270.001 Calculation of Estimated Expenditures on Covered Clinical Services

Policy Number  270.001
Effective Date  July 16, 2015
Revision Date  July 16, 2015
Subject Matter Expert HIV Services Staff
Approval Authority  HIV/STD Prevention and Care Branch Manager
Signed by Shelley Lucas

1.0 Purpose

This policy specifies the methods to be used by the Department of State Health Services (DSHS) to estimate the aggregate expenditures for covered clinical services in each HIV Service Delivery Area (HSDA). These estimates must be used by DSHS and DSHS-funded Administrative Agents in the allocation of funds for health insurance assistance and the development of policy and procedures on use of Ryan White HIV/AIDS Program (RWHAP) and State Services funds to assist eligible clients with 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, and the inclusion of information on expenditures from Part C, D, and F grantees in estimating local clinical expenditures.

2.0 Background

DSHS policy 590.001 establishes the Ryan White Part B and State Services (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 Ryan White HIV/AIDS Program (RWHAP) to be used as payment of last resort.

Policies 7-05, 10-02, and 13-05 from the Health Resources and Services Administration (HRSA), the agency administering RWHAP funds, establish that RWHAP grantees and their contractors must vigorously pursue enrollment into public and private health insurance plans for eligible clients. RWHAP and SS funds may also be used to provide assistance to eligible clients in making payments associated with health insurance plans, including premium, deductible, and out of pocket payments as an alternative to making direct payment for health services. Financial assistance with health insurance plan costs, however, may be made available only for plans that offer appropriate drug and outpatient care coverage, and must be extended only when assistance with health insurance offers a cost-advantage to the direct payment for treatment services. HRSA policy 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, Chapter 85, §§85.003, 85.013, 85.014 - 85.03; Ryan White Treatment Extension Act 2009; HRSA Policy Notices 7 -05, 10-02, and 13-05.

4.0 Definitions

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

AIDS Regional Information and Evaluation System (ARIES) - software used by most DSHS-funded service providers to report on eligible services provided to eligible clients. Information on services in the Houston area is imported into ARIES rather than directly entered.

Covered clinical services - Outpatient/Ambulatory Medical Care; Local Pharmacy Assistance Programs/AIDS Pharmacy Assistance Programs; outpatient Mental Health Services Home Health; Hospice; and inpatient and outpatient Substance Abuse Treatment. Definitions of these services may be found here (dshs.texas.gov/hivstd/taxonomy/).

DSHS-funded administrative agency (AA) - Entity under contract with DSHS responsible for distributing and monitoring use of funds allocated by DHSH for the delivery of HIV-related medical and psychosocial support services. 

5.0 Persons/Organizations Affected by this Policy

  • DSHS HIV/STD Prevention and Care Branch Staff
  • DSHS-funded Administrative Agencies
  • Part A Planning Councils and Administrative Agencies
  • Part C, D, and F RWHAP grantees

6.0 Calculating Estimated per Client Aggregate Clinical Expenditures

In April of each year, DSHS will issue estimates of per-client expenditure on clinical services to be used when making cost comparisons for health insurance assistance. These estimates must be incorporated into local policy, procedures, and decision-making on the availability of financial assistance for health insurance payments. 

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

The estimate of per client expenditures for covered clinical services will be calculated by DSHS for each HSDA on an annual basis in April. The estimate will use allocations as indicators of intended expenditures, and includes allocations for only those services that are typically covered by health insurance plans: Outpatient/Ambulatory Medical Care; Local Pharmacy Assistance Programs/AIDS Pharmacy Assistance Programs; Mental Health Services; Home Health; Hospice; and inpatient and outpatient Substance Abuse Treatment. The estimate must include allocations for Part B and State Services, and Part A, C, and D when applicable. These latter allocations will be requested on an annual basis from the Part A AA and Part C and D grantees. The total amounts allocated for the selected clinical services will be divided by the unique count of clients receiving one or more of the services, and will include clients only if one or more service was paid for by RWHAP Parts A - D or SS funds. This yields a per client estimate of local expenditures on covered clinical services.

Since drug costs will also be covered for clients with health insurance, the statewide per client ADAP expenditure for dispensed drugs will be added to the estimate of local expenditures.

The sum of the average ADAP expenditure and the average local expenditure on covered clinical services is the total per client expenditure on directly delivered clinical services that will be used in each HSDA 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 that support the covered clinical services, DSHS-funded AA or Planning Councils may request that they be included in the local estimate. The funds must be used to provide services and clients eligible for RWAHP/SS funds and they must not be one-time funds. Additionally, the number of clients in the denominator must be adjusted to reflect the unique clients added by inclusion of these funds. If this adjustment cannot be reasonably estimated by DSHS, the funds will be excluded 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 Planning Councils are responsible for setting allocations for Part A grant funds. The HRSA policy 13-05 requires Part A Planning Councils to develop methods to determine the cost effectiveness of providing assistance with health insurance as an alternative to direct delivery of care. DSHS policy directs DSHS-funded AAs to collaborate with Planning Councils when planning allocations of Part B and SS funds in HSDAs include Part A service areas.

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

If DSHS has substantive concerns about the methods used by a Part A Planning Councils, DSHS will provide written comment to the Planning Council recommending changes. If an agreement on methods cannot be reached, DSHS may require local policy and allocations for Part B and SS funds to reflect estimates of cost developed by DSHS 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. Separate expected expenditures on oral health services will be calculated by DHSH using the approaches specified 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 made in each HSDA is available to DSHS, and adjustments to denominators can be made for Part F clients, these funds will be included in the oral health expenditure estimate.

8.0 Review of Estimations

In areas without Part A grantees or in areas where Part A Planning Councils have agreed to use the methods described in this policy to calculate estimated expenditures on covered clinical services, DSHS will provide DSHS-funded AAs, Planning Councils, and Part C, D, and F grantees with the 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. AAs, Planning Councils and RWHAP Part C, D, and F grantees will have 30 days to inspect and comment on these data. Changes to the estimate may be requested, and must be accompanied by information that supports the requested change. DSHS is the final authority on changes to the estimates. DSHS will make the estimates available to the public via posting on their website and to the parties in listed above once any comments on the estimates have been addressed.

In Part A areas where an alternative method of calculation for estimated covered clinical costs is used, the DSHS-funded AA must provide the results of the calculations to DSHS when submitting planned allocations to DSHS for approval. DSHS urges Planning Councils 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 AA and Planning Councils may request that DSHS revise the estimate of the cost of covered clinical services if there has been a significant change in allocations. The AA or Planning Council should submit the request along with information about the new level of allocation to DSHS. DSHS will make a revised estimate available to the AA or Planning Council within five working days, and the AA or Planning Council will have 10 working days to inspect the revision for errors. DSHS will revise the publicly-posted estimated costs to reflect the revision.

Please note that DSHS will use 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 client requests for health insurance assistance that exceeds the estimated cost of directly-delivered services may be denied unless special circumstances exist that make 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.

DSHS-funded AA are encouraged to collaborate with Part A Planning Councils 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

DSHS will calculate estimated expenditures for covered clinical services annually in April. These calculations will use the allocations or planned expenditures currently in effect when the calculation is made. DSHS will solicit information on current allocations from DSHS-funded AA and Planning Councils (when appropriate) and will solicit planned expenditures from Part A, C, D. and F grantees. DSHS will also solicit information from DSHS-funded AA and Part A Planning Councils and administrators on other funds that could be included in local estimates; DSHS will consider if it is possible to arrive at reasonable estimates of unduplicated client counts using information from ARIES before including these additional funds in the calculations.

In areas where Part C, D, or Part F services or services delivered through other funding streams are not completely reported through ARIES, DSHS will consult with the grantees and DSHS-funded AA on the most appropriate approach to calculating the unique client count for the area. Funds are included in the estimate at the sole discretion of DSHS.

Client counts will be based on the most recent calendar year. Clients will be attributed to the HSDA(s) where services were delivered; a client may be counted in more than one HSDA if the client received a covered clinical service in more than one HSDA. The ADAP estimate will reflect 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 areas is created through aggregating the unique counts of clients that received one or more of the covered clinical services using a union intersection - that is unique counts of clients that received at least one covered clinical service through Part B or SS or Part A or Part C or Part D or Part F or other funding sources, as appropriate given the funding available in that HSDA. 

12.0 Revision History

Date Action Section
7/16/2015 New policy All