On June 6, 2024, the United States Supreme Court ruled that the Indian Health Service (IHS) must reimburse tribes under the Indian Self-Determination Act for contract support costs incurred in providing tribal health care services funded with Medicare, Medicaid, and private insurance. IHS estimates that tribes could be owed an additional $800 million to $2 billion annual funding.
The Supreme Court’s decision in Becerra v. San Carlos Apache Tribe is available here. There are a couple immediate takeaways from this decision:
- First, looking back, tribes have claims for contract support cost shortfalls related to third-party “program income” for past years. Such claims will be paid out of the United States Treasury’s Judgment Fund, not by IHS. Claims for fiscal year 2018 shortfalls are due by September 30, 2024.
- Second, looking forward, tribes are expected to seek more funding to operate their self-determination contracts and compacts and are urged to lobby their members of Congress to do what should have been done long ago—shift the IHS budget from discretionary to mandatory funding.
In Becerra, the Court found that IHS traditionally provided health care services using Congressional appropriations under the 1975 Indian Self Determination Act (ISDA). In 1976, in part to provide greater parity between IHS and other health care providers, Congress passed the Indian Health Care Improvement Act (IHCIA), a statute authorizing IHS (like other health care providers) to bill third-party service providers (Medicaid, Medicare, and private insurance). Today, a significant portion of IHS’s health care budget ($1.8 billion in 2024 alone) comes from this third-party “program income.”
The Court also found that tribes have a “parallel funding structure”: just as IHS relies on congressional appropriations and program income to provide health care, so do tribes. And because the purpose of “contract support cost” funding is to cover overhead of tribal healthcare programs as a whole, IHS must pay contract support costs to tribes both on their actual base contract amount and on program income spent “on activities enumerated in their contractual Scope of Work.”
Moving from the language of the statutes, the Court determined that the intent of Congress also mandates the payment of contract support costs on program income. In the final section of the opinion, the Court found as follows: “IHS’s failure to cover contract support costs for healthcare funded by program income inflicts a penalty on tribes for opting in favor of greater self-determination. Congress designed the statute to avoid such a counterproductive result. . . . Contract support costs are necessary to prevent a funding gap between tribes and IHS.”
Patterson Earnhart Real Bird & Wilson LLP is dedicated to the representation of American Indian tribes, tribal entities, and individual Indians across the United States. Our mission is to support and advance the sovereignty, self-sufficiency, and self-governance of our tribal clients.
To learn more about how we can assist your tribe, contact our Colorado office at 303-926-5292.