Ryan White Care Act: Opportunities to Enhance Funding Equity (Testimony,
07/11/2000, GAO/T-HEHS-00-150).

Pursuant to a congressional request, GAO discussed ways to distribute
Ryan White Comprehensive AIDS Resources Emergency (CARE) Act funds to
states and localities, focusing on the: (1) potential for distributing
funds on the basis of counts of persons with human immunodeficiency
virus (HIV) infection in each geographic area rather than on counts of
only persons whose disease has progressed to acquired immunodeficiency
syndrome (AIDS); (2) differences in funds for states with an eligible
metropolitan area (EMA), which receive grants under both title I and
title II of the CARE Act, and states without an EMA, which receive only
title II grants; and (3) current effect of the hold-harmless provision
adopted in the 1996 reauthorization, when the method of counting living
AIDS cases replaced the practice of counting cumulative AID cases.

GAO noted that: (1) only about 60 percent of the states include HIV
cases that have not progressed to AIDS in their reports to the Centers
for Disease Control and Prevention (CDC); (2) to ensure that the
formulas provide an equitable distribution, all states would need to
report HIV cases; (3) CDC officials told GAO that they expect all states
to be reporting new HIV cases by 2003 and that an additional 1 to 3
years may be needed to allow cases that existed before then to be
entered into their reporting systems; (4) however, the states' ability
to completely identify past cases is not known; (5) GAO also found
substantial differences in funding between states with an EMA and those
without one; (6) for example, in fiscal year (FY) 2000 states that had
no eligible EMA received on average of $3,340 per person suffering from
AIDS; (7) in contrast, the states with more than 75 percent of their
AIDS cases in an EMA received nearly 50 percent more, averaging $4,954
per AIDS case; (8) states such as California and New York with more than
90 percent of their cases in EMAs received $5,240 per case or almost 60
percent more than states without an EMA; (9) GAO has in the past
recommended changes to the Ryan White Funding Formulas that would result
in more comparable funding across states; (10) a hold-harmless provision
was included in the 1996 reauthorization to help with the transition of
the EMAs that would receive less by using living AIDS rather than
cumulative AIDS cases, which included both living and deceased cases;
(11) the transition has been very gradual and has had the effect of
providing some EMAs with more funding on a per-person-with-AIDS basis
than other similarly situated EMAs; (12) only one EMA, San Francisco,
continues to benefit from the hold-harmless provision, and it received
substantially more aid than other similarly situated EMAs; (13) for
example, San Francisco received more than 80 percent greater title I
funding per person with AIDS than other EMAs; (14) Oakland, across the
bay from San Francisco, and all other EMAs received $1,289 per person in
FY 2000 title I funding compared with San Francisco's $2,359 per person;
(15) San Francisco continues to benefit from the hold-harmless provision
because a large proportion of its cumulative AIDs cases were deceased
under the formula used before FY 1996 and because there have been
smaller increases in new AIDS cases compared with other EMAs; and (16)
GAO has in the past recommended changes to the Ryan White funding
formulas that would enhance comparable funding across states.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-00-150
     TITLE:  Ryan White Care Act: Opportunities to Enhance Funding
	     Equity
      DATE:  07/11/2000
   SUBJECT:  Acquired immunodeficiency syndrome
	     Federal/state relations
	     Grants to states
	     State-administered programs
	     Statutory law
	     Eligibility criteria
	     Discretionary grants
	     Health care services
	     Grant administration
	     Reporting requirements
IDENTIFIER:  AIDS Drug Assistance Program
	     AIDS
	     California
	     New York
	     Texas
	     Colorado
	     San Francisco (CA)
	     Medicaid Program
	     Medicare Program
	     Supplemental Security Income Program
	     SSI

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Testimony.                                               **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************

GAO/T-HEHS-00-150

   * For Release on Delivery
     Expected at 10:00 a.m.

Tuesday, July 11, 2000

GAO/T-HEHS-00-150

ryan white care act

Opportunities to Enhance Funding Equity

        Statement of Janet Heinrich, Associate Director

Health Financing and Public Health Issues

Health and Human Services Division

Testimony

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

United States General Accounting Office

GAO

Ryan White Care Act: Opportunities to Enhance Funding Equity

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today as you discuss ways to distribute Ryan White
CARE Act funds to states and localities. As you know, the program is facing
new challenges as the epidemic of the human immunodeficiency virus (HIV)
changes and spreads to new segments of the American population. At the same
time, new medicines and treatments have lengthened the life expectancy of
infected persons. This, in turn, emphasizes the need to insure that program
funding reflects the changing pattern of the epidemic.

In fiscal year 2000, Ryan White grants have provided nearly $1.6 billion in
federal funding to assist state and local service providers in delivering
health care and support services to individuals and families affected by HIV
infection. Title I of the Act provides assistance to metropolitan areas most
affected by the disease and Title II primarily provides funding for state
agencies responsible for persons not served under Title I and for funding
drug therapies. Although the Ryan White program serves individuals with HIV,
funds are distributed on the basis of the number of individuals whose
disease has progressed to acquired immunodeficiency syndrome (AIDS).

At the request of the Subcommittee, I will focus on three issues:

   * the potential for distributing funds on the basis of counts of persons
     with HIV infection in each geographic area rather than on counts of
     only persons whose disease has progressed to AIDS;
   * the differences in funds for states with an eligible metropolitan area
     (EMA), which receive grants under both title I and title II of the Act,
     and states without an EMA, which receive only title II grants; and
   * the current effect of the hold-harmless provision adopted in the 1996
     reauthorization, when the method of counting living AIDS cases replaced
     the practice of counting cumulative AIDS cases.

To address these issues, we have analyzed data from the Centers for Disease
Control and Prevention (CDC) and the Health Resources and Services
Administration (HRSA) in the Department of Health and Human Services (HHS)
and have developed computer models to calculate how funding would change
under alternative formula scenarios.

In brief, we found that only about 60 percent of the states include HIV
cases that have not progressed to AIDS in their reports to CDC. To ensure
that the formulas provide an equitable distribution, all states would need
to report HIV cases. CDC officials told us that they expect all states to be
reporting new HIV cases by 2003 and that an additional 1 to 3 years may be
needed to allow cases that existed before then to be entered into their
reporting systems. However, the states' ability to completely identify past
cases is not known.

We also found substantial differences in funding between states with an EMA
and those without one. For example, in fiscal year 2000 states that had no
eligible EMA received on average of $3,340 per person suffering from AIDS.
In contrast, the states with more than 75 percent of their AIDS cases in an
EMA received nearly 50 percent more, averaging $4,954 per AIDS case. States
such as California and New York with more than 90 percent of their cases in
EMAs received $5,240 per case or almost 60 percent more than states without
an EMA. GAO has in the past recommended changes to the Ryan White Funding
Formulas that would result in more comparable funding across states.

Finally, a hold-harmless provision was included in the 1996 reauthorization
to help with the transition of the EMAs that would receive less by using
living AIDS rather than cumulative AIDS cases, which included both living
and deceased cases. The transition has been very gradual and has had the
effect of providing some EMAs with more funding on a per-person-with-AIDS
basis than other similarly situated EMAs. Currently, only one EMA, San
Francisco, continues to benefit from the hold-harmless provision, and it
received substantially more aid than other similarly situated EMAs. For
example, San Francisco received more than 80 percent greater title I funding
per person with AIDS than other EMAs. Oakland, across the bay from San
Francisco, and all other EMAs received $1,289 per person in fiscal year 2000
title I funding compared with San Francisco's $2,359 per person. San
Francisco continues to benefit from the hold-harmless provision because a
large proportion of its cumulative AIDS cases were deceased under the
formula used before fiscal year 1996 and because there have been smaller
increases in new AIDS cases compared with other EMAs. GAO has in the past
recommended changes to the Ryan White funding formulas that would enhance
comparable funding across states.

Background

Since the first cases were identified in 1981, more than 700,000 persons in
the United States have been diagnosed with AIDS. Recent developments in
medical and pharmacological therapies have improved the survival of persons
with AIDS and have slowed the progression from HIV to AIDS. At the end of
1999, an estimated 300,000 persons were living with AIDS. It is also
estimated that an additional 500,000 to 600,000 people are infected with HIV
that has not progressed to AIDS. The composition of the AIDS population has
also changed over time, with minorities and women representing a larger
portion of all cases.

Federal efforts to provide health and support services involve a wide
variety of programs and activities. In addition to Ryan White grants,
federal funding is provided through CDC, the Department of Housing and Urban
Development, Medicare, Medicaid, Social Security Disability Insurance, and
the Supplemental Security Income program, among others.

Seventy percent of Ryan White funds are distributed by formula under titles
I and II of the act, while titles III and IV provide discretionary grants
for a variety of support services. Title I has provided $527 million in
assistance in fiscal year 2000 to consortia of local service providers in
EMAs. To be eligible, a metropolitan area must have a population of at least
500,000 and must have had a cumulative total of more than 2,000 reported
AIDS cases in the past 5 years. There were 16 EMAs when the program began in
1991, and the number has grown to 51 today.

Title I funding has increased at an average annual rate of 24 percent since
1991. (See fig. 1.) Half of these funds is distributed by formula on the
basis of estimated living AIDS cases in each EMA. HRSA distributes the
remainder of title I funds among EMAs on a discretionary basis in response
to proposals EMAs submit. Historically, the distribution of discretionary
grants has generally mirrored the pattern of the formula grants.

Title II provides funding for state agencies. In fiscal year 2000, 96
percent of funds was distributed by formula, $528 million for the AIDS Drug
Assistance Program (ADAPS) and $266 million to provide health and support
services to persons not living in an EMA and for other activities. Title II
funds have grown at an average annual rate of 29 percent. Almost all this
growth has resulted from increased funding in the ADAPS program. (See fig.
2.)

In our previous report on the CARE Act funding formulas, we recommended to
the Congress that the funding formulas be modified so that

   * comparable medical services funding be made available regardless of
     where people with AIDS live and
   * an indicator be added to the formulas that reflect relative differences
     across states and EMAs in the cost of serving people with AIDS.

As I will discuss in more detail, these recommendations continue to be
applicable today.

State HIV Reporting Is Improving but Is Still Incomplete

Because the Ryan White program serves 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
persons living with HIV. However, while all states report AIDS cases, many
do not report the number of persons with HIV that has not progressed to
AIDS. Therefore, for purposes of distributing formula funds equitably, the
total number of AIDS cases continues to be the best available indicator of
need.

CDC officials told us that they expect all states to be reporting newly
diagnosed HIV cases by 2003 and that an additional 1 to 3 years may be
needed to get all HIV cases entered into a new reporting system. The
potential for lags in reporting the older cases was clear when we compared
the experience of states that had been reporting HIV cases for different
lengths of time. States with long reporting histories had many more HIV
cases compared with their number of AIDS cases than did newly reporting
states. This is illustrated by comparing Texas and Colorado. Texas just
began reporting HIV cases in 1999 but Colorado has been reporting since
1985. Reported HIV cases in Texas are about one-eighth the number of AIDS
cases. In Colorado, with a much longer reporting history, the number of
reported HIV cases exceeds reported AIDS cases by a factor of about 2 to 1.
(See fig. 3.) The extent to which states can identify preexisting cases once
they begin HIV reporting is not known. Some of the discrepancy, illustrated
by the Colorado and Texas comparison, could be reduced as Texas identifies
more preexisting cases. States that begin reporting more recently may
continue for some time into the future to have a larger proportion of
previously diagnosed but not reported cases.

The cost of serving persons who have HIV disease can vary substantially,
depending on the stage of their disease. Persons whose disease has
progressed to AIDS often require more expensive drug therapies and more
intensive care. If HIV data were integrated into the funding formulas,
greater weight could be assigned to persons whose need for therapy are in
the more expensive stages of the disease. Doing so would better ensure that
the distribution of funds is commensurate with the cost of care. Information
on such cost differences and how to estimate the number of persons in
different stages of the disease would need to be addressed before this type
of adjustment could be incorporated.

States With No EMA Are Disadvantaged Under the Current Formula Structure

A comparison of Colorado and Indiana provides a clear example of these
funding disparities because both states have roughly 2,300 living AIDS
cases. Colorado has an EMA because most of its cases are concentrated in the
Denver metropolitan area. Indiana's cases are more dispersed. As a
consequence, Indiana does not have an EMA and receives no title I funding.
The effect is that Indiana receives $3.3 million less to help it serve the
same number of cases as Colorado.

The Hold-Harmless Provision Currently Benefits a Single EMA

Finally, I would like to discuss the hold-harmless provision added to title
I in the 1996 reauthorization. Before the 1996 reauthorization, funding was
distributed among EMAs on the basis of the cumulative count of diagnosed
AIDS cases. By 1996, many persons diagnosed with the disease in the 1980s
had died, yet they were still counted for purposes of distributing funding
to EMAs. The areas of the country with the longest experience with the
disease had the most deceased cases and benefited the most from using
cumulative case counts in the formula.

The 1996 Ryan White reauthorization changed this practice by replacing
cumulative case counts with estimates of living AIDS cases. The effect of
the change was to shift funding away from EMAs with high proportions of
deceased cases and toward those with higher proportions of newly diagnosed
cases.

Because these shifts would have been quite large, a hold-harmless provision
was added so that the EMAs that were affected would gradually make a
transition to an allocation based on living AIDS cases. Under the transition
rules adopted at that time, EMAs that would otherwise have lost funding were
guaranteed to receive in fiscal year 1996 the same funding they received in
1995, 99 percent in 1997, 98 percent in 1998, 96.5 percent in 1999, and 95
percent in 2000.

HRSA records show that four EMAs benefited from the hold-harmless provision
in 1996: Houston, Jersey City, New York, and San Francisco. By 1999, San
Francisco was the only EMA that continued to benefit from the provision for
two reasons. First, it had benefited the most from using cumulative rather
than live cases before fiscal year 1996 and second, it has had smaller
increases in newly reported cases than other EMAs. It received 80 percent
more title I funding than other EMAs: $2,360 per case compared with $1,290
in fiscal year 2000 (see fig. 5).

The high grant that San Francisco derives from the hold-harmless provision
has declined somewhat but continues to be sizable. Figure 6 shows that in
fiscal year 1996 San Francisco's title I grant was more than twice the grant
of other EMAs. In fiscal year 2000, it has been reduced to roughly 80
percent.

As I noted earlier, roughly half of title I funding is distributed by
formula, and half is distributed on a discretionary basis. Discretionary
funding is awarded on the basis of the quality of proposals submitted to
HRSA. The discretionary grants awarded to San Francisco appear to reflect
the hold-harmless provision as well as those in need. For example, for
fiscal year 2000 San Francisco's discretionary award per AIDS case was
roughly twice as large as the average for the other EMAs.

In conclusion, Mr. Chairman, the HIV-AIDS epidemic continues to evolve and
the location of the disease continues to change as well. As a consequence,
it becomes increasingly important that federal resources match the
distribution of persons who suffer from this dread disease. When data on all
living HIV cases become available in the next few years, their inclusion in
funding formulas will improve the ability of the Ryan White CARE Act to
effectively deliver funding to persons in need. However, improvements in
matching funding to persons in need of health and support services could
also be achieved with this reauthorization if, as we have recommend, the
double counting of EMA AIDS cases was phased out. We would be happy to work
with subcommittee to achieve this.

GAO Contacts And Acknowledgments

(201080)

        Orders by Internet

For information on how to access GAO reports on the Internet, send an e-mail
message with "info" in the body to:

[email protected]

or visit GAO's World Wide Web home page at:

http://www.gao.gov

        Web site: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: [email protected]

1-800-424-5454 (automated answering system)
  
*** End of document. ***