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Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
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6
Recommendations

The Committee reiterates that the primary goal of a publicly financed program for HIV/AIDS care is to improve the quality and duration of life for those with HIV and promote the effective management of the epidemic by providing access to comprehensive care to the greatest number of individuals with HIV infection. As discussed in Chapter 4, the existing public and private programs do not achieve this goal. In Chapter 5, the Committee set forth criteria for a financing program that would be more likely to achieve this goal. After assessing seven different approaches, the Committee concluded that the approach most closely aligned with the Committee’s criteria is a federally funded, state-administered program that purchases a uniform benefits package meeting the standard of care for HIV/AIDS on behalf of low-income individuals with HIV.

In this chapter, the Committee puts forth its vision for an improved public financing and delivery system for HIV care and examines the cost and health implications of such a program. For expository convenience, the Committee has named its proposal the HIV Comprehensive Care Program (HIV-CCP). The Committee anticipates that the vast majority of individuals with HIV/AIDS currently receiving care financed through state Medicaid programs would be eligible for and would enroll in the HIV-CCP. This shift will cause an increase in federal expenditures on HIV/AIDS care but is offset by substantial savings by the states. In all, the Committee estimates that approximately 400,000 individuals would be eligible to enroll in the HIV-CCP in the first year of the program and that approximately 280,000 of these individuals would enroll and remain in care. Of these, the Com-

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
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mittee estimates that 58,697 individuals with HIV who are in need of but are not receiving highly active antiretroviral therapy (HAART) would begin antiretroviral therapy. As a direct result of receiving HAART, the Committee predicts that premature deaths among this cohort of individuals would fall over a 10-year period by more than half (55.9 percent). Put another way, an estimated 19,825 lives would be saved. The Committee estimates that the incremental cost of providing HAART to these individuals for 10 years in 2002 dollars is $2.65 billion, discounted (over 10 years). In the judgment of the Committee, this investment would be cost effective for the nation, yielding an estimated cost per quality-adjusted life year (QALY) saved of $42,972, less than one-fourth of the estimated cost per QALY of an annual mammography for women ages 55–65.

These estimates, combined with its analysis of current public programs and alternative options, persuade the Committee that establishment of a new federally funded, state-administered program for low-income individuals with HIV is the most appropriate policy direction at this stage of the epidemic. The Committee therefore makes a number of specific recommendations regarding the major structural elements of such a program: eligibility, benefits, provider payment, financing, administration, and cost containment. The Committee recognizes that these recommendations do not constitute a detailed set of specifications from which implementing legislation could be drafted. Instead, the Committee intends that its recommendations serve as a framework for a complete program design by policy makers.

The recommendations are:

Recommendation 6.1: The federal government should establish and fully fund a new entitlement program for the treatment of individuals with HIV that is administered at the state level.


Recommendation 6.2: The new program should extend coverage for treatment to individuals determined to be infected with HIV whose family incomes do not exceed 250 percent of the federal poverty level (FPL). Individuals with HIV infection whose family incomes exceed this standard should be allowed to establish eligibility for coverage by spending down or by buying in on a sliding scale basis.


Recommendation 6.3: The new program should entitle each eligible individual with HIV to a uniform, federally defined benefit package that reflects the standard of care for HIV/AIDS.


Recommendation 6.4: The new program should reimburse providers who elect to participate at rates comparable to those paid by Medicare for comparable services.


Recommendation 6.5: To ensure that the new program is a prudent purchaser of drugs used in the treatment of HIV/AIDS, the Congress

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

should implement measures that lower the cost of these drugs such as applying the federal ceiling price or the federal supply schedule price currently used by some major federal programs.


Recommendation 6.6: The new program should adequately fund a nationwide demonstration of the effectiveness of Centers of Excellence in delivering covered services to eligible individuals with HIV.


Recommendation 6.7: The new program should coordinate closely with the Ryan White CARE Act, which should be refocused to meet the needs of low-income individuals who are not eligible to be served by the new program.

The Committee acknowledges that the group of recommendations it makes to redesign the way HIV care is financed and delivered is a bold response to its charge. In formulating its response and recommendations, however, the Committee conducted extensive modeling and analysis of the program before deciding to move forward. In the next section, the committee presents the results of its analyses, including the anticipated impact of the program on HAART use, the expected health benefits associated with the program, the cost and cost effectiveness of the program, the program’s overall budget impact, and the prevention benefits associated with the program. Finally, the committee presents an outline of the program it recommends.

COST AND HEALTH IMPLICATIONS OF THE HIV COMPREHENSIVE CARE PROGRAM1

The Committee’s recommendations were guided by an assessment of the financial implications, health benefits, and relative cost per health benefit gained of increased access to HAART under the HIV-CCP. In the next section, the analysis and results of the assessment are presented.

In its approach to making calculations of cost and benefits, the Committee first identified access to HAART as its primary indicator of receiving appropriate and quality HIV care. This decision was based on the centrality of HAART to treatment for HIV infection. Second, the Committee made

1  

For a complete discussion of the methods used to derive the cost and health outcome estimates reported here, see Appendix A. The numbers presented in the Cost and Health Implications section are estimates derived from data on current HIV population size and care patterns, and assumptions regarding program rules, eligibility, enrollment, and care seeking. Therefore, these numbers are subject to two types of imprecision. There is rounding error because in the tables we round calculated values to whole numbers of individuals. More importantly, the estimates are subject to uncertainties in inputs; we address this issue in the sensitivity analyses.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

two assumptions in estimating the benefits and costs of the program. The first assumption is that the implementation of the HIV-CCP would not have the effect of providing incentives for the privately insured to discontinue their coverage and enroll in the program, resulting in “crowd-out” and an increase in the publicly insured population. This assumption is based on recent findings indicating that subsidized health insurance for low-income persons did not result in crowd-out in four state programs among adults with incomes below 100 percent of poverty. Some crowd-out did occur among person with incomes of 100 to 200 percent of poverty in two states (Kronick and Gilmer, 2002). Though it is reasonable to expect there will be some level of crowd-out if the program is implemented, any estimation of its potential effects was deemed too unreliable to be included in the Committee’s calculations. Thus, an estimated 167,500 individuals who are aware of their infection and privately insured are not included in the policy changes being modeled. The second assumption is that the creation of a health care entitlement will not increase enrollment in care or increase HAART use among individuals who are unaware of their HIV status.2 Thus, the estimated 280,000 individuals who are unaware of their HIV serostatus are also not included in the modeling.

Anticipated HAART Use Gain and Program Enrollment of HIV-CCP

As discussed previously, 670,000 individuals are aware of their positive HIV serostatus; of these, the Committee estimates that 69 percent (463,070) are in need of HAART as determined by treatment guidelines (Table 6-1). Evidence from Kahn and colleagues (2002) indicates that slightly less than half of those who need HAART (230,000 individuals) receive it, leaving 233,070 individuals with an unmet need for HAART. Among those on HAART, the Committee estimates that 73 percent (167,650) are publicly insured through Medicaid, Medicare, or both, or are uninsured and rely on a public program to finance their care. Of those who need HAART but do not receive it, the Committee estimates that 77 percent (180,314) are publicly insured or uninsured.

Program Eligibility and HAART Gain for the HIV-CCP

Using the federal poverty level of $8,860 for an individual in 2002, and extrapolating from the HIV Cost and Services Utilization Study (HCSUS)

2  

This assumption underlies the Committee’s base case analysis and results. A univariate sensitivity analysis was performed, however, for 36 model input values, including total population estimates. The sensitivity analysis produced results for values of ±20% of the base case. These results are presented in Appendix A.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

TABLE 6-1 Estimated HAART Need Use and Deficit by Insurance Status

 

Private

Public

Uninsured

Public/Uninsured Subtotal

Total

Total aware of HIV status

167,500

335,000

167,500

502,500

670,000

Need HAART

115,106

247,766

100,198

347,964

463,070

Receive HAART

62,350

123,024

44,626

167,650

230,000

HAART deficit

52,756

124,742

55,572

180,314

233,070

data presented by Bozzette and colleagues (1998), the Committee estimates that about 80 percent of publicly insured and uninsured individuals (400,975) who are aware of their positive status would meet the HIV-CCP income eligibility requirements (250 percent of FPL, or $22,150 for an individual in 2002; see Table 6-2). The Committee further estimates that about 71 percent (285,503) of those eligible would enroll and receive care, and that about 78 percent (222,681) of those enrolled and in care need HAART. Estimates of enrollment were derived using the Committee’s expert judgment assessment of the likely enrollment rates across four subpopulations of those infected with HIV who are aware of their infection: those publicly insured and in care (90 percent), publicly insured and not in care (40 percent), uninsured and in care (90 percent), and uninsured and not in care (30 percent). The result equaled 71 percent of the total population that the Committee estimates is publicly insured or uninsured and aware of their

TABLE 6-2 HIV-CCP by Eligibility, Enrollment, and Care Status, HAART Need and HAART Gain

Eligibility, Enrollment, and Care Status

HIV-CCP

Individuals eligible to enroll in program

400,975

Individuals predicted to enroll in program and remain in care

285,503

Individuals enrolled and in care who need HAART

222,681

Individuals who will receive HAART through the program

181,848

Individuals receiving HAART through the program who received HAART prior to enrolling in the program

123,151

Individuals who will continue to receive HAART through a public program such as Medicaid or ADAPa

44,499

Total gain in HAART use as a result of the program

58,697

aThese individuals represent a small percentage of individuals in public programs who may not transition into the new program because of imperfect outreach and awareness of the program, imperfectly implemented enrollment procedures, or personal choice.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

TABLE 6-3 Comparison of Total HAART Use Estimated as a Result of the HIV-CCP by Insurance Status Prior to Implementation (new program numbers are in bold)

Insurance Status Prior to the Implementation of Alternative Financing Option

Current

HIV-CCP

Public

123,024

169,868

Uninsured, in care

44,626

56,480

Subtotal

167,650

226,348

Continued private insurance

62,350

62,350

Total

230,000

288,697

Total HAART Gain

n/a

58,697

HIV-positive status. See Appendix A for a complete discussion. Taking into account the increased likelihood of receiving HAART through insurance coverage and comprehensive support services, the Committee predicts that nearly 82 percent (181,848) of those in need of HAART will receive antiretroviral therapy paid for by the program. In addition, the Committee estimates that a small number of individuals (44,499) will continue to receive publicly funded HAART without enrolling in the program. Of 181,848 receiving HAART through the program, approximately 68 percent, or 123,151 individuals, were previously on HAART financed through public programs, largely Medicaid, but also programs for the uninsured such as the AIDS Drug Assistance Progra (ADAP). The Committee estimates that the implementation of the HIV-CCP will result in 58,697 individuals gaining access to HAART, or approximately one-third of those publicly insured or uninsured who are aware of their infection and need HAART but are not currently receiving it (Table 6-3).

Health Benefits of the HIV-CCP

Although the increase in HAART use is one measure of the benefit of implementing the Committee’s policy recommendations for public financing of HIV care, it is an intermediate outcome that relates to but is not a direct measure of the likely impact of the Committee’s recommendations on life expectancy or the quality of life of those living with HIV. To estimate the health impact of providing greater access to antiretroviral therapy, the Committee used a model of HIV disease states to conduct a computer simulation of HIV disease progression.

The model, adapted from Kahn et al. (2001), was used to estimate the

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

number of lives saved (or, more precisely, premature deaths averted) and gain in life expectancy (life years) and quality-adjusted life-years3 for those likely to receive HAART assuming the Committee’s recommendations are implemented. The model is also used to estimate health care costs, the cost per life year gained, and the cost per QALY gained. These cost-effectiveness ratios can be compared with cost-effectiveness ratios for other health care investments to establish the relative value of providing greater access to antiretroviral therapy. All estimates for the HIV-CCP assume full participation occurring at the time of implementation, are calculated only for individuals who enter the program in the first year, and are based on a 10-year time horizon.

Preventing Deaths and Adding Years of Life

The Committee estimates that, of the initial cohort of 58,697 individuals who would not otherwise be taking HAART but who will receive it under the HIV-CCP, most are likely to have AIDS or symptomatic HIV disease, reflecting both current population distribution and evidence of substantial barriers to HAART. Without access to antiretroviral drugs, the model predicts 35,489 individuals from this cohort (60.1 percent) would die from an AIDS-related illness over a period of 10 years4 (Table 6-4). Providing immediate access to antiretroviral medications would prevent an estimated 19,825 deaths among the initial cohort of 58,697 individuals receiving HAART through the first 10 years that the program is in place; this is a 55.9 percent reduction in mortality. With each additional year, the number of HIV-infected individuals who will benefit from the program will grow along with the number of lives that are “saved.”

Adjusting for quality of life, the life-year gain as a result of the HIV-CCP is equivalent to 129,385 QALYs. This adjustment assumes that, in addition to extending life, there are benefits associated with HAART that improve quality of life (e.g., from reduced morbidity due to fewer opportu-

3  

A quality-adjusted life year is a measure that takes into account both life expectancy and the quality of life, and is based on the notion that many people value a year of life lived in perfect health more highly than a year of life lived in less than perfect health. QALYs can be used to assess the relative benefits of alternative investments in health.

4  

The estimate is based on a computer simulation of disease progression that accounts for the current distribution of HIV disease by stage of illness, insurance, and financial status of the infected population. If no changes are made to the current system of public financing of HIV care, some of the initial cohort of 58,697 individuals who would not otherwise be on HAART at the time they would qualify for the program recommended by the Committee would eventually receive antiretroviral therapy as a result of a worsening in their disease status and/or finances.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

TABLE 6-4 Premature Deaths Prevented Among the Year One Cohort (58,697) in the HIV-CCP

 

Deaths in a Period of 10 Years

Without access to HAART

35,489

With access to HAART

15,664

Premature deaths prevented

19,825

nistic infections and less HIV disease progression). These benefits are greater than the negative impacts of HAART, including the burdens associated with the side effects of taking antiretroviral medications.

Cost and Cost Effectiveness

The Committee recognizes that there are competing demands for society’s health care resources. One way to determine whether or not the Committee’s recommendation to increase the level of HIV care funding is an efficient use of those dollars is to compare the incremental cost effectiveness of increased HIV care funding to the cost effectiveness of alternative uses of the same dollars.

The Committee estimates that the incremental cost of providing antiretroviral therapy to 58,697 individuals for 10 years in 2002 dollars is $2.65 billion, discounted. Adding in the cost of the complete benefits package (including case management, substance abuse treatment, and mental health care services), and setting the rate of reimbursement for outpatient services at the Medicare rate and at Medicare plus 5 percent for services provided through Centers of Excellence, the incremental cost from a societal perspective associated with implementation of the HIV-CCP is estimated to be $5.6 billion, discounted over 10 years (Table 6-5).

The Committee estimates that the cost per QALY gained associated with the implementation of the HIV-CCP will be $42,972. This figure is substantially higher than previously reported cost-utility ratios for expanding access to HAART, but is well within the range of what is considered to be a cost-effective investment in health. The difference is due largely to a disparity in the breadth of the policies studied, assumptions made about the timing of the initiation of HAART, and the impact of medical care inflation on the cost of care.

To generate its estimate, the Committee followed the recommendations of the U.S. Panel on Cost-Effectiveness in Health and Medicine. Specifically, the Committee adopted the Panel’s recommendation that the “societal perspective” be used in developing reference case analyses rather than the

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

TABLE 6-5 Cost Effectiveness of HIV-CCP

 

Gain in HAART Use

Gain in QALYs

Incremental Cost over 10 Years

Cost Effectiveness (cost per QALY gained)

HIV-CCP

58,697

129,385

$5.6 billion

$42,972

perspective of a particular set of beneficiaries or that of a specific payer—that is, to incorporate all costs and benefits (including adverse effects) associated with an intervention, regardless of who pays the costs or to whom the benefits (or harms) accrue (Russell et al., 1996). Recognizing that the benefits associated with an investment in health may accrue in different years than the costs are incurred, and that people have a time preference for money and health, the Committee also adopted the panel’s recommendation that both benefits and costs be discounted to their present value (Weinstein et al., 1996). The recommended discount rate is 3 percent per year after adjusting all costs for inflation (Weinstein et al., 1996).

Previous analyses focus narrowly on providing access to HAART in the early stages of the disease. The program modeled by the Committee provides for comprehensive care and therefore has substantial costs and benefits beyond the costs and life-expectancy gains associated with HAART. For example, the Committee recommends that case management, substance abuse treatment, and mental health services be provided as part of the packet of services to which beneficiaries are entitled in order to support the goal of early entry into care, retention, and adherence. Each of these services is likely to benefit the health of enrollees in ways that are independent of life expectancy. Although quality of life gains are difficult to quantify precisely, the Committee incorporated conservative estimates into its cost-effectiveness analysis, partially capturing these effects.

The Committee’s estimate necessarily overstates the true cost per QALY gain because it accounts for all the costs, but not all benefits. Still, even overstated, the creation of an HIV care entitlement appears to be “cost effective.” Generally speaking, an investment of health care resources that can purchase an additional QALY for less than $50,000 is considered to be a “good buy” (Hirth et al., 2000), and many of the health care investments routinely made are considerably more expensive. Table 6-6 uses the Committee’s estimate of the incremental cost per QALY gained for the creation of an entitlement to care based on HIV infection and places it in the context of other health care investments society has decided to make. The interventions and cost per QALY numbers were drawn from the Harvard Center for Risk Analysis (Graham, 1999) and are expressed in 2002 dollars.

Among current investments in health care that are somewhat less expen-

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

TABLE 6-6 Cost-effectiveness Ratios for Selected Life-saving Measures (2002 $)a

Intervention

Comparator

Target Population Saved

Cost/QALY

Annual colorectal screening

No screening

People ages 50 to 75

$23,000

Frontal airbags with manual belts

Manual belts (50% use)

Drivers of passenger cars

$31,000

HIV Entitlement

Current treatment context

HIV-infected individuals with incomes <250% of the federal poverty level ($)

$42,972

Radon mitigation in homes

No testing or mitigation

Home residents with radon levels above 20 pCi/liter

$74,000

Coronary angioplasty

No revascularization

Patients with mild angina and one-vessel disease

$143,000

Annual mammography

Annual clinical breast exam

Women ages 55 to 65

$194,000

Screening to prevent HIV transmission to patients

Universal precautions

Health care workers in acute care settings

$636,000

Lap/shoulder belts in rear center seat of car (9% use)

No restraints

Rear-center seats of cars

$3,100,000

aFigures were obtained from Risk in Perspective (Graham, 1999) and were adjusted to 2002 dollars using the Medical Care Consumer Price Index (CPI) from the Bureau of Labor Statistics.

sive than an HIV health care entitlement are annual colorectal screening for individuals ages 50 to 75 ($23,000 per QALY gained) and adding driver side airbags to passenger cars in combination with manual seat belts ($31,000/QALY). Investments that are significantly more expensive than implementation of the Committee’s recommendations for public financing of HIV care are annual mammography (versus clinical breast exam) for women ages 55 to 65 ($194,000/QALY), coronary angioplasty (versus no revascularization) for patients with mild angina and one-vessel disease ($143,000/QALY), and installation of lap and shoulder belts in the rear-center seats of cars versus no restraints ($3,100,000/QALY).

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

Estimated Budget Impact

Data derived from the Committee’s model suggest that implementation of an entitlement to care based on HIV infection is likely to produce considerable benefits at a cost that compares favorably to other investments in health. The Committee recognizes, however, that its recommendations will have a substantially different budgetary implication for the federal government relative to other public payers—particularly the states.

The Committee estimates current public spending on care for people with HIV disease, including the cost of care for the uninsured, to be $7.161 billion. If an entitlement to care were established as recommended by the Committee, an additional $574 million in public spending would be needed in the first year the program is operational (Table 6-7). The estimate collapses the budgetary impact on all public payers into a single, summary figure. It assumes no crowd-out of private insurance and does not take into account any cost savings, such as discounted drug costs or reductions in disability that might be found to offset the cost of an expansion of publicly financed HIV care. The estimate assumes that provider reimbursement is set at Medicare rates for outpatient services and at Medicare plus 5 percent for outpatient services provided through a Center of Excellence.

TABLE 6-7 Comparison of Estimated Year One Expenditures, Current and Anticipated, by Payer Associated with the HIV-CCP (in millions)

 

Current

Year 1 of HIV-CCP

Incremental Costs/(Savings)

Federal share of Medicaid/Medicare

$3,003

$5,610a

$2,607

State share of Medicaid

$2,138

$984b

($1,154)

Subtotal CMS-administered (federal/state Medicaid/Medicare)c

$5,141

$6,594

$1,453

Care for the uninsuredd

$2,020

$1,140

($880)

Total public (includes Medicare and federal/state Medicaid and the uninsured)

$7,161

$7,734

$574

aThe cost of the HIV-CCP ($4,408) is included in the federal share of Medicaid/Medicare.

bThis reflects state spending on individuals with HIV who remain in the Medicaid program as well as incomplete adjustment for dual Medicaid and Medicare eligibility.

cThis excludes the cost of care provided by the Ryan White CARE Act, which is included in “care for the uninsured”. See text for discussion of potential CARE Act savings.

dThe estimate of the cost of care for the uninsured includes care provided to veterans with HIV/AIDS by the Department of Veterans Affairs (VA) health care system. Though the VA is the largest single provider of HIV/AIDS care in the country, the amount of money it spends on HIV/AIDS care is small compared with other public programs, totaling less that $400 million in FY 2002. The VA does not cover care for veterans with private insurance, so in a sense it is a program for the uninsured.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

The additional cost to the federal government, measured by expenditures for the new program, plus greater federal-share-of-cost spending for Medicaid and Medicare beneficiaries who are not enrolled in the new program, is estimated at $2.607 billion. Collectively, the states would realize a first year savings of $1.154 billion. This savings is the result of the transfer of the cost of care from Medicaid, for which the states share fiscal responsibility, to the HIV-CCP, which is funded entirely by the federal government. The Committee predicts that the cost of care for the uninsured, currently estimated at $2.02 billion, will fall to $1.140 billion, resulting in a net savings of $880 million shared by the federal government, states, counties, providers of uncompensated care, and other payers.

Budget Impact on the Ryan White CARE Act

The Committee found estimating the cost of care for the uninsured to be a difficult task due to the variety and complexity of payers and the lack of data on both services provided and individuals treated. It is not surprising, then, that estimating the impact of the HIV-CCP on the cost of care for the uninsured, particularly on the Ryan White CARE Act, was difficult to do precisely, and was thus approached by the Committee with great caution. The Committee estimates that the current cost of care to public payers for uninsured individuals with HIV/AIDS is just over $2 billion dollars (Table 6-7). This number includes costs borne by states and localities, as well as by the VA for costs incurred by otherwise uninsured veterans, and, finally, a substantial portion of the Ryan White CARE Act. It is important to note that although the Ryan White CARE Act provides services exclusively for the un- and underinsured, the Committee’s estimated cost of care for the un- and underinsured does not include the entirety of funds allocated to the CARE Act. This is because the CARE Act funds many services that are not included in the HIV-CCP (e.g., housing support) and therefore are not included in the modeling. For this reason, the Committee concluded that estimates of the potential reduction to the funding allocation of the Ryan White CARE Act should be only a cautious adjunct to reporting the modeling results.

If the HIV-CCP is implemented as recommended, however, there would indeed be a reduction in need among those currently served by the CARE Act. This might, in turn, lead to the opportunity to reduce the funds allocated to the CARE Act, providing further savings to the overall cost of care. The Committee would like to stress that any reduction in the funding allocation for the Ryan White CARE Act must be undertaken with utmost care and deliberation, as the individuals served by the CARE Act after the implementation of the HIV-CCP program would remain the most vulnerable population with HIV/AIDS. In fact, since the Committee believes that

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

there is currently substantial unmet demand for services, any adjustments in funding for the Ryan White CARE Act should allow for meeting some of the currently unmet needs. The following paragraphs estimate the upper bound of the potential reduction to the Ryan White CARE Act if the HIV-CCP were to be fully implemented. This upper bound represents the most that could be eliminated from the program, before allowing for meeting current unmet needs.

As discussed in Chapter 3 (Box 3-2), Titles I and II of the CARE Act cover a variety of support services, including housing and food assistance, transportation, and advocacy and outreach services. The need for these services among the populations served by the CARE Act would not be eliminated by the implementation of the HIV-CCP. The Committee also envisions that any overlap between the CARE Act and the HIV-CCP would almost certainly occur only with Titles I and II and the dental reimbursement program. Though the Committee does foresee a potential restructuring of Title III (discussed later in this chapter), Title IV, and the AIDS Education and Training Centers (AETC) and the Special Projects of National Significance (SPNS) programs, these funds are targeted toward unmet needs that would still exist even with the new program and are unlikely to be diminished.

Table 3-1 provides the percentage distribution of funds for Titles I and II through Fiscal Year (FY) 2001, the most recent year for which data is available. Using these percentages for FY 2001 and applying them to FY 2002 allocations, we were able to approximate what percentage of CARE Act funds would be spent on services covered by the HIV-CCP (Table 6-8).5

The amount of CARE Act funds spent in service categories covered by the HIV-CCP totals $1.261 billion. This does not mean, however, that all of these funds could be used to offset the cost of the HIV-CCP. Not all of those receiving services under the CARE Act will be eligible for the HIV-CCP. In the model the Committee estimates that only 53 percent of uninsured individuals in care will be eligible for the program, leaving 47 percent who would continue to rely on other payers to receive care. Of the 53 percent who are eligible for the program, the Committee estimates that 90 percent (48 percent of those eligible) will actually enroll due to barriers in switching programs and inefficiencies in outreach and enrollment mechanisms. Thus, we calculate that of services covered by the HIV-CCP no more than $602 million of the $1.261 billion in potential overlap may be realized

5  

The percentage distribution of funds across service categories in Titles I and II does vary slightly from year to year; however, it has not varied by more than ±5 percent in any category since 1998. Therefore, the margin of error caused by applying the values from FY 2001 to FY 2002 is relatively small.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

TABLE 6-8 Areas of Potential Overlap between the Ryan White CARE Act and the HIV-CCP

Ryan White Funding Category

Type of Service Covered under the HIV-CCP ($ in millions)

NotCovered under the HIV-CCP ($ in millions)

Title I

Health care

$272

 

Case management

$74

 

Support services

 

$161

Medications/ADAP

$43

 

Administration, planning, evaluation, and program support

 

$68

Title II

Health care

$117

 

Case management

$78

 

Support services

 

$68

Medications/ADAP

$664

 

Administration, planning, evaluation, and program support

 

$68

Title III

 

$194

Title IV

 

$71

Dental assistance

$13

 

AETCs

 

$35

SPNS

 

$25

Total

$1,261

$690

as savings within the Ryan White CARE Act. Compared to the estimated savings for care of the uninsured in Table 6-7, no more than $602 million of the estimated $880 million would be realized within the CARE Act. It is worth noting again that this estimate represents the upper bound of potential savings. Because the CARE Act is a discretionary program limited by the funds allocated to it each year, there is almost certainly a level of unmet need that would become apparent should the current recipients of CARE Act services gain access to other resources. The Committee has no acceptable data with which to determine the level of this unmet need and therefore does not make the attempt. But it is likely that at least some of the $602 million in potential savings would be absorbed in meeting the needs of those who are currently outside the system but would enter it if there were room.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
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Prevention Benefit of the HIV-CCP

In developing the model, the Committee sought a clear evidence base for making its assumptions. Wherever there was uncertainty, the Committee chose to be conservative. For example, the model does not take into account a potential “prevention effect” in the base-case analysis, although prevention counseling is included in the package of benefits provided in the recommended program. This does not imply that the Committee believes there would be no positive prevention impact as a result of the program. Rather, the Committee, on the basis of the available data, was uncomfortable providing an estimate of this effect as part of the model results. Instead, the Committee chose to estimate the potential “prevention effect” in a separate analysis. The Committee estimated the possible prevention impact of the program using a linear calculation with four data inputs: (1) gain in individuals receiving ongoing intensive prevention counseling, (2) rate of disease transmission, (3) prevention effect of the program, and (4) estimated cost of care for those newly infected over the first 10 years of infection. The significant assumption underlying this calculation is that the prevention counseling received through the program would be a concerted and sustained effort using evidence-based prevention methods.

It is estimated that the program would enroll 285,503 individuals in the first year. This population is made up of individuals who were not previously in care as well as those who were enrolled in Medicaid or received care through programs for the uninsured. Through the program, these individuals would receive ongoing prevention counseling, which the vast majority of them would not have received even if they were previously in care. Based on expert judgment, we adjusted the total population size by -0.30 to exclude the small number of individuals already receiving ongoing prevention counseling and individuals who would not receive this service even if offered in the benefits package. Thus, the total population that we estimate would receive ongoing prevention counseling through the program is 199,852.

An average HIV transmission rate of 4 percent per year (i.e., four new HIV infections per 100 infected individuals per year) for all individuals infected with HIV, as reported in Holtgrave (2004), was used in the calculations. Sensitivity analyses were conducted around lower values because the program may enroll individuals who are less infectious and/or engage in less risky behavior than average. To be conservative, the Committee did not examine higher values.

Though several studies are currently examining the risk reduction effectiveness of prevention interventions for individuals who are HIV positive and aware of their status, few have published results. In time, it will be possible to use a more precise number for effect size in this calculation, but

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

in the absence of a clear point estimate, we decided to use a range of effect sizes from 30 to 50 percent reduction in transmission. This is consistent with many studies on prevention in mixed-HIV status risk groups.

An estimate of the cost of care averted by the prevention impact of the program was based on the model developed to determine the cost of the program. This model predicts that the cost of HIV disease for one person will be $45,000 over 10 years and $164,000 over 30 years, discounted to the present at 3 percent. The cost includes current use of ancillary services, but not the cost of added ancillary services such as substance abuse treatment received as a result of being enrolled in the program. The predicted cost reflects the fact that many individuals with early HIV disease are unaware of their infection. If perfect HIV awareness is assumed from the time of infection, the predicted costs rise to $67,000 and $190,000, respectively.

The results of this calculation show that from the 199,852 individuals in the program, 7,994 new infections can be expected to occur per year in the absence of prevention counseling. Using the midpoint of the range of risk reduction effect sizes (40 percent), we estimate that through ongoing prevention counseling, 3,198 of these infections can be averted, at an estimated cost savings to the care system of $144 million over 10 years and $524 million over 30 years. This represents an 8 percent reduction in the estimated 40,000 HIV infections transmitted each year. Using the lower and upper end of the range of effect sizes, the reduction in new infections is 2,398 and 3,997, respectively. Using a 3 percent annual transmission rate generates an estimate of 2,398 new infections prevented.

Table 6-9 shows the estimated number of infections averted and cost savings over 10 years and 30 years for both imperfect awareness of new infection and perfect awareness of new infection. The transmission rate is first assumed to be 4 percent and then varied to 3 percent as a sensitivity analysis. As indicated in the table, the expected results of exposure to prevention counseling, in terms of both infections and costs averted, vary as a function of changes in input parameter values. Yet even with wide variation, the human and economic benefits that will be realized from implementing the Committee’s recommendations are substantial. These benefits were not included in the base case modeling results. Had they been included, the estimated cost per QALY gained would have decreased.

RECOMMENDATIONS

The number of lives that could be saved by a new federal program for low-income individuals with HIV, and the estimated cost effectiveness of additional federal funding for such a program, persuade the Committee that establishment of such a program would represent an important

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

TABLE 6-9 Estimated Prevention Impact of the HIV-CCP

 

Imperfect Awareness Infections Averted—Cost Savings in Millions (10 yr/30 yr)

Perfect Awareness Infections Averted—Cost Savings in Millions (10 yr/30 yr)

4 percent transmission rate (4 new infections per 100 infected individuals)

 

 

30 percent risk reduction

2,398 ($108/$393)

2,398 ($161/$456)

40 percent risk reduction

3,198 ($144/$524)

3,198 ($214/$608)

50 percent risk reduction

3,997 ($180/$656)

3,997 ($268/$759)

3 percent transmission rate (3 new infections per 100 infected individuals)

 

 

30 percent risk reduction

1,799 ($81/$295)

1,799 ($121/$342)

40 percent risk reduction

2,398 ($108/$393)

2,398 ($161/$456)

50 percent risk reduction

2,998 ($135/$492)

2,998 ($201/$570)

improvement over the status quo. The Committee deliberated the structural outlines of such a program and arrived at the following recommendations. While these recommendations do not address all of the design features of such a program, they offer a coherent framework upon which federal and state policy makers can build.

Recommendation 6.1: The federal government should establish and fully fund a new entitlement program for the treatment of low-income individuals with HIV that is administered at the state level.

As discussed in Chapter 4, the current public financing programs do not adequately address the barriers to HAART for low-income Americans with HIV. Despite the dramatic decline in the annual number of AIDS deaths due in large part to the advent of HAART, the number of new infections has remained constant at about 40,000 per year; new data indicate that the number of new infections is on the rise (CDC, 2003). In addition, the demographics of the epidemic have shifted to include more individuals who come from low-income communities and communities of color and who are more dispersed geographically throughout the United

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

States than in the past. Data also show that individuals cared for in the publicly financed HIV delivery system often receive inadequate or incomplete care because of variations in coverage and limitations on prescription drugs and other services. Simply stated, the nation’s current approach, which provides limited federal funding for early treatment of HIV and relies on the federal–state Medicaid partnership to fund much of the care once an AIDS diagnosis is made, does not provide the fiscal or administrative resources necessary to finance timely, comprehensive, and consistent care to low-income individuals infected with HIV.

The Committee examined seven different alternatives to the existing public financing arrangements. These ranged from incremental approaches building upon the existing Ryan White CARE Act, Medicare, and Medicaid programs, to the establishment of new federal programs. As explained in Chapter 5, the Committee concluded that the approach that best fit the criteria for effective public financing of HIV care for low-income Americans was a federally funded, state-administered program (Option 7). Medicare’s character as a social insurance program oriented toward acute care was felt by the Committee to be incompatible with the need for a program targeted at the chronic care needs of low-income individuals with HIV. While Medicaid, as the nation’s largest health care program for the poor, would appear to be a logical program on which to build, the Committee concluded that options for expanding Medicaid would not provide adequate funding under current and foreseeable state budget constraints. Similarly, options that leave the states substantial discretion to limit eligibility, benefits, and provider payment levels in order to constrain costs would undermine the Committee’s objectives of a national program addressed to a national epidemic.

Under the Committee’s recommendation, state participation would be voluntary. The federal government would pay the costs of covering low-income individuals with HIV, as well as all costs incurred by participating states in connection with administration of the program. To eliminate any uncertainty on the part of states regarding the availability of federal funds, the Committee recommends that the program be funded as an open-ended entitlement to states and not be subject to annual appropriations. That is, the federal government would pay all allowable costs of providing covered services to eligible individuals through qualified providers. Because the federal government would guarantee the payment of the costs of treating low-income individuals with HIV that states and localities now incur under Medicaid or the Ryan White CARE program, as well as the new costs they could be exposed to as the epidemic proceeds, the Committee believes that all states would choose to participate.

As a condition of participation, the new program could apply minimum standards relating to eligibility, benefits, and provider payment so as

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

to create a reasonably uniform national program. With respect to administration, states would have the flexibility to use their Medicaid agencies, their public health departments, or some other state agency, so long as they complied with the reporting requirements needed to ensure programmatic accountability. All costs reasonably incurred by states in administering the new program, whether through their Medicaid or other agencies, would be assumed by the federal government.

Privacy and confidentiality are a concern for many individuals who are HIV positive. The Committee expects that the program would be run in accordance with the national standards for protecting the privacy of health information set by the Health Insurance Portability and Accountability Act of 1996 or pertinent state standards that impose more stringent standards.

Recommendation 6.2: The new program should extend coverage for treatment to individuals determined to be infected with HIV whose family incomes do not exceed 250 percent of the federal poverty level. Individuals with HIV infection whose family incomes exceed this standard should be allowed to establish eligibility for coverage by spending down or by buying in on a sliding scale basis.

While early and continuous access to HAART is demonstrably cost-effective, as shown in Appendix A, it does entail costs. The drug therapies themselves are expensive, and the providers of the medical and nonmedical services required to maximize the effectiveness of these therapies must be compensated. At the same time, the federal government’s resources are not unlimited, and there are numerous competing claims for the federal health care dollar. The Committee therefore recommends that eligibility for the new federal program be limited to individuals who are medically determined to be infected with HIV and whose family incomes do not exceed 250 percent of the federal poverty level (FPL; $8,980 for an individual in 2003).

As discussed in Chapter 3, most low-income Americans receiving care for HIV/AIDS do so through Medicaid or the Ryan White CARE Act program. Most state Medicaid programs limit eligibility to those with HIV/AIDS who otherwise meet Medicaid disability standards. As a practical matter, this means that most low-income individuals with HIV infection only become eligible for Medicaid once they have advanced AIDS, which results in disability and serious illness. In a classic Catch-22, people diagnosed with HIV cannot get Medicaid coverage that would enable them to access care that would prevent the costly onset of AIDS, which Medicaid does recognize as a basis for eligibility. In contrast, eligibility for the Ryan White CARE Act program is usually based on HIV diagnosis rather than the onset of AIDS. In the view of the Committee, this approach is far superior. Limiting eligibility for coverage to individuals whose disease has

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

advanced to AIDS is fundamentally at odds with the demonstrated value of early and continuous access to HAART therapy. The Committee therefore recommends that categorical eligibility for coverage be based upon a medical determination of HIV infection.

With respect to income eligibility, there is no commonly agreed-upon standard for “low-income.” Different means-tested programs apply different tests. For example, the minimum Medicaid income eligibility standard for an individual with disabilities who qualifies on the basis of receiving Supplemental Security Income (SSI) cash assistance is 74 percent of the federal poverty level. State Medicaid programs have discretion to set higher income standards for individuals with disabilities, and many of them have, resulting in considerable variation from state to state. The Ryan White CARE Act program uses less restrictive standards. Reflecting the high costs of HAART, eligibility for the AIDS Drug Assistance Program (ADAP) is offered to individuals with HIV infection with incomes at least under 500 percent of the federal poverty level in two states (Delaware and New Jersey). The majority of ADAP clients (92 percent) have incomes below 300 percent of the federal poverty level. However, the ADAP income standard applies to coverage for prescription drugs only, not for the full range of medical and related services needed to manage HIV/AIDS.

Because of the high cost of HAART and the comprehensive care necessary for effective treatment of HIV/AIDS, the Committee concludes that the income eligibility standard for the new federal program should be 250 percent of the federal poverty level ($22,500 for an individual in 2003). This standard is higher than the minimum Medicaid eligibility standard for disabled SSI recipients but is consistent with the standard applicable to working disabled individuals eligible for Medicaid at state option under the Balanced Budget Act of 1997 (1902(a)(10)(A)(ii)(XIII) of the Social Security Act added by section 4733(3) of the Balanced Budget Act, P.L. 105-33). This is lower, however, than the standard commonly applied in the ADAP program. Unlike the new federal program recommended by the Committee, ADAP does not cover services other than prescription drugs and does not guarantee coverage of the prescription drugs it offers to each individual with HIV who qualifies under its income standard.

Notwithstanding the differences between ADAP and the new federal program, the Committee recognizes that the adoption of an income standard lower than that now in use under ADAP will potentially pose a hardship to many individuals now receiving ADAP assistance. The Committee therefore recommends that, in determining whether an individual meets the 250 percent income standard, a “spend-down” methodology be applied similar to that used by many state Medicaid programs in determining income eligibility for individuals with disabilities through the “medically needy” eligibility category. Under this methodology, an individual’s incurred

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

medical expenses are subtracted from the individual’s income to determine whether the individual’s income is at or below the eligibility standard. Once the individual has incurred sufficient medical expenses to reduce his or her income to the eligibility standard (in this case, 250 percent of FPL), the program would cover all additional costs of care and treatment over the remainder of the accounting period (e.g., six months, one year). At the end of the accounting period, the “spend-down” process would be repeated, and the individual would be responsible for medical expenses until he or she had once more incurred sufficient costs to reduce income to the 250 percent standard.

The Committee recognizes that there will be individuals with HIV who have no access to adequate private insurance coverage, whose incomes exceed 250 percent of the federal poverty level, and who will not be able to “spend down” into eligibility. For these individuals, the new federal program, as a practical matter, will be the only available source of coverage for HAART and related services. The Committee does not believe that any useful public purpose would be served by excluding these individuals from the new federal program if they are willing to contribute toward the costs of this coverage. The Committee therefore recommends that individuals with HIV who cannot purchase adequate private insurance coverage (either through their employers or in the individual insurance market), and who are financially ineligible for the new federal program, have the opportunity to purchase coverage through the program by paying a monthly premium that is reasonably related to their incomes.

The Committee recognizes that under current Medicaid law, some eligibility groups are subject only to income limitations, while others are subject to both income and assets limitations. (Kaiser Commission on Medicaid and the Uninsured Resource Book, 2002). While the Committee supports the application of an income test, it does not recommend the use of an assets test. Assets tests are commonly applied in determining Medicaid eligibility for individuals with disabilities; in general, these individuals may not qualify for coverage if they have countable assets (e.g., savings accounts, real property other than the home) of more than $2,000. In contrast, the amount of assets an individual has is generally not a consideration in determining eligibility for ADAP benefits. From the standpoint of an applicant, assets tests are significantly more intrusive than income tests and can deter individuals from seeking benefits to which they are entitled (Moon et al., 2002; Cohen-Ross and Cox, 2000). From the standpoint of the program agency, administering an assets test is very staff-intensive and significantly increases the complexity and welfare stigma of the program (Moon et al., 2002). Assets testing has two broad policy purposes: to limit program benefits to those perceived to be most deserving (as measured by the absence of countable resources), and to discourage application for program benefits

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

through the establishment of paperwork barriers. The purpose of the Committee’s recommendation is to target coverage on low-income individuals with HIV while at the same time minimizing administrative burden and cost. In the Committee’s view, application of an assets test would add significantly to the complexity and administrative cost of the program and runs the risk of deterring low-income individuals with HIV from applying for, or qualifying for, the coverage they need. In the Committee’s judgment, neither of these policy objectives is appropriate to a federal program intended to facilitate access to early and continuous treatment for low-income individuals with HIV.

The Committee considered a number of eligibility criteria other than HIV infection and financial ability (as measured by income). These other criteria were private insurance coverage, immigration status, and residence in a correctional facility. In each case, federal Medicaid law has established a policy, and in each case, the Committee has determined that this established Medicaid policy should apply to the new federal HIV program as well.

With respect to insurance status, current Medicaid (and Medicare) policy is not to disqualify individuals who have private insurance coverage. Instead, this coverage is viewed as a liability of a third party for the beneficiary’s cost of care, and Medicaid pays only for the services that the insurer does not cover. There is only one Medicaid eligibility category to which this policy does not apply: women diagnosed with breast or cervical cancer. In this case, a woman can qualify only if she is not privately insured; however, unlike any other Medicaid eligibility group, these women are not subject to an income or resource test.6 The goal of the new federal program is to ensure early and continuous access to treatment by low-income individuals with HIV. Because of their income and their HIV status, these individuals are less likely to have private insurance coverage. In these circumstances, screening all applicants to identify those individuals would unnecessarily complicate the application process. In the Committee’s view, the more efficient course is that now used by the Medicaid (and Medicare) programs, in which any private insurance coverage a low-income individual with HIV may have should be looked to as the primary payer rather than as a disqualifier.

New public programs may cause a “crowd-out effect” or the substitution of public funds for private funds. A new public program may prompt

6  

The Committee notes that the authorizing statute, section 1504(a) of the Public Health Service Act, prohibits the Secretary of Health and Human Services from making Breast and Cervical Cancer Screening program grants to a state unless the state agrees that “low-income women will be given priority in the provision of services and activities [under the program].” However, there is no prohibition against screening women who are not low income (a term which is not defined either by income or assets).

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

employers, for example, to contribute fewer dollars to employees’ health insurance coverage, or to drop or reduce coverage to encourage individuals to enroll in the new program. There is no clear estimate of the extent of crowd-out associated with public programs. Estimates on the extent of crowd-out associated with Medicaid expansions vary considerably (see a review of the evidence by Dubay, 1999; Dubay and Kenney, 1997; Cutler and Gruber, 1996; Thorpe and Florence, 1998; Holahan, 1997), and states have implemented a number of strategies to deal with the risk of “crowd out.” Under the State Children’s Health Insurance Program (SCHIP), for example, states have implemented a number of strategies including: establishing a wait period, verification of insurance status, monitoring changes in employer contributions, and imposing obligations on employers and/or insurers to deter them from encouraging employees to enroll in the program (Wooldridge et al., 2003). The monitoring strategy is a first step in evaluating the extent to which the proposed program results in crowd-out and the imposing of obligations could be a further step if it is determined that crowd-out is occurring. Another policy question posed by some analysts is not how much crowd-out is taking place, but rather how much substitution is acceptable (Altera, 2001).

With respect to immigration status, under current law Medicaid covers immigrants who are otherwise eligible and who entered the country legally after August 16, 1996, only after five years of continuous residency. Otherwise eligible immigrants who are in the country illegally may qualify for Medicaid coverage only for emergency services. The Committee recognizes this as a policy area in which considerations other than health care are at play and on which the national debate is ongoing. The Committee therefore weighed in favor of following current Medicaid policy rather than reopening this debate. However, the Committee expects that a strongly refocused Ryan White CARE Act program will include these populations in care.

With respect to individuals in correctional facilities, federal Medicaid law denies coverage for otherwise eligible individuals who are inmates in state or local institutions. This reflects a long-standing federal policy that states and localities should bear the costs of providing health care to their correctional populations. Again, this debate goes well beyond health care policy to issues of fiscal federalism, and the Committee decided not to reopen this issue in connection with the new federal HIV program. The Committee cautions, however, that it is estimated that up to one-fourth (151,000–197,000 people) of the people living with HIV infection in the United States pass through a correctional facility each year (Hammett et al., 1998; Rich et al., 2001), and others become infected while in prison (Sabin et al., 2001). Most of these people return to the community. Developing more effective ways to manage HIV infection in prison and to promptly

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

engage people in care upon release must become a higher priority for state and local officials.

Recommendation 6.3: The new program should entitle each eligible individual with HIV to coverage for a uniform, comprehensive package of services that reflects the standard of care for HIV/AIDS.

In the view of the Committee, a new federally funded program that is structured as an individual entitlement is most likely to achieve the Committee’s goal of extending coverage reflecting the standard of care for HIV/AIDS to low-income Americans with HIV regardless of the state in which they reside. Entitlement to a specified set of services is a defining characteristic of the current Medicare and Medicaid programs and distinguishes those programs from a federal block grant like SCHIP. In Medicaid, eligible low-income Americans are entitled to have certain services such as physician and hospital care paid for on their behalf when medically necessary, regardless of the state in which they live. In SCHIP, eligible low-income children have no such entitlement; a state may close new enrollment in the program or disenroll existing eligibles, or both, at any time. The use of enrollment caps or other techniques to terminate or limit benefits to otherwise eligible individuals is not consistent with an effective program of coverage for low-income individuals with HIV, which requires early and continuous access to HAART, without which they face increased illness, disability, and death.

As discussed in Chapter 2, nearly complete adherence to the prescribed HAART regimen is essential to securing optimal benefit from the treatment and to preventing drug resistance. This in turn requires services that support and promote early and continuous participation in care, particularly among populations with one or more co-morbidities. The Committee therefore recommends that the defined benefits package to which all eligible individuals with HIV would be entitled contain the following six elements:

  1. antiretroviral therapy and other medications, including those that prevent complications and support retention in care;

  2. obstetric and reproductive health services;

  3. treatment for mental health and substance abuse problems on both an inpatient and outpatient basis;

  4. case management services;

  5. HIV prevention services (e.g., education regarding risk reduction in the clinical and community setting); and

  6. primary care services.

The logic of this comprehensive benefits package is clinical efficacy. Timely initiation of HAART and maintenance of therapy are crucial to

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

clinical effectiveness. Medications must include not just antiretroviral drugs but also drugs necessary to treat opportunistic diseases, such as antibiotics and antifungals. Because of the complexity of the disease process and the susceptibility of those with HIV to opportunistic infection, primary care services, case management, and prevention services are essential. To prevent HIV transmission from pregnant women to their newborn children, transmission that is virtually completely avoidable with appropriate drug therapy during pregnancy, obstetric and reproductive health services must be included. Finally, many people with HIV/AIDS suffer from co-morbid conditions such as mental illness or substance abuse disorders that interfere with compliance with treatment regimens. The inclusion of services for these conditions is fundamental to retention in care and continuation of therapies essential to disease management

The Committee acknowledges that the six core elements of the defined benefit package it recommends are not new. In fact, much of what is included in the benefit package can be found in some of the currently funded CARE Act programs. Title III-Early Intervention Services, Planning and Capacity Grants, for example, allow for coverage of medical evaluation, primary care, antiretroviral therapies, medical and mental health care, case management, screening and testing, and other services. Title IV of the CARE Act addresses the specified needs of women, infants, and children and youth living with HIV. It covers primary and specialty medical care, psychosocial services, logistical support and coordination, and outreach, and case management (HRSA, 2002) for this subpopulation of HIV-infected individuals. The HIV/AIDS Dental Reimbursement program acknowledges the need for well trained oral health providers to provide oral health services to clients with HIV. What is new about the Committee’s recommendation is that it hopes to make these benefits available to all low-income individuals who need them, regardless of the state they live in.

Recommendation 6.4: The new program should reimburse providers who elect to participate at rates comparable to those paid by Medicare for comparable services.

As in the Medicare and Medicaid and CARE Act programs, the Committee suggests that provider participation in the new federal HIV program be voluntary. Whether an individual practitioner or clinic or hospital or other provider decides to participate would depend on a number of factors. One of these is the adequacy of reimbursement. This may be particularly important for services that are technically complex or are time- or resource-intensive, as are many of the services required for effective clinical management of individuals with HIV.

As discussed in Chapter 4, low reimbursement rates in many state Medicaid programs affect access to care for beneficiaries of that program.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

In fact, Medicaid reimbursement to HIV/AIDS providers historically has been so low that in many states access to care for Medicaid beneficiaries with HIV/AIDS is the same as for those who are uninsured (Shapiro et al., 1999). Such access barriers are incompatible with the Committee’s objective of reducing morbidity, mortality, and disability among low-income individuals with HIV. While reimbursement levels will not in and of themselves guarantee widespread participation by qualified providers, they are an important determinant. Perhaps the best illustration of this is the contrast between Medicare and Medicaid. Physician participation in Medicare, which sets reimbursement rates higher than those in most states, has been consistently higher than in Medicaid, resulting in better patient access to care and easier patient referrals (MedPAC, 2003). This is not to say that Medicare rates for every covered item or service are always optimal. However, a public program that relies on Medicare payment principles and rates is much more likely to succeed in attracting sufficient qualified providers than is a program that pays providers less.

Recommendation 6.5: To ensure that the new program is a prudent purchaser of drugs used in the treatment of HIV/AIDS, Congress should implement measures that lower the cost of these drugs such as applying the Federal Ceiling Price or the Federal Supply Schedule price currently used by some major federal programs. Implementation of this recommendation would lead to an estimated discount off of Medicaid antiretroviral prices of 9 percent to 25 percent, as discussed below.

Drug manufacturers sell the same product at different prices to different purchasers. The price established for the different segments of purchasers depends on the price sensitivity of each group or the extent to which the group would change the amount of a product it buys if the price increases or decreases. Under current law, the price drug manufacturers can charge the Department of Veterans Affairs (VA), the Department of Defense (DOD), the Public Health Service (PHS), and the Coast Guard for products (brand-name drugs) listed on the Federal Supply Schedule (FSS) is capped at the Federal Ceiling Price (FCP). That price is at least 24 percent off the average price paid to a manufacturer (AMP) by wholesalers for drugs distributed to nonfederal purchasers (NFAMP). The NFAMP is not publicly available (GAO, 2000). The VA manages the FSS, another cost containing measure. The schedule specifies the quantities of and prices paid by the federal government for a wide range of medical goods including drugs. Competitive procedures are used to award contracts to companies to provide drugs at “the most favored customer price.”

Under the Medicaid program, state agencies are allowed to purchase drugs at a lower cost for the treatment of HIV/AIDS through a rebate program. Under this Medicaid Drug Rebate Program, established by the

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

Omnibus Budget Reconciliation Act of 1990, manufacturers must enter into rebate agreements with the Secretary of Health and Human Service and pay quarterly rebates to state Medicaid agencies. The amount of the rebate received by the State is calculated as the greater of 15.1 percent of the AMP or AMP per unit, or the difference between the AMP and the manufacturer’s “Best Price” for brand-name drugs. The “Best Price” is the lowest price the manufacturers charge “best customers” other than Medicaid (e.g., wholesalers, retailers, non-profits, FSS, etc.). For generic drugs, state agencies are given a rebate of 11 percent of the AMP (DHHS, 2001).

Certain entities are eligible to purchase pharmaceuticals under the 340B Drug Discount Program, including ADAP programs. This program allows for these entities to purchase drugs directly from manufacturers though a centralized mechanism at a lower price or to obtain rebates under the state Medicaid rebate program. The 340B discount is roughly the AMP minus the Medicaid rebate amount. Twenty-two state ADAP programs that directly purchase pharmaceuticals through a centralized purchaser obtain drugs at the 340B discount price. Twenty-six state ADAP programs take advantage of their states’ Medicaid unit rebates on a quarterly basis (Aldridge and Doyle, 2002). ADAP programs that use this method do not purchase drugs but reimburse retail pharmacies for prescriptions filled (DHHS, 2001).

In a report released in 2001, the Office of the Inspector General for the Department of Health and Human Services (OIG) estimated that state Medicaid programs in 1999 paid 33 percent more than the FCP for antiretroviral medications (DHHS, 2001). The OIG also estimated that Medicaid’s price for antiretroviral drugs was 10 percent higher than the FSS, and 5 to 15 percent higher than the price paid by state-administered ADAP programs (depending on how the ADAP programs were organized). In its report, the OIG recommended that Medicaid be given access to the FCP for antiretroviral drugs (DHHS, 2001). In a separate report, the OIG recommended that ADAP programs also be given access to the FCP (DHHS, 2000).

The Committee finds that the OIG analysis has merit and that it should apply with equal force to the new federal HIV program. By replacing and expanding upon both Medicaid and ADAP, the new federal HIV program would be this country’s single largest purchaser of the prescription drugs that make possible effective HAART therapy. As discussed earlier in this chapter, while the new federal program would be demonstrably cost effective, it would nonetheless impose a net new burden on the federal treasury. The incremental cost of providing antiretroviral therapy alone would be in the range of $2.65 billion over the next 10 years. At this projected level of expenditure, simple fiscal prudence requires that the new program use mechanisms currently in use by other federal purchasers to

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

constrain its expenditures and give taxpayers confidence that it is paying for needed items and services in an efficient manner. The Committee estimates that purchasing antiretroviral drugs at the FCP would reduce the federal government’s outlays by $419.3 million. It is also worth noting that further cost savings may be achieved by extending this policy to Medicaid Managed Care Organizations (MCOs), which currently must negotiate directly with pharmaceutical manufacturers to obtain discounts on drugs.

The Committee recognizes that pricing policies of public programs can affect the research and development investment decisions of pharmaceutical manufacturers, particularly when, as in this instance, the public program is a dominant purchaser. There is a risk that, if the new program purchases antiretroviral drugs at the FCP, manufacturers may be less willing to invest significant resources in research and development for HIV therapies because they project a reduction in potential revenues for new drugs in this class. There are also concerns that manufacturers will raise prices to other purchasers to offset revenue losses resulting from the lower reimbursement for HIV/AIDS drugs (GAO, 2000). The Committee takes this matter seriously: after all, research and development of antiretroviral therapies by pharmaceutical manufacturers have made fundamental contributions to our understanding of HIV and the dramatic change in the clinical course and outcome of HIV infection brought about by HAART. However, the Committee is firm in asking the federal government to be a prudent purchaser and to explore ways that would reduce the cost of pharmaceuticals in the new program while recognizing that the steps taken should not undermine research and development of new HIV/AIDS drugs.

The preceding concerns led the Committee to conduct the following analysis, which suggests that there is substantial room for lowering prices while still substantially increasing manufacturer net revenues with this initiative. Specifically, the added revenue associated with increasing the number of individuals on HAART by 58,697 should be compared with the decrease in revenue for 123,151 individuals already on HAART who switch to the new program and thus obtain drugs for a more discounted price. The Committee calculated the discount off of the current Medicaid price at which net revenue is zero. We conservatively assumed that the marginal cost of production is $1,500 per person year of HAART therapy. This is conservative because brand-name HAART is available for low-income countries at costs substantially less than this (Médecins Sans Frontières, 2003). With this assumption on marginal cost of production, a 27 percent discount leads to revenue neutrality. Thus, any discount less than 27 percent leads to increased revenue to manufacturers, further defraying the cost of research and development. While this quantitative analysis is not the final word on maintaining adequate profits for manufacturers, it suggests that there is

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

room for price discounts while still increasing net revenue and profits and thus maintaining incentives for research and development. Ideally the Committee would prefer to rely on a formal analysis of the future costs of research and development for new ARV medications and their potential market. However, such an analysis would be based on hypothetical assumptions and is beyond the scope of the Committee’s research resources. In the absence of such an analysis, the Committee believes that a discount that increases net revenues in association with a drug-benefits expansion should assure ARV manufacturers that the United States government is committed to allowing them to recover substantial research and development costs.

Recommendation 6.6: The new program should adequately fund a nationwide demonstration and evaluation of the effectiveness of Centers of Excellence in delivering covered services to eligible individuals with HIV.

Consistent with past IOM reports (IOM, 2000, 2001, 2002, 2003a, 2003b), the Committee embraces a chronic care model for HIV care and recognizes the need for any new delivery system to be grounded in the tenets of quality care. Centers of Excellence (CoEs) surfaced as a concept that embodies these goals. In the Committee’s view, a system of HIV care needs to (1) ensure effective treatment and efficient resource utilization, (2) coordinate care and social support across a number of providers within any given community, and (3) be accountable to patients and to the programs that are purchased on their behalf. As discussed in Chapter 5, one promising model for a system of care meeting these criteria is the CoEs. The Committee recognizes that this model is not currently operational in many communities, that CoEs can be structured in a number of ways, and that testing is required to see which model is feasible in different geographic areas and circumstances. However, the Committee believes that the new federal program offers an opportunity to test this model for the benefit of low-income individuals with HIV, providers, and public and private purchasers. The Committee therefore recommends that the new program include adequate funding for a nationwide, multiyear demonstration of the effectiveness of CoEs in delivering the standard of care for HIV/AIDS to eligible individuals. The demonstration should include an independent evaluation of the quality, cost, and outcomes of the services furnished. Positive evaluation results would provide support for a wider dissemination of the model and the possibility of incorporating other responsibilities such as research to improve care delivery.

Recommendation 6.7: The new program should coordinate closely with the Ryan White CARE Act, which should be refocused to meet the

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

needs of low-income individuals who are not eligible to be served by the new program.7

The Committee emphasizes that the creation of a new federal HIV program for low-income individuals with HIV would not eliminate the need for the Ryan White CARE Act. It would, however, alter the role of the CARE Act, particularly with respect to funding drug therapies and other services that would be covered by the new federal program. Many of the individuals with HIV who are now served by the CARE Act would be eligible for the new federal program. As an entitlement, the new federal program would have more funds with which to address the treatment needs of these individuals than the CARE Act programs, which are subject to the annual appropriations process. In the case of individuals eligible for both programs, the new federal program should be the first dollar payer for the services that it covers. This would free up remaining CARE Act funds for other purposes, such as assisting individuals in enrolling in the new federal program, filling in any remaining service gaps, and supporting delivery system improvements.

The proposed program has significant implications for a number of CARE Act sub-programs, notably Title II and ADAP. As noted before, ADAP represents the majority of Title II expenditures. Under the new program, the majority of these expenditures would be covered. However, the Committee recognizes that low-income immigrants with HIV infection will not be eligible for the federal program. Thus, a percentage of current ADAP funds should continue to be available to address the needs of this population and the public health imperative to control the spread of this infectious disease.

Title I under the CARE Act would also be notably impacted by the new program. If implemented as recommended by the Committee, the new program would lessen the need for Title I. Title I funds are primarily, but not entirely, devoted to services included in the Committee’s benefit package and, as an entitlement program, eligibility is triggered by HIV infection; thus, funds follow the individual. Under this scenario, planning bodies would be refocused, and Title I funding savings could be used to offset federal spending on the HIV-CCP or some portion of the funds shifted to Title III.

The Committee gave considerable attention to the need for continuing to allocate funds for Title III, Early Intervention Services discretionary grants. Current grantees include community and migrant health centers, hospitals or university-based medical centers, and city and county health

7  

For a discussion on the new program’s budget impact on the Ryan White CARE Act, please see the earlier section of this chapter.

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

departments. Grantees use these funds to conduct risk reduction, counseling, and testing, and to provide clinical care, medications, and case management (GAO, 2000). The Committee envisions two possible roles for Title III grantees under the new program. In one role, Title III grantees—community health centers, hospitals, or university-based medical centers—with high-quality services and accountability structures, are engaged to participate as part of CoEs since many of the services they provide are included in the proposed program. In the second role, the Committee envisions Title III grantees acting to address two specific groups with unmet needs under the new program: those populations ineligible for the program and vulnerable populations who are often unable to access formal systems of care. These populations require additional outreach and support, services which the CARE Act system provides. In addition, these programs are a means to provide voluntary counseling and testing that enables individuals to be made aware of their infection at an earlier disease stage and to enter care. Thus, a refocused Title III program could continue to fulfill the mission of the CARE Act by covering the much smaller gaps remaining in the new system and acting as a link to CoEs (assuming they are implemented) by guiding the most vulnerable persons into care.

CONCLUSION

The Committee’s recommendation for the establishment of a federally funded, state-administered entitlement to care for low-income Americans with HIV may strike some as imprudent. After all, the federal government is already experiencing high budget deficits, and the Committee’s recommendation would require increased federal spending. In addition, current notions of federalism assume the devolution of responsibility for social welfare functions from the federal government to the states, and the Committee’s recommendation would elevate all financial responsibility for HIV care to the federal level. In short, the Committee’s recommendation does not reflect conventional wisdom. Instead, it reflects the Committee’s conviction that such a program is demonstrably the most effective way for the United States to respond to the HIV epidemic and the needs of those affected by it.

With the development of HAART and other tools, we now have the technology to extend life and reduce morbidity and disability among those Americans with HIV. The Committee’s estimates indicate that the cost effectiveness of delivering these technologies to low-income individuals with HIV compares favorably with that of other common public health interventions, such as frontal air bags and radon mitigation. To possess a demonstrably life-saving and cost-effective technology but not make it available to

Suggested Citation:"6 Recommendations." Institute of Medicine. 2005. Public Financing and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White. Washington, DC: The National Academies Press. doi: 10.17226/10995.
×

Americans with HIV who cannot otherwise afford it is, in the Committee’s view, indefensible.

Making these technologies available to those in need will require additional resources from the public sector. While both the federal government and state governments face serious budgetary constraints, it is clear to the Committee that the federal government is the proper locus of financial responsibility for this purpose. The HIV epidemic is global in scope, not state-specific; the federal government’s revenue base is broader and more structurally sound than that of the states; and uniformity of eligibility and benefits, essential to an effective treatment of HIV nationally, cannot be sustained over time if states are required to fund the program. Of course, federal financing does not necessarily imply the establishment of a new federal bureaucracy. Indeed, the Committee recommends that the new national program be administered by the states. But without additional federal resources, harnessed through a national program along the lines recommended by the Committee, low-income Americans with HIV will continue to suffer avoidable death and disability. Our nation can and must do better.

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Each year it is estimated that approximately 40,000 people in the U.S. are newly infected with HIV. In the late 1990s, the number of deaths from AIDS dropped 43% as a result of highly active antiretroviral therapy. Unfortunately, the complex system currently in place for financing and delivering publicly financed HIV care undermines the significant advances that have been made in the development of new technologies to treat it. Many HIV patients experience delays in access to other services that would support adhering to treatment. As a result, each year opportunities are missed that could reduce the mortality, morbidity, and disability suffered by individuals with HIV infections.

Public Financing and Delivery of HIV/AIDS Care examines the current standard of care for HIV patients and assesses the extent the system currently used for financing and delivering care allows individuals with HIV to actually receive it. The book recommends an expanded federal program for the treatment of individuals with HIV, administered at the state level. This program would provide timely access and consistent benefits with a strong focus on comprehensive and continuous care and access to antiretroviral therapy. It could help improve the quality of life of HIV/AIDS patients, as well as reduce the number of deaths among those infected.

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