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Lolita Cervera and Tom Hickey

HAB T. A. Consultants

March 18, 2015

Treatment of Costs Under the 10% Administrative Limit for Ryan White HIV/AIDS Part D Programs

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OverviewWhy revisit the costs under the

administrative cap?What has remained the same?What has changed for Part D

grantees and subrecipients?What are principles for the proper

allocation of costs applicable to the 10% administrative cap?

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Why revisit the treatment of costs under the 10% admin limit?

• Acknowledge a rapidly changing healthcare environment in which RWHAP grantees are playing a greater role in coordinating across multiple payer sources

• Strengthen the RWHAP comprehensive system of care

• Provide greater flexibility to grantees so they can meet the needs of RWHAP clients

• Increased focus on oversight of subrecipients as required by the HHS implementation of the new Uniform Guidance at 45 CFR 75

• Address the variation in statutory 10% administrative cost cap that exist for RWHAP Parts A, B, C, D

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Recipient vs Subrecipient (45 CFR 75)Recipient (grantee)

The entity that receives the RWHAP award directly from HRSA

Many RWHAP recipients (grantees) are also “pass-through” entities Pass-through entity is

an entity that provides a subaward to a subrecipient to carry out part of the RWHAP activity

Subrecipient

The entity that receives a subaward from a pass-through entity to carry out part of the RWHAP programmatic activity (e.g., RWHAP provider)

Is responsible for adherence to applicable Federal RWHAP program requirements

Has its performance measured in relation to whether objectives of the RWHAP were met

Uses Federal funds to carry out the RWHAP program for a public purpose as specified in authorizing statute

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What has remained the same for Part D?§2671(f)(1) a grantee may not use

more than 10 percent of the grant for administrative expenses

Awarded $500,000 x 10% = $50,000 for administrative expenses, including all indirect costs

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What has remained the same for Part D?

Grantee: 10% limit – “administrative expenses” means grant management and monitoring activities• Preparation of RWHAP Program & Financial Reports• Complying with terms and conditions of RWHAP

award• Contracting activities – development of RFPs,

proposal review, issuing contracts• Subrecipient monitoring by phone, site visits, reports

• Non-Client related legal activities • Accounting, drawing Part D Funds

The 10% administrative limit includes ALL indirect costs The 10% administrative limit does NOT flow down to

subrecipients Does NOT include planning and evaluation

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What has changed for Part D? The treatment of the portion of expenses allocated to

administration vs. program. The following costs are no longer required to count against the 10% admin limit:

Direct facilities expenses such as rent, maintenance, utilities, etc. related to medical or support services provided to RWHAP clients

Malpractice insurance related to RWHAP clinical care Electronic Medical Records: maintenance, licensure,

annual updates, data entry related to RWHAP clinical care

Receptionist’s time providing direct RWHAP patient services

Third party billing (Medicare, Medicaid, insurance) costs related to RWHAP

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What else has changed for Part D? The treatment of the portion of expenses allocated

to administration vs. program. The following costs are no longer required to count against the 10% admin limit:

Medical waste removal and linen services related to RWHAP

ACA Outreach and Enrollment for RWHAP clients

Supervisor’s time devoted to providing professional oversight and direction regarding RWHAP-funded medical or support service activities

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Principles for the proper allocation of administration vs program costs

Which cost are allowable? Rent

Utilities

Nurse practitioner

Medical case management supervisor

Postage

Cash payment to clients

Indirect Cost

Part D Program Coordinator

Grant writer

Nursing home care

Printing

Purchase of vehicles

Lobbying activities

The cost must be allowable—to be allowable a cost must be authorized by statute and must meet the federal criteria of being necessary, reasonable allocable and awarded consistent treatment.

45 CFR 75 Uniform Guidance• Subpart E – Cost Principles

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Principles for the proper allocation administration vs program costs

Easy totrace

Direct orIndirect

Rent N I

Utilities N I

Nurse practitioner

Y D

Postage N I

Office supplies N I

Program Director

Y D

Copier N I

Printing Y D

Audit Y D

File clerk Y D

Clinic receptionist

Y D

Internet N I

MCM supervisor Y D

Direct cost—A cost that can be accurately traced to a program/service activity with little effort.

Indirect (F&A) cost— A cost that is not directly traceable to a program/service activity

Indirect cost rate – Is a device/methodology for determining fairly and conveniently how much of the common (hard to trace) cost each program should bear

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45 CFR 75 changes to indirect costs Per 45 CFR §75.414(f), any non-Federal entity that has

never received a Federal negotiated indirect cost rate may charge a de minimis rate of 10% of modified total direct costs. Governmental departments or agency units receiving more than

$35M in federal funds MUST have a negotiated rate—they may not charge the flat 10%.

As described in §75.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time.

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Principles for the proper allocation of indirect costs

Part D GranteesThe portion of direct facilities expenses

related to medical and support services provided to RWHAP clients would not count toward the 10% administrative limit

All indirect costs count toward the 10% administrative limit

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Audience Participation

Rent associated with administration office

Rent associated with library-computer room (café) for consumers

Preparing and submitting the RSR

Postage Telephone Office supplies Clinic receptionist Indirect costs

Rental copier CAREWare/ARIES/Other

data entry Clerical Support Utilities Facility Maintenance Professional magazines AIDS magazines front

office Memberships Insurance

Indirect (F&A) or Direct (service)Does it count against the 10%

admit limit

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Principles for the proper allocation of administrative cost

Effort ReportingConfirms that the budget estimates used to charge labor cost to the different funding sources or program categories is allowable.

When allocating salaries between administration and program categories the recipient (grantee) or subrecipient must have a system of internal controls over the records that:

Justify the cost of salariesReasonable over the long termEnter into the record on a timely mannerConsistentAuditable

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Principles for the proper allocation of administrative cost

Allocations Permits expenses to be appropriately charged to cost

centers, object classes, funding sources and multiple sites.

For allocations to be valid there should be written methodology that can be replicated and auditable

Most common methodology:Payroll-------------direct or time and effortFacility------------direct or square footageOccupancy--------direct or program/cost centerAdministration---direct or total dollar amountCommunication--program/cost center

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Example—Part D budget $609,500Categories Medical

Services

CQM Support Services

Admin

Program Director FTE 1.0 Sal. $38,750 Administers Part D

Nurse practitioner plans develops and does chart reviews for the quality improvement program

Ped/Adolescent HIV Specialist, Pharmacy Tech

MCM ($85,000), Transportation Specialist ($24,000)

Fiscal staff (2 @ .25 FTE)– RWHAP budgets, reports, funds

Supplies (exam tables, medical supplies)

Child Care

Transportation vouchers

Facilities costs (90% services, 10% admin) $40,000/yr

HHS NICRA = 26% MTDC ($606,450 x .26 = $157,677)

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Example—Part D budget $609,500Categories Medical

Services

CQM Support Services

Admin

Program Director FTE 1.0 Sal. $38,750 Administers Part D

$38,750

Nurse practitioner plans develops and does chart reviews for the quality improvement program $25,00

0

Ped/Adolescent HIV Specialist, Pharmacy Tech $275,450

MCM ($85,000), Transportation Specialist ($24,000) $85,000 $24,000

Fiscal staff (2 @ .25 FTE)– RWHAP budgets, reports, funds

14,750

Supplies (exam tables, medical supplies) $33,500

Child Care $40,000

Transportation vouchers $30,000

Facilities costs (90% services, 10% admin) $40,000/yr

$24,000 $12,000 $4,000

HHS NICRA = 26% MTDC ($606,450 x .26 = $157,677)

$3,050

Costs that count toward grantee’s 10% admin limit = $60,300

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ALLOCATIONEXAMPLE

Rent allocated to admin or services

$50,000 rent a year

Space 10,000 sq ftAssign costs no longer required to be applied to the 10% administrative limit to the appropriate service category

Space Sq ft % Total

Case mgt offices

6,000

60 $30,000

Child Care 1,000 10 $5,000

Exam rooms 1,000 10 $5,000

Reception area 800 .08 $4,000

Accounting/Administration

1,20

0

12 $6,000

Totals 10,000

100

$50,000

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ALLOCATION EXAMPLE

The latest effort reporting shows that the agency full time receptionist is now working at the clinic answering agency phone, making medical appointments, entering data for billing and entering the labs in the medical records. Salary $25,000

Assign costs no longer required to be applied to the 10% administrative limit to the appropriate service category

Activity HRS

FTE%

Admin Out-patient

Care

HCI receptionist

15 37.5 $9,375

Appointments 7 17.5 $4,375

Billing for grant

5 12.5 $3,125

Labs 13 32.5 $8,125

Total 40 100% $12,500

$12,500

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ALLOCATIONEXAMPLE

Administration

• Any data entry reports for the grantor FFR, Expenditure and Allocation reports, RSR, MAI, single audit

• CAREWare data entry when associated with the RSR

Services

• CAREWare data entry for case managers notes, or medical information for quality

• Eligibility information on CAREWare or another electronic or manual system

• Clinical Quality Management reports, performance measures

• Client registration/intake

Examples of data entry expenses (kind of data and reports being produced that support services vs those that support finance and administration)

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Unit Cost ExampleCategory Total % allocation Physician N P R N

SALARIES $

322,050 21%-31%-48% $

67,630 99,836 154,584

employee benefits $ 54,038 21%-31%-48% $

11,348 16,752 25,938

Payroll taxes $ 25,777 21%-31%-48% $ 5,413 7,991 12,373

Contract/Consultant         

Physician on site $ 49,350 24%-28%-48% $

11,844 13,818 23,688

Nutrition $ 4,400 24%-28%-48% $ 1,056 1,232 2,112

Contracted Fee $ 10,045 24%-28%-48% $ 2,411 2,813 4,822

Supplies         Equipment expensed $ 11,487 24%-28%-48%

$ 2,757 3,216 5,514

Program Supplies $ 14,002 24%-28%-48% $ 3,360 3,921 6,721

Travel $ 3,252 24%-28%-48% $

780 911 1,561Conference Meetings $ 4,793 24%-28%-48%

$ 1,150 1,342 2,301

Insurance $ 2,065 24%-28%-48% $

496 578 991

Other expense $ 1,278 24%-28%-48% $

307 358 613

  $ 502,537   $

108,552 152,768 241,218Billable RWHAP/MAI   0.26 0.29 0.28

      $

28,224 44,303 67,541Visit/units    149 164 251

cost per unit    $

189.42 270.14 269.08

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Summary – properly allocate and report costsPart D Grant Recipient Up to 10% of the grant may be used for routine grant

administration and monitoring ALL indirect costs are included in the 10% The 10% administrative limit does NOT flow down to

subrecipients

Portion of direct costs of facilities utilized to provide RWHAP services are no longer subject to the 10% admin limit—charge to relevant service category

Supervisor’s time devoted to providing professional oversight and direction regarding RWHAP-funded core medical or support service activities

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Summary – properly allocate and report costs

See Policy Clarification Notice 15-01

Effective for RWHAP awards issued on or after January 1, 2015 New Awards Competing Continuations Non-competing Continuations

Statutory 10% Administrative Limit varies by Part A, B, C, and D Recipient vs subrecipient

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Questions and Answers

Treatment of Costs Under the 10% Administrative Limit for Ryan White HIV/AIDS Part D Programs