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H H S Department of Health and Human Services
Health Resources and Services Administration
HIV/AIDS Programs

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ADAP Manual - 2003 Version

II.  AIDS Drug Administration Program (ADAP) Overview

2.  ADAP Administration and Program Structure

Chapter Summary

  1. Eligibility and Formulary Parity
  2. Administrative Structure
  3. Administrative Responsibilities
  4. Factors That Impact an ADAP's Choice of a Drug Purchasing and Dispensing
  5. Purchasing and Dispensing Options for State ADAPs
  6. References

 Chapter Summary TOP

This chapter describes the administrative structure and responsibilities of the Health Resources and Services Administration's (HRSA) HIV/AIDS Bureau's (HAB) AIDS Drug Assistance Programs (ADAPs). Factors that affect how ADAPs organize program components are also addressed.

 Eligibility and Formulary Parity TOP

The Department of Health and Human Services’ (DHHS) Health Resources and Services Administration’s (HRSA) Office of the General Counsel has determined reference to a “State ADAP,” [1] in the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act, to mean that both eligibility criteria and covered treatments for anyone enrolled in the program must be consistently applied across any State.[2] As long as they comply with this essential requirement about equity and consistency, States have significant flexibility in how they administer their ADAPs.

 Administrative Structure TOP

Almost all States have centralized the administration of their programs. The main characteristics of centralized and decentralized programs are highlighted below.

  • Centralized: ADAPs in this category are administered by a State agency, usually the State health or human/social services department. As of February 2001, 53 of the existing 54 State ADAPs (98 percent) are centrally administered. Of those 53 State ADAPs, three are located within their State’s Medicaid agency, and 11 States contract with a pharmacy benefits manager (PBM) to administer the day-to-day operations of the program. Typically, the State ADAP coordinator provides contract oversight and monitoring of the program carried out by the PBM.
    In the remaining 39 States, the ADAP coordinator, and possibly ADAP staff, direct the day-to-day and pharmacy operations of the ADAP and provide the general oversight and monitoring needed to ensure the fiscal soundness and overall quality of the ADAP.
  • Decentralized: The ADAP in this category is administered through local consortia and/or county health departments. These entities receive a sub-grant from the State to administer the day-to-day activities of the ADAP at a local/regional level. The State plays a large role in program oversight to assure eligibility and formulary parity across the State.

Table 1 presents a breakout by State of how ADAPs are administered.

Table 1: How States Administer Their ADAP
Administrative Structure
# of
ADAPs
State ADAPs
Centralized
53
 
State Medicaid Agency
3
CT, NJ, MN, and OK
Contract with a Pharmacy Benefits Manager
11
AK, CA, CO, IL, IN, IA, MA, MO, and WA
State Department of Health or Human/Social Services Department
39
AL, AZ, DE, DC, FL, GA, GU, HI, ID, KS, KY, LA, ME, MD, MI, MS, MT, NE, NV, NH, NM, NY, NC, ND, OH, OR, PA, PR, RI, SC, SD, TN, TX, UT, VI, VT, VA, WI, WY, and WV
Decentralized
1
 
Local Consortia
1
AR

 Administrative Responsibilities TOP

ADAP administrative responsibilities generally fall into three broad categories: program operations, oversight and monitoring duties, and managing the purchase and distribution of pharmaceuticals.

  • Program operations center around the ADAP client. These tasks can include determining client eligibility for enrollment and periodic re-certification for ADAP services; coordinating with providers, pharmacies, manufacturers’ patient assistance programs, clinical trials, and other sources of medications; monitoring client prescription usage and physician prescribing patterns; and providing information on ADAP services to clients.
  • Program oversight and monitoring involves monthly tracking of ADAP expenditures and client utilization trends; seeking input and guidance from the ADAP advisory body, consumers, and/or service providers; program planning and development activities; fulfilling reporting requirements (e.g., the ADAP Monthly Report [AMR], the CARE Act Data Report [CADR], the Title II Grant Application); and overseeing any contracts for ADAP services.
  • Managing pharmaceutical purchasing and dispensing includes establishing and monitoring a drug purchasing and dispensing system; monitoring drug delivery to clients; processing reimbursement claims and submitting drug rebate claims; and providing quality assurance for these processes.

ADAP Administration

As mentioned above, each ADAP is unique in how it manages one or more of these administrative tasks. Although all ADAPs are subject to a cap on administrative, planning, and evaluation activities, a range of factors will affect how an ADAP organizes its operations, oversight, and purchasing/dispensing responsibilities.

Budget

The size of the program’s budget is often the most significant factor. A larger budget will allow the ADAP more flexibility for staff positions, technical resources, and the ability to serve a greater number of eligible clients. ADAPs with smaller budgets are often faced with the difficult task of balancing limited staff and resources with the demands of clients and necessary program oversight and reporting activities.

Data Management

The data management capabilities of the ADAP will impact decisions related to both client tracking and drug purchasing/dispensing. For programs with limited technical resources, contracting out data-related activities may be a good solution to managing more complex program components. Identifying other State programs, such as the State Medicaid agency, that process similar types of data may assist the ADAP with its information management needs.

Clients

Finally, the number and geographical distribution of clients will be a significant consideration for the ADAP as it determines how to administer program enrollment and the distribution of medications. States with a significant number of rural clients face very different issues than those States where ADAP clients are concentrated in a few mid-size to large metropolitan areas.

HOW CLIENTS ACCESS ADAP

Clients generally apply for ADAP services in one of two ways. In some States, applications are centrally processed, evaluated, and approved or denied by State ADAP staff. Because the enrollment process is centrally administered, it is very important that local case managers, providers, and consumers are consistently and continually educated about ADAP services and how to apply for them. Some States have implemented innovative outreach strategies including: maintaining a web page, toll free numbers, pamphlets in different languages, and educational symposiums around the State.

In other States, clients apply directly for ADAP services at the local level through a case manager, physician, nurse, or other service providers. Depending on the size and responsibilities of the ADAP staff, applications are then either sent to the State ADAP staff for a final review, or the State relies on the local level to approve or deny the client’s application. Because service providers act as the client’s point of entry into ADAP, it is important that they are familiar with the State ADAP and are continuously educated about program changes. This is especially critical because HRSA policy requires parity across the State regarding access to the ADAP and the number of available drugs on the State ADAP formulary. Outreach methods, similar to the ones mentioned earlier, are also utilized by these ADAPs to accomplish these goals.

The RWCA Amendments of 2000 provided funding for the Minority AIDS Initiative (MAI). These funds are to be used to initiate, modify, or expand educational and outreach services for disproportionately impacted communities of color to improve ADAP participation. Seven million in MAI funding was awarded in FY 2001.

 Factors That Impact an ADAP's Choice of a Drug Purchasing and Dispensing System  TOP

As mentioned previously, the size and demographics of the HIV/AIDS epidemic within the State, the program budget, number of staff, data management capabilities, and geographic distribution of clients are all factors that influence the administrative structure of the ADAP and define the most appropriate drug purchasing and dispensing system.

Low HIV/AIDS Incidence States

A State with a lower AIDS incidence level typically has a smaller budget, limited technical resources, and often serves fewer clients. A single staff person who handles many other tasks in addition to the ADAP often administers the program. For this type of ADAP, day-to-day client responsibilities may be all that the ADAP coordinator can reasonably manage. Consequently, the ideal purchasing system may be one in which the ADAP contracts with an entity to manage the processing, ordering, and filling of client prescriptions. Moreover, the ADAP can require the contractor to tailor its reporting to the ADAP’s specification. This will help the ADAP coordinator satisfy some, if not all, of HRSA’s ADAP reporting requirements and give the coordinator information needed to perform program oversight and monitoring activities.

Medium and High HIV/AIDS Incidence States

In contrast, an ADAP with a larger budget and additional staff has the ability to internally manage the administrative responsibilities of the ADAP. This larger ADAP can more easily manage the paperwork needed for reimbursing multiple pharmacies or monitoring the administrative requirements of the direct purchase option of the 340B Drug Discount Program.

Other factors that will influence the most appropriate drug purchasing and dispensing systems for each State include:

  • Can prescriptions be safely and confidentially mailed to a client’s home or other address in a timely manner?
  • Do clients prefer picking up prescriptions at local pharmacies?
  • Are there State laws that mandate drug pricing discounts for the ADAP?
  • Are there other pharmaceutical delivery systems within the State’s HIV service delivery scheme?

Finally, as more ADAPs seek to provide eligible clients with access to health insurance coverage that includes prescription benefits, ADAPs’ purchasing and dispensing systems should be flexible enough to allow the appropriate party to be billed for their portion of each prescription. The most efficient systems are ones in which the dispensing pharmacy bills each responsible party so that the ADAPs do not have to “pay and chase” for amounts owed by an insurance company or other reimbursement source. However, these “up-front” systems are not feasible in all States. Consequently, several State ADAPs have developed pay-and-chase models.

 Purchasing and Dispensing Options for State ADAPs  TOP

Cost-Containment Strategies: HRSA Expectations

In the 1996 conference report authorizing the first appropriation of ADAP-specific funds, Congress strongly encouraged State ADAPs to employ cost-saving measures to maximize assistance to HIV patients. Congress asked HRSA to ensure that States seek the best possible price for AIDS drugs purchased with these funds. They also suggested that ADAPs could participate in the Section 340B Drug Discount Program or seek voluntary manufacturers’ rebates/discounts and negotiate pharmacy-based discounts.

Shortly after this initial appropriation of funds, HRSA’s HIV/AIDS Bureau’s Division of Service Systems (DSS) released a letter to CARE Act grantees that asserted the expectation that all State ADAPs make every effort to secure the best possible price for HIV/AIDS drugs. In each subsequent appropriation report, Congress reiterated the expectation that HRSA continue to encourage States to maximize use of cost-saving strategies so that ADAPs are purchasing pharmaceuticals at the lowest possible price.

Point of Purchase Discounts

In general, ADAP purchasing systems fall under two models: point of purchase discount (also called direct purchase) or reimbursement to a network of local pharmacies. Under the point of purchase discount model, the ADAP pays a discounted price for each prescription at the point of sale. Most ADAPs utilizing this cost-saving strategy receive discounted drug prices through the Section 340B Drug Discount Program, which calculates a significant reduction from the average manufacturers’ price of each drug, based on a Federally-mandated formula for qualified “covered entities.” Participation in the point of purchase system is easiest for States that centrally purchase and distribute medications. Other options for purchasing drugs at a discount are participating in a buying alliance or directly negotiating with the pharmacy, wholesaler, or manufacturer.

Reimbursement Models

Under a reimbursement model, ADAPs reimburse participating pharmacies and then submit rebate claims (refunds) for some or all of the drugs on their ADAP formulary (to pharmaceutical manufacturers). Prior to July 1998, ADAPs using this system negotiated individually with each manufacturer for a rebate, and possibly also with dispensing pharmacies for an initial discount on purchase price. States with a high volume of drug purchases were generally in a better position to negotiate larger rebates, either directly or through a contracted agent.

Section 340B ADAP Rebate Option

On June 29, 1998, HRSA published a final notice in the Federal Register that allows State ADAPs to receive rebates as an alternative means of accessing the Section 340B Drug Discount Program. The 340B ADAP rebate option allows ADAPs using a reimbursement model to achieve cost savings that are closer to the savings received by ADAPs purchasing drugs at the 340B point of purchase discount.

Currently, the majority of ADAPs use the Section 340B Drug Discount Program strategy--through either the point of purchase discount or the rebate option--as their primary cost-saving mechanism. As of April 2001, 29 ADAPs receive Section 340B pricing through a point of purchase discount, and 29 ADAPs participate in the ADAP Section 340B rebate option. One State ADAP uses both Section 340B options. Of the remaining three ADAPs, one State receives State-mandated rebates from manufacturers, one program uses Section 603 of the Veteran’s Health Care Act, and one ADAP is in the process of developing its purchasing and dispensing systems.

 References TOP

Sources Used for This Chapter

October 17, 1996 letter from DSS to grantees re: Expectations and Recommendations about the Administration of State ADAPs supported with Ryan White CARE Act funds.

Notes

[1] The fifty States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam operate ADAPs.

[2] Although this requirement applies to ADAPs, ADAP is not an entitlement program.