The Virginia Department of Health has not yet developed a clear plan for how to manage lost services that provide wraparound care for the state’s most vulnerable residents with HIV, the state epidemiologist said Friday.
Late last year, the department significantly reduced funding for the Ryan White Part B program, a federal program that covers core medical services for low-income residents living with HIV.
Of the 21 services once provided under the program, only seven are funded now.
Dr. Laurie Forlano, the state epidemiologist and director of the Office of Epidemiology, said the department is working to identify and facilitate conversations between other local and regional resources that can help offset services no longer available through the state.
She confirmed Friday that the funding deficits stem from billing errors and problems within the agency’s rebate claims process.
In prior years, mistakes in billing for HIV medications caused the department to receive more rebate money from pharmaceutical manufacturers than it should have, Forlano said.
The state now has to pay back that money to the pharmaceutical company.
With the correct billing, rebate revenue has dropped to $16.5 million — roughly half from previous years.
Rebate revenue helps fund Virginia’s Ryan White Part B program, which is part of the overall Ryan White HIV/AIDS Program enacted by Congress in 1990. It supports access to low-cost outpatient HIV care, prescriptions and support services to those without health insurance.
Forlano said the department is still reviewing records and does not yet know how much it was overpaid. The state will have to negotiate a repayment plan with the pharmaceutical company once that amount is finalized. The state has not publicly named which company is involved.
The department is reviewing data flow processes and oversight controls in the billing and rebate claims offices.
“[We are] enhancing and making sure we hold true to the controls that were already in place and shoring up the ones that needed more attention,” Forlano said.
She did not provide specific details about new oversight protocols or methods to prevent future mistakes. State officials also say they don’t know if the rebate issue will be fully resolved by next year.
On Jan. 28, the Health Department hosted a public meeting with providers and consumers, offering an opportunity for discussion.
Ashley Yocum, an HIV care services planner with the Health Department, asked participants to share programs and services in their communities that have helped clients stay in care.
“We continue working to help clients be more autonomous and help them find ways to support themselves,” she said.
Ryan White Part B is considered the payer of last resort, meaning it covers services only after all other insurance or funding options have been exhausted. The structure is designed to ensure public funds are used when no other coverage is available. Now those services have largely disappeared in Virginia.
Cuts included early intervention services, health insurance premium and cost-sharing assistance, mental health services, medical nutrition therapy, substance-use services, emergency financial assistance, food bank and home-delivered meals, health education and risk reduction, housing support, legal services, linguistic services and referrals to health care.
Cardinal News first contacted the Health Department about the funding cuts on Jan. 22. The department did not respond until Feb. 13, when it offered an interview with Forlano.
Rebate revenue drops by about half in Virginia
When the state purchases HIV medications, it pays the manufacturer upfront and later submits utilization data under federal rebate agreements. Pharmaceutical manufacturers then calculate the rebate owed based on those agreements and send payments back to the state.
The department is now reviewing its data to determine how much it was overpaid and how much it must return, Forlano said.
In previous grant years, the state received an average of about $32 million in rebate revenue. When the state corrected its billing error, the rebate amount dropped to $16.5 million for the 2026 grant year — roughly half the amount from prior years.
Federal grant money has remained relatively steady, averaging about $26 million annually over the last five years, Forlano said. While the total 2025 award was consistent with prior years, the federal government distributed funding in partial installments last spring.
This drop in funding caused some providers to end Part B services. The Council of Community Services, a Roanoke-based nonprofit that serves unhoused and HIV-positive clients, became the only provider of Part B services in the Southwest and Southside regions.
Virginia did not receive its full federal grant award until mid-August. Then, in November, the Health Department notified remaining Part B providers of additional funding cuts.
These cuts forced the council to reduce its case management staff from 12 employees to three and close two offices — one in Marion and one in Danville. The three remaining case managers now serve more than 600 clients.
Now, state officials are working with the drug manufacturer to review data systems and billing language. Forlano said the state suspects errors in terminology or coding may have contributed to the overpayments. However, the state is still identifying exactly where these errors occurred.
Services cut as funding shrinks
As rebate revenue declined, the department significantly reduced expenditures.
The number of direct service providers in the state funded through Part B dropped from 27 to 14, said Dr. Cameron Webb, the new commissioner of health, during a Senate Finance and Appropriations committee meeting on Jan. 29. Funding levels for remaining providers was also reduced.
The number of covered services fell from 21 to seven. Certain medical services such as outpatient ambulatory care, emergency oral health, medical and nonmedical case management and medical transportation remain in place.
“Future rebate revenue totals are uncertain,” Webb said during the presentation.
Forlano also said it is unclear if rebate issues will be fully resolved by next year.
To offset losses, the state secured $3.8 million in supplemental funding from the federal AIDS Drug Assistance Program that provides medication assistance to low income or uninsured residents with HIV. Virginia also applied for emergency relief funding from the federal Health Resources and Services Administration but has not yet received a response, Forlano said.
“We acknowledge, I acknowledge, that this is happening. The main priority is to mitigate any negative impacts as much as possible,” she said.