270.001 Calculation of Estimated Expenditures on Covered Clinical Services

Policy Number  270.001
Effective Date  July 16, 2015
Revision Date  December 20, 2023
Subject Matter Expert HIV/STD Care and Medications Unit Staff
Approval Authority  HIV/STD Section Director
Signed by D’Andra Luna

1.0 Purpose

This policy specifies the methods the Department of State Health Services (DSHS), HIV/STD Section (Section), uses to estimate the aggregate expenditures for covered clinical services in each HIV Service Delivery Area (HSDA). The Section requires these estimates in the allocation of funds for health insurance assistance with the use of Part B Ryan White HIV/AIDS Program (RWHAP) and State Services (SS) funds. These funds assist eligible clients with the payment of costs associated with health insurance plans. 

The policy also makes provision for the use of alternative estimate methods developed by RWHAP Part A Planning Councils (PCs) and the inclusion of information on expenditures from Part C, D, and F grantees in estimating local clinical expenditures.

2.0 Background

HIV/STD Section Policy 590.001 establishes the Ryan White Part B and SS funds made available through DSHS as payment of last resort. Sections 2605(a)(6), 2617(b)(7)(F), 2664(f)(1), and 2671(i) of the Public Health Service Act similarly require funds awarded through Parts A–F of the federal RWHAP as payment of last resort.

RWHAP grantees and their contractors must vigorously pursue enrollment in public and private health insurance plans for eligible clients. RWHAP grantees and their contractors may also use RWHAP and SS funds to financially assist eligible clients in making payments associated with health insurance plans, including premium, deductible, and out-of-pocket payments, as an alternative to making direct payments, for health services. RWHAP Part B providers may only make financial assistance with health insurance plan costs available for plans offering appropriate drug and outpatient care coverage and only when this assistance provides a cost advantage in comparison to direct payment for treatment services. Health Resources and Services Administration (HRSA) Policy Clarification Notice (PCN) 13-05 requires RWHAP Part A Councils and Part B, C, D, and F grantees to establish methods to "assess and compare the aggregate cost of paying for the health insurance option versus paying for the full cost for medications and other appropriate primary care services."

3.0 Authority

Texas Health and Safety Code, §85.003, §85.014, and §85.032; Ryan White Treatment Extension Act 2009; HRSA PCN 7-05; PCN 16-02; and PCN 13-05.

4.0 Definitions

AIDS Drug Assistance Program (ADAP) – DSHS program providing access to HIV treatment drugs for low-income residents of Texas.

Covered clinical services – Outpatient or Ambulatory Medical Care; Local Pharmacy Assistance Programs and AIDS Pharmacy Assistance Programs; outpatient Mental Health Services; Home Health; Hospice; and inpatient and outpatient Substance Abuse Treatment. The Section’s taxonomy page provides definitions of these services.

DSHS-funded administrative agency (AA) – An entity under contract with DSHS responsible for distributing and monitoring the use of funds DSHS allocates for the delivery of HIV-related medical and psychosocial support services. 

TakeChargeTexas (TCT) – A secure and centralized web portal application that streamlines the HIV Care Services (CARE) and Texas HIV Medication Program (THMP) eligibility application processes, processes medication orders for THMP, and reports Ryan White and State Services client services.

5.0 Persons Affected

  • DSHS HIV/STD Prevention Unit Staff
  • DSHS HIV Care and Medications Unit Staff
  • DSHS-funded AAs
  • Part A PCs and AAs
  • Part C, D, and F RWHAP grantees

6.0 Calculating Estimated per Client Aggregate Clinical Expenditures

In April of each year, the Section issues estimates of per-client expenditure on clinical services used when making cost comparisons for health insurance assistance. Local policy, procedure, and decision-making on the availability of financial assistance for health insurance payments must incorporate these estimates. 

6.1 Calculating the Estimated Per Client Expenditures from RWHAP and State Services for Covered Clinical Services

The Section calculates the estimate of per client expenditures for covered clinical services for each HSDA on an annual basis in April. The estimate uses allocations as indicators of intended expenditures and includes allocations for only clinical services that health insurance plans typically cover. The estimate must include allocations for Part B, State Services (SS), and Parts A, C, and D when applicable. 

The Section requests allocations from Part A, C, and D annually from the associated AAs and grantees. The total amounts allocated for the selected clinical services divided by the unique count of clients receiving one or more of the services paid for by RWHAP Parts A – D or SS funds yields a per client estimate of local expenditures on covered clinical services.

Since health insurance also covers drug costs for clients with health insurance, the Section adds HSDA per client ADAP expenditure for dispensed drugs to the estimate of local expenditures.

The sum of the average ADAP expenditure plus the average local expenditure on covered clinical services is the total per client expenditure on directly delivered clinical services. Each HSDA uses this as the comparison benchmark to judge the cost-effectiveness of health insurance assistance.

6.2 Inclusion of Other Funds for Covered Clinical Services

If other federal, state, or local funds are available in an area supporting the covered clinical services, DSHS-funded AAs or PCs may request to include this funding in the local estimate. They must use ongoing funds to provide services, and clients are eligible for RWAHP funds, SS funds, or both. Additionally, the Section must adjust the number of clients in the denominator to reflect the unique clients added by the inclusion of these funds. If the Section cannot reasonably estimate this adjustment, it excludes the funds from the estimation of expenditure on covered clinical services.

6.3 Use of Alternate Estimation Methods by Part A Planning Councils

By federal law and HRSA policy, Part A PCs are responsible for setting allocations for Part A grant funds. HRSA PCN 13-05 requires Part A PCs to develop methods to determine the cost-effectiveness of assisting with health insurance as an alternative to direct delivery of care. The Section policy directs DSHS-funded AAs to collaborate with PCs when planning allocations of Part B and SS funds in HSDAs that include Part A service areas.

The Section urges Part A PCs to adopt the methods described in this policy in their assessment of the cost of covered clinical services. If a PC adopts different methods, the Section reviews the written policies and procedures used to calculate comparison costs for direct clinical service delivery. If the Section finds the methods provide a reasonable estimate of clinical costs, the DSHS-funded AAs for that area must use the PC’s estimation in local policy and decision-making. With the approval of the Section, the funded AA may extend the use of this alternate method to the other HSDAs in their service area to increase coordination of resources and continuity of services.

If the Section has substantive concerns about the methods used by a Part A PC, the Section provides a written comment to the PC recommending changes. If the Section and PC cannot reach an agreement on methods, the Section may require local policy and allocations for Part B and SS funds to reflect estimates of cost developed by the Section using the methods outlined in this policy. 

7.0 Estimating Direct Costs of Oral Health Services

Oral health services are typically available only through supplemental or stand-alone dental health insurance plans. The Section calculates expected expenditures on oral health services separately using the same approach used for other covered clinical services. Estimated local expenditures must include allocations for these services made through RWHAP Parts A–D and SS. If information on expenditures made by RWHAP Part F in each HSDA is available to the Section, and the Section can adjust denominators for Part F clients, the Section includes these funds in the oral health expenditure estimate.

8.0 Review of Estimations

The Section provides DSHS-funded AAs, PCs, and Part C, D, and F grantees with estimates of expenditures on covered clinical services and oral health services, as well as the service allocations and client counts used to calculate the estimate for areas using the Section methodology. AAs, PCs, and RWHAP Part C, D, and F grantees have 30 days to review and comment on these data. Information that supports the requested change must accompany requests by the local area for changes to the estimate. The Section is the final authority on changes to the estimates. 

The Section finalizes estimates, posts them on the Section website, and sends them directly to areas using the Section methodology by May 15th.

In Part A areas where DSHS-funded AAs used an alternative method of calculation for estimated covered clinical costs, the DSHS-funded AAs must provide the results of the calculations to the Section when submitting planned allocations to the Section for approval. The Section urges PCs to make their estimates available to the general public and to RWHAP Part C, D, and F grantees in their area.

9.0 Request for Revisions of Estimate

DSHS-funded AAs and PCs may request the Section revise the estimate of the cost of covered clinical services if there has been a significant change in allocations. The AA or PC submits the request along with information about the new level of allocation to the Section. The Section makes a revised estimate available to the AA or PC within five working days, and the AA or PC have 10 working days to inspect the revision for errors. The Section also revises the publicly posted estimated costs to reflect the revision.

The Section uses the unduplicated client count established in April for all cost estimations made from April until March of the subsequent year.

10.0 Use of Estimated Direct Clinical Costs in Local Eligibility Policies and Resource Allocations

Locally developed policies on health insurance assistance services must reference this cost in the development of eligibility guidelines and any policies on caps or payment limits. Policies must specify that RWHAP Part B providers may deny the client requests for health insurance assistance that exceed the estimated cost of directly delivered services unless special circumstances exist making financial support of health insurance plan costs necessary to preserve the health of the client. Proposed allocations for health insurance assistance services must be reasonable given the number of presently uninsured clients in the service area who are likely to qualify for health insurance plans with costs that favorably compare to the local estimated expenditures on covered clinical services.

The Section encourages DSHS-funded AAs to collaborate with Part A PCs and Part C and D grantees to develop uniform policies and approaches to eligibility and cost controls for health insurance assistance funds within an HSDA or service area. 

11.0 Procedures

The Section calculates estimated expenditures for covered clinical services annually in April. These calculations use the allocations or planned expenditures currently in effect when making the calculation. The Section solicits information on current allocations from DSHS-funded AAs and PCs (when appropriate) and solicits planned expenditures from Part A, C, D, and F grantees. The Section also solicits information from DSHS-funded AAs, Part A PCs, and administrators on other funds that the Section could include in local estimates. The Section considers whether it is possible to arrive at reasonable estimates of unduplicated client counts.

In areas where TCT did not completely report Part C, D, or Part F services or services delivered through other funding streams, the Section consults with the grantees and DSHS-funded AAs on the most appropriate approach to calculating the unique client count for the area. The Section includes funds in the estimate at its sole discretion.

The Section bases client counts on the most recent calendar year. The methodology attributes clients to the HSDA(s) where service providers or agencies delivered services; a client may count in more than one HSDA if the client received a covered clinical service in more than one HSDA. The ADAP estimate reflects expenditures and ADAP client counts on dispensed drugs from the prior state fiscal year, which runs from September through August. The unique client count for each area originates from aggregating the unique counts of clients who received one or more of the covered clinical services using a union intersection. This is the unique count of clients who received at least one covered clinical service through any of the following: SS, Part A, B, C, D, F, or other funding sources, as appropriate given the funding available in that HSDA. 

12.0 Revision History

Date Action Section
12/20/2023 Updated with current authority, replaced ARIES with TCT, clarified of roles and deadlines. All
7/16/2015 New policy All