	Background

CARE Act base grants are distributed through a formula that includes  HIV/AIDS case counts. 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,  emerging community grants that are awarded by formula for HIV/AIDS  services, 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. 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. 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. 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. 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. 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. 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. About   71 percent of EMAs received hold-harmless funding in fiscal year 2009,  while 41 percent received hold-harmless funding in fiscal year 2004. 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. 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 2004, the funding per case ranged from $1,221 to $2,241, a range  of $1,020. However, in fiscal year 2009, San Francisco received $208 in hold- harmless funding per case, while in fiscal year 2004 it received $1,020 in  hold-harmless funding per case. 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. Part B base funding penalties ranged from $6,433 in Palau to  $1,493,935 in Ohio. ADAP base funding penalties ranged  from $26,233 in Maine to $12,670,248 in Pennsylvania. 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. 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. 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.
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.