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Lolita Cervera and Tom Hickey

HAB T. A. Consultants

March 20, 2015

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

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OverviewWhy revisit the costs under the

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

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 National Monitoring Standards and the HHS implementation of the new Uniform Guidance at 45 CFR part 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 B recipients (grantees)?

 2618(b)(4) LIMITATION ON USE OF FUNDS - a State may not use more than a total of 15 percent of amounts received under a grant awarded under section 2611 for the purposes described in paragraphs (2) [Planning and Evaluation] and (3) [Administration]

Up to 10% for administration 2618(b)(3)(A) Up to 10% for planning and evaluation 2618(b)(2) Not to exceed 15% of the amount received under this

grant for administration, planning, and evaluation

Awarded $3 million x 15% = $450,000 for administrative, planning, and evaluation costs

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Aggregate 10% limit on all subawards for administrative activities—including ALL indirect costs

$2M grant: $200,000 (10%) = admin, $100,000 (5%) = planning and evaluation, $100,000 (5%) = Clinical Quality Management (CQM), and $1.6 million is allocated to contracts for services

Subrecipient

$1.6 M 10% $160,000

HIC $400,000 3% $12,000

BCC $450,000 7% $31,500

CHD $350,000 28% $98,000

NKHD $400,000 4.625% $18,500

What has remained the same for Part B subrecipients?

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What has remained the same for Part B recipients (grantees) and subrecipients?

GRANTEE ADMIN DEFINITION

§2618(b)(3)(C) routine grant monitoring and administration activities that include routine grant administration and monitoring activities.

• RWHAP Program & Financial Reports

• Contracting activities – developing RFP, proposal review, issuing contracts

• Subrecipient monitoring-by phone, site visits, report review

• Related payroll, audit, and general legal activities

• Contracted planning and evaluation responsibilities

SUBRECIPIENT ADMIN §2618(b)(3)(D) usual and

recognized overhead activities, including established indirect rates for agencies; (B) management oversight (administration and monitoring); and (C) quality assurance, quality control, and related activities.

Same as grantee but includes all indirect costs

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What has remained the same for Part B?CONSORTIA

Consortia receives $3M

$450,000 = 15% for planning, evaluation, and admin (this counts against the state’s 15% admin, P&E limit)

$150,000 = CQM

$2,400,000 = subawards

• $240,000 = aggregate 10% for administration (includes all indirect costs)

FIDUCIARY AGENTS

Fiduciary agent receives $3M

$300,000 for administration (this counts against the state’s 10% admin limit)

$150,000 = CQM

$2,550,000 = subawards

• $255,000 = aggregate 10% for administration (includes all indirect costs)

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What has changed for Part B recipients (grantees) and subrecipients? 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 :

Facilities expenses such as rent, maintenance, utilities, etc. related to core 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, etc.) costs related to RWHAP

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What else has changed for Part B recipients (grantees) and subrecipients? 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 Activities related to the bi-annual RWHAP client re-

certification Supervisor’s time devoted to providing professional

oversight and direction regarding RWHAP-funded core medical or support service activities

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Principles for the proper allocation of administration vs program costs

Which cost are allowable?

Mental Health Clinic rent

Utilities

Nurse practitioner

Lead Pharmacist ADAP Pharmacy

Non ADAP Formulary medications

Personnel or contract for the payment of insurance premiums

Cash payment to clients

Part B Service Coordinator

Office supplies

Surveillance staff

Copier

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 to

trace

Direct orIndirect

Rent N I

Utilities N I

Nurse practitioner Y D

Postage N I

Office supplies N I

Ins Asst. Coordinator

Y D

Copier N I

Printing Y D

Audit Y D

File clerk Y D

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 B Recipients (Grantees)The portion of direct and indirect facilities expenses

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

For Part B Subrecipients The portion of direct facilities expenses related to core

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

All indirect cost would count toward the 10% administrative limit.

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Audience Participation

Rent associated with the ADAP pharmacy

Service contract for eligibility screening and recertification

Depreciation Postage Telephone Office supplies Clinic receptionist Indirect cost certificate Texas

OMB

Rental copier CAREWare/ARIES/Other

data entry Clerical Support Utilities Facility Maintenance NASTAD training related

travel Insurance Pharmacy Benefits

Manager

Indirect (F&A) or Direct?Does it count toward the 10% administrative

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 B Grantee Budget $20,756,411

Categories Admin, P & E CQM Services ADAP

PD & Dep (.75 admin; .25 P&E); ADAP Coord, Deputy & Insurance Coord (.8 ADAP admin; .2 ADAP QM); 5 Eligibility Specialists; QM; Program Coord (NMS oversight- .8 admin; .2 P&E), 2 Contract Mgrs; MAI Coord (.75 admin; .25 P&E), 2 Data Analysts, admin assistant (.6 admin; .4 CDC) Fiscal officer, staff (2 @ .5 FTE; .5 State GR) and support – HRSA budgets, mods, reports; draw $$; data entry

ADAP Medications

ADAP Health Insurance Cost-share

MAI Contract

Direct Services Contracts (22)

HHS NICRA = 26% base = salaries/fringe ($2,041,600 x .26 = $)

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Example—Part B Grantee Budget $20,756,411

Categories Admin, P & E CQM Services ADAP

PD & Dep (.75 admin; .25 P&E); ADAP Coord, Deputy & Insurance Coord (.8 ADAP admin; .2 ADAP QM); 5 Eligibility Specialists; QM; Program Coord (NMS oversight- .8 admin; .2 P&E), 2 Contract Mgrs; MAI Coord (.75 admin; .25 P&E), 2 Data Analysts, admin assistant (.6 admin; .4 CDC) Fiscal officer, staff (2 @ .5 FTE; .5 State GR) and support – HRSA budgets, mods, reports; draw $$; data entry

587,550 Admin

$151,750 P&ETotal:

$739,300

$111,000

$85,000 $367,000

ADAP Medications $10M

ADAP Health Insurance Cost-share $3M

MAI Contract $200,000

Direct Services Contracts (22) $5,723,325

HHS NICRA = 26% base = salaries/fringe ($2,041,600 x .26 = $)

$152,763 admin, $39,455

P&E

$28,860 $22,100 $95,420Costs that count toward grantee’s 10% admin limit = $740,313Costs subject to the aggregate 10% admin limit for subrecipients = $592,332

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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

Food Bank 1,000 10 $5,000

ADAP Pharmacy 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 Adm Out Patient Medical

HCI receptionist

15 37.5 9,375

Appointments 7 17.5 4,375

Billing 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 costs

Recipient (grantee) Up to 10% of the award may be used

for routine grant administration and monitoring

Portion of direct and indirect 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

Fiduciary agent/Consortia—all admin costs, exclusive of subawards, count toward the grantee’s 10% admin limit

Subrecipient

Up to 10% of the aggregate amount allocated for all subrecipients may be used for routine grants administration Includes all

indirect costs

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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 B Programs