HIV
cases in making CARE Act funding allocations include the states, Puerto
Rico, and metropolitan areas eligible for funding.

If HIV case counts had been incorporated along with ELCs in allocating
fiscal year 2004 CARE Act grants, instead of ELCs alone, funding would
have shifted among jurisdictions. Grantees in the South and the Midwest
generally would have received more funding if HIV cases were used in the
funding formulas, but there would have been grantees that would have
received increased funding and grantees that would have received decreased
funding in every region of the country. Although CARE Act grantees have
established HIV case-reporting systems, differences between these
systems-in their maturity and reporting methods, for instance-would have
affected the distribution of CARE Act funds based on ELCs and HIV case
counts. Grantees with more mature HIV-reporting systems would tend to
receive more funds.

We reported in February 2006 that if Congress wishes CARE Act funding to
more closely reflect the distribution of persons living with AIDS, it
should consider taking actions that lead to more comparable funding per
case by revising the funding formulas. In accordance with achieving more
comparable funding per AIDS case, we raised a number of matters for
consideration when Congress reviews the CARE Act. HHS generally agreed
with GAO's identification of issues in the funding formulas.

                                   Background

The CARE Act was enacted in 1990 to respond to the needs of individuals
and families living with HIV or AIDS and to direct federal funding to
areas disproportionately affected by the epidemic. The Ryan White CARE Act
Amendments of 199611 and the Ryan White CARE Act Amendments of 200012
modified the original funding formulas. For example, prior to the 1996
amendments, the CARE Act required that for purposes of determining grant
amounts a metropolitan area's caseload be measured by a cumulative count
of AIDS cases recorded in the jurisdiction since reporting began in
1981.13 The 1996 amendments required the use of ELCs instead of cumulative
AIDS cases.14 Because this switch would have resulted in large shifts of
funding away from jurisdictions with a longer history of the disease than
other jurisdictions, due in part to a higher proportion of deceased cases,
the 1996 CARE Act amendments added a hold-harmless provision under Title
I, as well as under Title II, that limits the extent to which a grantee's
funding can decline from one year to the next.

11Pub. L. No. 104-146, 110 Stat. 136.

12Pub. L. No. 106-345, 114 Stat. 1319.

Titles I and II also provide for other grants to subsets of eligible
jurisdictions either by formula or by a competitive process. For example,
in addition to AIDS Drug Assistance Program (ADAP) base grants, Title II
also authorizes grants for states and certain territories with
demonstrated need for additional funding to support their ADAPs.15 These
grants, known as Severe Need grants, are funded through a set-aside of
funds otherwise available for ADAP base grants. Title II also authorizes
funding for "Emerging Communities," which are communities affected by AIDS
that have not had a sufficient number of AIDS cases reported in the last 5
calendar years to be eligible for Title I grants as EMAs. In addition,
Title II contains a minimum-grant provision that guarantees that no
grantee will receive a Title II base grant less than a specified funding
amount.

Metropolitan areas heavily affected by HIV/AIDS have always been
recognized within the structure of the CARE Act. In 1995 we reported that,
with combined funding under Title I and Title II, states with EMAs receive
more funding per AIDS case than states without EMAs.16 To adjust for this
situation, the 1996 amendments instituted a two-part formula for Title II
base grants that takes into account the number of ELCs that reside within
a state but outside of any EMA. Under this distribution formula, 80
percent of the Title II base grant is based upon a state's proportion of
all ELCs, and 20 percent of the base grant is based on a state's
proportion of ELCs outside of EMAs relative to all such ELCs in all states
and territories. A second provision included in 1996 protected the
eligibility of EMAs. The 1996 amendments provided that a jurisdiction
designated as an EMA for that fiscal year would be "grandfathered" so it
would continue to receive Title I funding even if its reported number of
AIDS cases dropped below the threshold for eligibility. Table 1 describes
CARE Act formula grants for Titles I and II.

13In this statement, cumulative AIDS cases are the total number of AIDS
cases, both living and dead, reported in a jurisdiction in a given period.

14HRSA calculates a jurisdiction's ELCs by using data from CDC on the
reported AIDS case counts for the last 10 years and weighting those
numbers to account for the likelihood of deaths. We used this measure as
our estimate of living AIDS cases in our analyses of CARE Act
funding-formula provisions and the use of HIV cases in CARE Act funding
formulas.

15In addition to the 50 states, these grants, like ADAP base grants, are
authorized to the District of Columbia, the Commonwealth of Puerto Rico,
Guam, and the Virgin Islands.

16See GAO, Ryan White CARE Act of 1990: Opportunities Are Available to
Improve Funding Equity, GAO/T-HEHS-95-126 (Washington, D.C.: Apr. 5,
1995).

Table 1: Description of CARE Act Title I and Title II Formula Grants

Formula      Eligible                          Minimum      Hold-harmless  
grant        grantees      Distribution        grant        provisiona     
Title I Base Metropolitan  Distributed among   No           Grant annually 
Grant        areas with    EMAs according to                declines to    
                500,000 or    each EMA's                       98%, 95%, 92%, 
                more in       proportion of ELCs               and 89% of the 
                population    relative to all                  base year      
                and with more EMAs.                            grant,         
                than 2,000                                     respectively.c 
                reported AIDS                                  In the fifth   
                cases in the                                   and all        
                most recent 5                                  subsequent     
                calendar                                       years, EMA     
                yearsb                                         receives 85%   
                                                               of base year   
                                                               grant. The     
                                                               funds          
                                                               necessary to   
                                                               meet the       
                                                               hold-harmless  
                                                               requirement    
                                                               are deducted   
                                                               from funds     
                                                               available for  
                                                               supplemental   
                                                               grants under   
                                                               Title I.d      
Title II     States and    Eighty percent of   For states   Grant declines 
Base Grant   territoriese  base grant funding  with fewer   by 1% per year 
                              divided among       than 90      from the       
                              states/territories  ELCs,        fiscal year    
                              according to each   $200,000;    2000 grant. In 
                              grantee's           states with  fifth year,    
                              proportion of all   90 or more   grant is 95%   
                              ELCs. Twenty        ELCs,        of 2000 grant. 
                              percent of base     $500,000;    
                              grant funding       for          
                              divided among       territories, 
                              states/territories  $50,000      
                              according to each                
                              grantee's ELCs                   
                              located outside the              
                              EMAs within the                  
                              state's/territory's              
                              borders relative to              
                              such ELCs in all                 
                              states/territories.              
Title II     States and    Distributed         No           Grant declines 
ADAP Base    certain       according to each                by 1% per year 
Grant        territoriesf  grantee's                        from the       
                              proportion of all                fiscal year    
                              ELCs.                            2000 grant. In 
                                                               fifth year     
                                                               grant is 95%   
                                                               of 2000 grant. 
Title II     States and    Distributed         No           No             
ADAP Severe  certain       according to each                
Need Grantg  territoriesf  grantee's                        
                with a severe proportion of all                
                need for a    ELCs: grantees must              
                grant to      agree to match 25                
                increase      percent of their                 
                access to     severe need grant                
                medications   and not to impose                
                              eligibility                      
                              requirements                     
                              stricter than those              
                              in place on January              
                              1, 2000.                         
Title II     States and    Funds are divided   Minimum of   No             
Emerging     territories   into two tiers: 50% $5 million   
Communities  with          distributed among   for each     
Grant        metropolitan  communities with    tier         
                areas that    1,000-1,999 AIDS                 
                are not       cases, and 50%                   
                eligible for  distributed among                
                Title I, and  communities with                 
                that have     500-999 AIDS cases.              
                500-1,999     Funding is                       
                reported AIDS distributed                      
                cases in the  according to each                
                most recent 5 community's                      
                calendar      proportion of AIDS               
                years         cases (reported in               
                              the most recent 5                
                              calendar years) in               
                              Emerging                         
                              Communities within               
                              the tier.                        

Source: HRSA.

Notes: HRSA has also awarded Minority AIDS Initiative grants to EMAs,
states, and territories. HRSA characterizes Minority AIDS Initiative
grants to EMAs as Title I grants and Minority AIDS Initiative grants to
states and territories as Title II grants. These funds are allocated by
formula. Title I funds have been used for grants to EMAs with greater than
zero reported nonwhite AIDS cases in the most recent 2 calendar years. The
funds are distributed among all EMAs according to each EMA's proportion of
nonwhite AIDS cases reported over the most recent 2 calendar years. Title
II funds have been used for grants to states and territories with greater
than zero reported nonwhite AIDS cases in the most recent 2 calendar
years. The funds are distributed among all grantees according to each
grantee's proportion of nonwhite AIDS cases reported over the most recent
2 calendar years. There are no minimum-grant or hold-harmless provisions
for these grants.

aIf the distribution formula would otherwise result in a funding decrease
from a prior year, a hold-harmless provision may be triggered to mitigate
the decrease in funding.

bA grandfather clause added in 1996 provides that areas eligible at that
time continue to be eligible even if they no longer meet the eligibility
criteria.

cThe base year is the fiscal year prior to that in which the EMA first
becomes eligible for hold-harmless funding.

dTitle I also includes supplemental grants, which are awarded to EMAs
using a competitive application process based on the demonstration of
severe need and other criteria.

eIn addition to the 50 states, Title II base grants are authorized for the
District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin
Islands, American Samoa, the Commonwealth of the Northern Mariana Islands,
the Federated States of Micronesia, the Republic of Palau, and the
Republic of the Marshall Islands.

fIn addition to the 50 states, these grants are authorized for the
District of Columbia, the Commonwealth of Puerto Rico, Guam, and the
Virgin Islands.

gFunding for Severe Need grants may be reduced to maintain funding for
some states under a Title II hold-harmless provision. Severe Need grants
are funded by setting aside 3 percent of the funds earmarked specifically
for ADAPs.

The 2000 amendments provided for HIV case counts to be incorporated in the
Title I and Title II funding formulas as early as fiscal year 2005 if such
data were available and deemed "sufficiently accurate and reliable" by the
Secretary of Health and Human Services.17 They also required that HIV data
be used no later than the beginning of fiscal year 2007. In June 2004 the
Secretary of Health and Human Services determined that HIV data were not
yet ready to be used for the purposes of distributing formula funding
under Title I and Title II of the CARE Act.

  Multiple CARE Act Provisions Contribute to Disproportionate Funding per AIDS
                                      Case

Provisions in the CARE Act funding formulas result in a distribution of
funds among grantees that does not reflect the relative distribution of
AIDS cases in these jurisdictions. We found that provisions affect the
proportional allocation of funding as follows: (1) the AIDS case-count
provisions in the CARE Act result in a distribution of funding that is not
reflective of the distribution of persons living with AIDS, (2) CARE Act
provisions related to metropolitan areas result in variability in the
amounts of funding per ELC among grantees, and (3) the CARE Act
hold-harmless provisions and grandfather clause protect the funding of
certain grantees.

Provisions in CARE Act Funding Formulas Incorporate Measures of AIDS Cases That
Do Not Reflect an Accurate Count of Persons Living with AIDS

Provisions in the CARE Act use measurements of AIDS cases that do not
reflect an accurate count of people currently living with AIDS.
Eligibility for Title I funding and Title II Emerging Communities grants,
as well as the amounts of the Emerging Communities grants, is based on
cumulative totals of AIDS cases reported in the most recent 5-year period.
This results in funding not being distributed according to the current
distribution of the disease. For example, because Emerging Communities
funding is determined by using 5-year cumulative case counts, allocations
could be based in part on deceased cases, that is, people for whom AIDS
was reported in the past 5 years but who have since died. In addition,
these case counts do not take into account living cases in which AIDS was
diagnosed more than 5 years earlier. Consequently, 5-year cumulative case
counts can substantially misrepresent the number of AIDS patients in these
communities.

1742 U.S.C. S:S: 300 ff-13(a)(3)(D)(i) and 300ff-28(a)(2)(D)(i) (2000).

The use of ELCs as provided for in the CARE Act can also lead to
inaccurate estimates of living AIDS cases. Currently, Title I, Title II,
and ADAP base funding, which constitute the majority of formula funding,
are distributed according to ELCs. ELCs are an estimate of living AIDS
cases calculated by applying annual national survival weights to the most
recent 10 years of reported AIDS cases and adding the totals from each
year. This method for estimating cases was first included in the CARE Act
Amendments of 1996. At that time, this approach captured the vast majority
of living AIDS cases. However, some persons with AIDS now live more than
10 years after their cases are first reported, and they are not accounted
for by this formula.18 Thus, like the 5-year reported case counts, ELCs
can misrepresent the number of living AIDS cases in an area in part by not
taking into account those persons living with AIDS whose cases were
reported more than 10 years earlier.

CARE Act Funding Provisions for Metropolitan Areas Result in Disproportionate
Funding

When total Title I and Title II funding is considered, states with EMAs
and Puerto Rico receive more funding per ELC than states without EMAs
because cases within EMAs are counted twice, once in connection with Title
I base grants and once for Title II base grants. Eighty percent of the
Title II base grant is determined by the total number of ELCs in the state
or territory. The remaining 20 percent is based on the number of ELCs in
each jurisdiction outside of any EMA. This 80/20 split was established by
the 1996 CARE Act amendments to address the concern that grantees with
EMAs received more total Title I and Title II funding per case than
grantees without EMAs. However, even with the 80/20 split, states with
EMAs and Puerto Rico receive more total Title I and Title II funding per
ELC than states without EMAs. States without EMAs receive no funding under
Title I, and thus, when total Title I and Title II funds are considered,
states with EMAs and Puerto Rico receive more funding per ELC. Table 2
shows that the higher the percentage of a state's ELCs within EMAs, the
more that state received in total Title I and Title II funding per ELC.19

18When determining CARE Act funding for fiscal year 2004, HRSA used a
survival weight of .28 for AIDS cases that had been reported 10 years
earlier. This figure represents the proportion of persons who had been
reported with AIDS 10 years earlier and were known to be alive.

19Approximately 80 percent of Puerto Rico's ELCs are in EMAs.

Table 2: Relationship between ELCs in EMAs and Total CARE Act Title I and
II Funding per ELC, Fiscal Year 2004

Percentage of states' and Puerto Rico's ELCs in                            
EMAs                                              Average funding per ELCa
None                                                                $3,592 
Less than 50 percent                                                 3,954 
50 to 75 percent                                                     4,717 
More than 75 percent                                                 4,955 

Source: GAO analysis of HRSA data.

aWe excluded from our analyses the nine states that received the minimum
Title II base grant awards. Under Title II, states with fewer than 90
cases receive no less than $200,000 in Title II base grant and states with
90 or more cases receive at least $500,000.

The two-tiered division of Emerging Communities also results in
disparities in funding among metropolitan areas. Title II provides for a
minimum of $10 million to states with metropolitan areas that have 500 to
1,999 AIDS cases reported in the last 5 calendar years but do not qualify
for funding under Title I as EMAs. The funding is equally split so that
half the funding is divided among the first tier of communities with 500
to 999 reported cases in the most recent 5 calendar years while the other
half is divided among a second tier of communities with 1,000 to 1,999
reported cases in that period.

In fiscal year 2004, the two-tiered structure of Emerging Communities
funding led to large differences in funding per reported AIDS case in the
last 5 calendar years among the Emerging Communities because the total
number of AIDS cases in each tier was not equal. Twenty-nine communities
qualified for Emerging Communities funds in fiscal year 2004. Four of
these communities had 1,000 to 1,999 reported AIDS cases in the last 5
calendar years and 25 communities had 500 to 999 cases. This distribution
meant that the 4 communities with a total of 4,754 reported cases in the
last 5 calendar years split $5 million while the remaining 25 communities
with a total of 15,994 reported cases in the last 5 calendar years also
split $5 million. These case counts resulted in the 4 communities
receiving $1,052 per reported case while the other 25 received $313 per
reported case. Table 3 lists the 29 Emerging Communities along with their
reported AIDS case counts over the most recent 5 years and their funding.

Table 3: Title II Emerging Communities in Fiscal Year 2004

                                         AIDS cases      Emerging Communities 
                                    reported in the     funding per AIDS case 
                                      most recent 5      reported in the most 
Emerging Community                calendar years   recent 5 calendar years 
Memphis, Tenn.                             1,588                    $1,052 
Nashville, Tenn.                           1,123                     1,052 
Baton Rouge, La.                           1,038                     1,052 
Indianapolis, Ind.                         1,005                     1,052 
Columbia, S.C.                               972                       313 
Charlotte, N.C.                              875                       313 
Wilmington, Del.                             801                       313 
Richmond, Va.                                783                       313 
Raleigh-Durham-Chapel Hill, N.C.             775                       313 
Jackson, Miss.                               722                       313 
Louisville, Ky.                              705                       313 
Rochester, N.Y.                              681                       313 
Fort Pierce-Port St. Lucie, Fla.             636                       313 
Greensboro-Winston-Salem, N.C.               617                       313 
Birmingham, Ala.                             615                       313 
Oklahoma City, Okla.                         608                       313 
Pittsburgh, Pa.                              602                       313 
Springfield, Mass.                           588                       313 
Monmouth-Ocean, N.J.                         582                       313 
Buffalo-Niagara Falls, N.Y.                  581                       313 
Greenville, S.C.                             560                       313 
Columbus, Ohio                               558                       313 
Milwaukee, Wis.                              558                       313 
Salt Lake City, Utah                         555                       313 
Sarasota, Fla.                               539                       313 
Charleston, S.C.                             538                       313 
Cincinnati, Ohio                             517                       313 
Daytona Beach, Fla.                          514                       313 
Providence, R.I.                             512                       313 
Total                                     20,748 

Source: GAO analysis of HRSA data.

Note: Emerging Communities are metropolitan areas not eligible for Title I
grants and that have 500-1,999 reported AIDS cases in the most recent 5
calendar years. The 5 most recent calendar years are 1998-2002.

Hold-harmless Provisions and Grandfather Clause Protect Funding of Certain CARE
Act Grantees

Titles I and II of the CARE Act both contain provisions that protect
certain grantees' funding levels. Title I has a hold-harmless provision
that guarantees that the Title I base grant to an EMA will be at least as
large as a statutorily specified percentage of a previous year's funding.
The Title I hold-harmless provision has primarily protected the funding of
one EMA, San Francisco.

If an EMA qualifies for hold-harmless funding, that amount is added to the
base funding and distributed together as the base grant. In fiscal year
2004, the San Francisco EMA received $7,358,239 in hold-harmless funding,
or 91.6 percent of the hold-harmless funding that was distributed.20 The
second largest recipient was Kansas City, which received $134,485, or 1.7
percent of the hold-harmless funding under Title I. Table 4 lists the EMAs
that received hold-harmless funding in fiscal year 2004.21 Because San
Francisco's Title I funding reflects the application of hold-harmless
provisions under the 1996 amendments, as well as under current law, San
Francisco's Title I base grant is determined in part by the number of
deceased cases in the San Francisco EMA as of 1995.

20The funds used to meet the Title I hold-harmless requirement are
deducted from the funds otherwise available for Title I supplemental
grants before these grants are awarded. Supplemental grants are awarded by
HRSA to EMAs using a competitive process based on the demonstration of
need and other criteria.

21San Francisco was the only EMA that received hold-harmless funding from
fiscal year 1999 through fiscal year 2002. In fiscal year 2003, 19
additional EMAs qualified for hold-harmless funding. Twenty-one EMAs
received hold-harmless funding in fiscal year 2004. Eleven EMAs qualified
in both fiscal years 2003 and 2004.

Table 4: Title I Hold-harmless Funding, Fiscal Year 2004

                                                                          Base               
                                               Percent of Hold-harmless  grant Hold-harmless 
                              Hold-harmless hold-harmless   funding per    per  as a percent 
EMA                                 funding       funding           ELC   ELCa of base grant
San Francisco, Calif.            $7,358,239         91.6%        $1,020 $2,241         45.5% 
Kansas City, Mo.                    134,485           1.7           104  1,325           7.8 
Santa Rosa, Calif.                   22,614           0.3            47  1,268           3.7 
Sacramento, Calif.                   36,456           0.5            29  1,251           2.3 
Minneapolis-St. Paul, Minn.          33,770           0.4            27  1,248           2.1 
Bergen-Passaic, N.J.                 55,288           0.7            26  1,248           2.1 
Jersey City, N.J.                    58,310           0.7            24  1,245           1.9 
Oakland, Calif.                      50,744           0.6            18  1,239           1.4 
New Haven, Conn.                     42,573           0.5            14  1,236           1.2 
Tampa-St. Petersburg, Fla.           44,908           0.6            12  1,233           0.9 
San Jose, Calif.                     12,097           0.2            11  1,232           0.9 
Boston, Mass.                        60,284           0.8            10  1,231           0.8 
Nassau-Suffolk, N.Y.                 21,212           0.3             8  1,230           0.7 
Middlesex-Somerset-Hunterdon,                                                                
N.J.                                  8,315           0.1             7  1,228           0.5
Jacksonville, Fla.                   12,825           0.2             6  1,228           0.5 
San Juan, P.R.                       41,011           0.5             6  1,228           0.5 
Seattle, Wash.                        9,844           0.1             4  1,225           0.3 
Denver, Colo.                         6,745           0.1             3  1,225           0.3 
Cleveland, Ohio                       4,616           0.1             3  1,224           0.2 
West Palm Beach, Fla.                 8,523           0.1             2  1,224           0.2 
Newark, N.J.                         10,975           0.1             2  1,223           0.1 
All Other EMAs                            0             0             0  1,221           0.0 
Total                           $8,033,563b       100.0%b                      

Source: GAO analysis of HRSA data.

Notes: An EMA's base funding is determined according to its proportion of
ELCs. If an EMA qualifies for hold-harmless funding, that amount is added
to the base funding and distributed together as the base grant.

aThis amount was calculated by dividing the base grant, including any
hold-harmless funding, received by each EMA by the number of ELCs in the
EMA.

bIndividual entries do not sum to total because of rounding.

More than half of the 51 EMAs received Title I funding in fiscal year 2004
even though they were below Title I eligibility thresholds.22 The
eligibility of these EMAs was protected based on a CARE Act grandfather
clause. Under a grandfather clause established by the CARE Act Amendments
of 1996, metropolitan areas eligible for funding for fiscal year 1996
remain eligible for Title I funding even if the number of reported cases
in the most recent 5 calendar years drops below the statutory threshold.
We found that in fiscal year 2004, 29 of the 51 EMAs did not meet the
eligibility threshold of more than 2,000 reported AIDS cases during the
most recent 5 calendar years but nonetheless retained their status as EMAs
(see fig. 1). The number of reported AIDS cases in the most recent 5
calendar years in these 29 EMAs ranged from 223 to 1,941. Title I funding
awarded to these 29 EMAs was about $116 million, or approximately 20
percent of the total Title I funding.

22To be eligible for Title I funding, a metropolitan area must have
reported a cumulative total of more than 2,000 AIDS cases during the most
recent 5 calendar years and have a population of at least 500,000. These
criteria differ from those used to calculate base grant funding
allocations, which are calculated using the number of ELCs.

Figure 1: Grandfathered EMAs, Fiscal Year 2004

Note: The 5 most recent calendar years are 1998-2002.

Title II has a hold-harmless provision that ensures that the total of
Title II and ADAP base grants awarded to a grantee will be at least as
large as the total of these grants a grantee received the previous year.23
This provision has the potential of reducing the amount of funding to
grantees that have demonstrated severe need for drug treatment funds
because the hold-harmless provision is funded out of amounts that would
otherwise be used for that purpose.24 Fiscal year 2004 was the first time
that any grantees triggered this provision. Severe Need grants are funded
by a 3 percent set-aside of the funds appropriated specifically for ADAPs.
Eight states became eligible for this hold-harmless funding in fiscal year
2004. In 2004, the 3 percent set-aside for Severe Need grants was $22.5
million. Of these funds, $1.6 million, or 7 percent, was used to provide
this Title II hold-harmless protection. (See table 5.) The remaining $20.8
million, or 93 percent of the set-aside amount, was distributed in Severe
Need grants.

2342 U.S.C. S: 300ff-28(a)(2)(I)(ii)(VI) (2000). Title II also contains a
hold-harmless provision that requires HRSA to consider separately Title II
base grants and ADAP base grants. For the Title II base grants, this
hold-harmless provision is funded by proportionately reducing the size of
the Title II base grants made to other jurisdictions that did not qualify
for this hold-harmless funding or receive a minimum grant. For ADAP base
grants, it would be funded by reducing the size of the ADAP base grants
made to those grantees that did not qualify for ADAP base grant
hold-harmless funding. 42 U.S.C. S: 300ff-28(a)(2)(H) (2000).

24To be eligible for a Severe Need grant, a jurisdiction must have met one
of four eligibility criteria as of January 1, 2000. It must have limited
(1) the eligibility of ADAP clients to those with incomes at or below 200
percent of the federal poverty level, (2) the number of ADAP clients by
using medical eligibility restrictions, (3) the number of antiretroviral
drugs covered in its drug formulary, or (4) the number of opportunistic
infection medications to fewer than 10 in its drug formulary.
(Opportunistic infections are illnesses such as parasitic, viral, and
fungal infections, and some types of cancer, some of which usually do not
cause disease in people with normal immune systems.) In addition, a
jurisdiction must also have agreed to provide a 25 percent match and not
impose eligibility requirements more restrictive than those in place on
January 1, 2000. According to HRSA, grantees have provided funds or
in-kind services to meet the matching requirement.

Table 5: States That Received Title II Hold-harmless Funding from Severe
Need Set-aside, Fiscal Year 2004

State        Hold-harmless amount 
Arkansas                  $23,705 
Kansas                     22,168 
New Mexico                 55,171 
North Dakota                1,820 
Oklahoma                   96,423 
Tennessee               1,300,502 
Utah                      119,695 
Vermont                       128 
Total                  $1,619,612 

Source: HRSA.

The total amount of Severe Need grant funds available in fiscal year 2004
to distribute among the eligible grantees was less than it would have been
without the hold-harmless payments. However, in fiscal year 2004 not all
25 of the Title II grantees eligible for Severe Need grants made the match
required to receive such grants. In future years, if all of the eligible
Title II grantees make the match, and if there are also grantees that
qualify to receive hold-harmless funds under this provision, grantees with
severe need for ADAP funding would get less than the amounts they would
otherwise receive.

    Funding Effect of Using HIV Case Counts Would Depend on Multiple Factors

CARE Act funding for Title I, Title II, and ADAP base grants would have
shifted among grantees if HIV case counts had been used with ELCs, instead
of ELCs alone, to allocate fiscal year 2004 formula grants. Our analyses
indicate that up to 13 percent of funding would have shifted among
grantees if HIV case counts and ELCs had been used to allocate the funds
and if the hold-harmless and minimum-grant provisions we considered were
maintained.25 Some individual grantees would have had changes that more
than doubled their funding.26 Grantees in the South and Midwest would
generally have received more funding if HIV cases were used in funding
formulas along with ELCs.27 However, there would have been grantees that
would have received increased funding and grantees that would have
received decreased funding in every region of the country.

25While we are aware of differences in the HIV data across jurisdictions,
we conducted this analysis in light of the CARE Act requirement that HIV
case counts be used for the distribution of Title I and Title II formula
grants not later than fiscal year 2007. We used two approaches to examine
the potential effect of including HIV cases in addition to persons living
with AIDS in fiscal year 2004 CARE Act funding formulas. See GAO-06-332 ,
app. I for more details regarding our methodology.

Funding changes in our model would have been larger without the
hold-harmless and minimum-grant provisions that we included. Changes in
CARE Act funding levels for Title I base grants, Title II base grants, and
ADAP base grants caused by shifting to HIV cases and ELCs would be
larger-up to 24 percent-if the current hold-harmless or minimum-grant
amounts were not in effect.

One explanation for the changes in funding allocations when HIV cases and
ELCs are used instead of only ELCs is the maturity of HIV case-reporting
systems. Case-reporting systems need several years to become fully
operational.28 We found that those grantees that would receive increased
funding from the use of HIV cases tend to be those with the oldest HIV
case-reporting systems. Those grantees with the oldest reporting systems
include 11 southern and 8 midwestern states whose HIV-reporting systems
were implemented prior to 1995.

26In our analyses, we considered the Title I hold-harmless provision and
the Title II hold-harmless provisions that are funded by proportional
reductions in Title II base grants and ADAP base grants. We did not
include the Title II hold-harmless provision funded by amounts otherwise
available for Severe Need grants.

27We classified states in accordance with the four U.S. Census Bureau
regions and the jurisdictions that constitute each region. Because Puerto
Rico is not included in any of these four regions, we excluded it from our
regional analyses. Additional details on this analysis are available in
GAO-06-332 .

28IOM has reported that it could take from 18 months to several years
after the implementation of an HIV-reporting system before there would be
valid estimates of the number of people living with HIV. See Institute of
Medicine of the National Academies, Measuring What Matters: Allocation,
Planning, and Quality Assessment for the Ryan White CARE Act (Washington,
D.C.: The National Academies Press, 2004).

Funding changes can also be linked to whether a jurisdiction has a name-
or code-based system. CDC will only accept name-based case counts as no
code-based system had met its quality criteria as of January 2006.29 CDC
does not accept the code-based data principally because methods have not
been developed to make certain that a code-reported HIV case is only being
counted once across all reporting jurisdictions.30 As a result, if HIV
case counts were used in funding formulas, HIV cases reported using codes
rather than names would not be counted in distributing CARE Act funds.
However, even if code-based data were incorporated into the CDC case
counts, the age of the code-based systems could still be a factor since
the code-based systems tend to be newer than the name-based systems. As of
December 2005, 12 of the 13 code-based systems were implemented in 1999 or
later, compared with 10 of the 39 name-based systems.31 The effect of the
maturity of the code-based systems could be increased if, as CDC believes,
name-based systems can be executed with more complete coverage of cases in
much less time than code-based systems. As a result, jurisdictions with
code-based systems could find themselves with undercounts of HIV cases for
longer periods of time than jurisdictions with name-based systems. Figure
2 shows the 39 jurisdictions where HIV case counts are accepted by CDC and
the 13 jurisdictions where they are not accepted, as of December 2005.

29CDC has established a set of performance standards for accepting case
counts from HIV-reporting systems. These standards include that case
reporting be complete (greater than or equal to 85 percent of cases are
reported) and timely (greater than or equal to 66 percent of cases
reported within 6 months of diagnosis) and that evaluation studies
demonstrate that the approach must result in accurate case counts (less
than or equal to 5 percent of reported cases are duplicates). CDC has
determined that the only systems which have been evaluated that meet these
standards use confidential, name-based reporting. In July 2005, CDC began
recommending that all states and territories adopt confidential name-based
surveillance systems to report HIV infections.

30CDC also has other concerns about code-based reporting. For example,
code-based reporting places a greater burden on health care providers
because submitted codes are frequently incomplete and require extensive
follow-up with providers to resolve potential duplicate reports on the
same person.

31Two of the 13 states, Illinois and Maine, established name-based HIV
reporting in January 2006. Both states are in the process of having their
HIV surveillance data certified by CDC and, once certified, their data
will be accepted by CDC.

Figure 2: CDC Acceptance of HIV Case Counts, December 2005

The use of HIV cases in CARE Act funding formulas could result in
fluctuations in funding over time because of newly identified preexisting
HIV cases. Grantees with more mature HIV-reporting systems have generally
identified more of their HIV cases. Therefore, if HIV cases were used to
distribute funding, these grantees would tend to receive more funds. As
grantees with newer systems identify and report a higher percentage of
their HIV cases, their proportion of the total number of ELCs and HIV
cases in the country would increase and funding that had shifted away from
states with newer HIV-reporting systems would shift back, creating
potentially significant additional shifts in program funding.

                            Concluding Observations

The funding provided under the CARE Act has filled important gaps in
communities throughout the country, but as Congress reviews CARE Act
programs, it is important to understand how much funding can vary across
communities with comparable numbers of persons living with AIDS. In our
report, we raised several matters for Congress to consider when
reauthorizing the CARE Act. We reported in February 2006 that if Congress
wishes CARE Act funding to more closely reflect the distribution of
persons living with AIDS, and to more closely reflect the distribution of
persons living with HIV/AIDS when HIV cases are incorporated into the
funding formulas, it should take the following five actions:

           o  revising the funding formulas used to determine grantee
           eligibility and grant amounts using a measure of living AIDS cases
           that does not include deceased cases and reflects the longer lives
           of persons living with AIDS,
           o  eliminating the counting of cases in EMAs for Title I base
           grants and again for Title II base grants,
           o  modifying the hold-harmless provisions for Title I, Title II,
           and ADAP base grants to reduce the extent to which they prevent
           funding from shifting to areas where the epidemic has been
           increasing,
           o  modifying the Title I grandfather clause, which protects the
           eligibility of metropolitan areas that no longer meet the
           eligibility criteria, and
           o  eliminating the two-tiered structure of the Emerging
           Communities program.

           We also reported that if Congress wishes to preserve funding for
           the ADAP Severe Need grants, it should revise the Title II
           hold-harmless provision that is funded with amounts set aside for
           ADAP Severe Need Grants. In commenting on our draft report HHS
           generally agreed with our identification of issues in the funding
           formulas.

           Mr. Chairman, this completes my prepared statement. I would be
           happy to respond to any questions you or other members of the
           subcommittee may have at this time.

           For further information regarding this statement, please contact
           Marcia Crosse at (202) 512-7119 or [email protected] . Contact
           points for our Offices of Congressional Relations and Public
           Affairs may be found on the last page of this statement. James
           McClyde, Assistant Director; Robert Copeland; Cathy Hamann; Opal
           Winebrenner; Craig Winslow; and Suzanne Worth contributed to this
           statement.

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                          Contact and Acknowledgments

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Highlights of GAO-06-703T , a testimony before the Subcommittee on Health,
Committee on Energy and Commerce, House of Representatives

April 27, 2006

RYAN WHITE CARE ACT

Changes Needed to Improve the Distribution of Funding

The CARE Act, a federal effort to address the HIV/AIDS epidemic, is
administered by HHS. The Act uses formulas based upon a grantee's number
of AIDS cases to distribute funds to eligible metropolitan areas (EMA),
states, and territories. The use of AIDS cases was prescribed because most
jurisdictions tracked and reported only AIDS cases when the grant programs
were established. HIV cases must be incorporated with AIDS cases in CARE
Act formulas no later than fiscal year 2007.

GAO was asked to discuss factors that affect the distribution of CARE Act
funding. This testimony is based on HIV/AIDS: Changes Needed to Improve
the Distribution of Ryan White CARE Act and Housing Funds, GAO-06-332
(Feb. 28, 2006). GAO discusses how specific funding-formula provisions
contribute to funding differences among CARE Act grantees and what
distribution differences could result from using HIV cases in CARE Act
funding formulas.

What GAO Recommends

In its February 2006 report, GAO stated that if Congress wishes CARE Act
funding to more closely reflect the distribution of persons living with
AIDS, it should consider taking actions that lead to more comparable
funding per case by revising the funding formulas. HHS generally agreed
with GAO's identification of issues in the funding formulas.

Multiple provisions in the CARE Act grant funding formulas as enacted
result in funding not being comparable per AIDS case across grantees.
First, the CARE Act uses measures of AIDS cases that do not accurately
reflect the number of persons living with AIDS. For example, the statutory
funding formulas require the use of cumulative AIDS case counts, which
could include deceased cases. Second, CARE Act provisions related to
metropolitan areas result in variability in the amounts of funding per
AIDS case among grantees. For example, AIDS cases within EMAs are counted
once for determining funding under Title I of the CARE Act for EMAs and
again under Title II for determining funding for the states and
territories in which those EMAs are located. As a result, states with EMAs
receive more total funding per AIDS case than states without EMAs. Third,
CARE Act hold-harmless provisions under Titles I and II and the
grandfather clause for EMAs under Title I sustain funding and eligibility
of CARE Act grantees on the basis of a previous year's measurements of the
number of AIDS cases in these jurisdictions. For example, the CARE Act
Title I hold-harmless provision results in one EMA continuing to have
deceased AIDS cases factored into its allocation because its hold-harmless
funding dates back to the mid-1990s when formula funding was based on a
count of AIDS cases from the beginning of the epidemic.

If HIV case counts had been incorporated along with the number of
estimated living AIDS cases (ELC) in allocating fiscal year 2004 CARE Act
grants instead of ELCs alone, funding would have shifted among
jurisdictions. Grantees in the South and the Midwest generally would have
received more funding if HIV cases were used in the funding formulas, but
there would have been grantees that would have received increased funding
and grantees that would have received decreased funding in every region of
the country. Although CARE Act grantees have established HIV
case-reporting systems, differences between these systems-in their
maturity and reporting methods, for instance-would have affected the
distribution of CARE Act funds based on ELCs and HIV case counts. Grantees
with more mature HIV-reporting systems would tend to receive more funds.
*** End of document. ***