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1
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?
3
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