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Consultations on Contract Support Costs Funding Methods

From September 25th to October 9th the Indian Health Service (IHS) hosted a total of 5 consultations to solicit Tribal input on funding methodologies for the payment of eligible Contract Support Costs (CSC) incurred by Tribes and Tirbal Organizations (T/TOs) related to the expenditures of health program income. The Dear Tribal Leader Letter explained that the Contract Support Costs Advisory Group (CSCAG) had already met a number of times to discuss needed changes to the existing funding methodology to address the calculation of CSC on expenditures of program income. Read more about the Supreme Court case that led to consultation here.

Consultation Questions

IHS offered 4 topics of discussion to solicit Tribal input. The first question was, if IHS utilizes a methodology based on program income expenditures from the most recent completed year, what documentation should Tribes submit to verify program income expenditures? In response, Tribes were united in saying that IHS should not heavily rely on expenditures from previous years to calculate future CSC needs. The leading reason was that Tribes are best situated to estimate what their future expenditures will likely be. Some participants added that Tribes could produce certifications explaining what went into the calculation, which could be where a Tribe discloses expenditures from recent years. Other participants explained that relying on expenditures from previous years would result in a massive undercalculation because Tribes may be planning to utilize program income in ways it had previously not done, such as funding construction projects. Overall, participants implored IHS to adopt a methodology that is not backward looking, but one that is simple and pragmatic, and does not encourage future litigation.

The second question solicited Tribal recommendations on what documentation T/TOs suggest is reliable to indicate how program income is being spent to provide services to non-beneficiaries that will ensure that T/TOs are not reimbursed twice for providing such services. Tribes again reached consensus in their response, explaining that such documentation would be immensely burdensome and resource-intensive to produce. Participants explained that some Tribes would be required to purchase expensive and highly complex and customizable electronic health records systems to track the data for the small number of non-beneficiaries that are seen, while some Tribes, who do not even provide services to non-beneficiaries, would also be required to participate in the burdensome practices. Participants also pointed out that not even a majority of contracting and compacting Tribes provide services to non-beneficiaries (excluding services required by statute), meaning IHS should work directly with Tribes who provide services to a relatively large non-beneficiary user population instead of burdening all Tribes with resource-intensive requirements.

The third question included a draft, created by IHS, of a CSC Certification of Estimated Program Income Expenditures form for participants to comment on. The form would be used during negotiations between T/TOs and IHS to establish the estimate of CSC need and funding prior to the contract year. Participants pointed out that the form included an attestation where whoever certified the accuracy of the form’s contents, did so under penalty of perjury. There was consensus among the participants that the language was not only unnecessary but that the federal government was already protected from fraud under the False Claims Act.

The fourth and final consultation question asked what documentation IHS can use to ensure the program expenditure has not already been fully reimbursed, and that there is, in fact, a CSC need. The question stemmed from the agency’s belief that compensation received from third-party payors may reimburse some costs that might also be proposed for CSC reimbursement. Participants voiced concerns that this approach may lead to an unlawful reduction in CSC. The reason that the reduction would be unlawful is that federal law only permits reductions in CSC if it would be duplicative of the Secretarial amount, or the amount HHS provides contracting and compacting Tribes to take over a federal health program. This reasoning led participants to believe that the fourth question presents a non-issue.

Funding CSC Need

According to IHS, under current indefinite discretionary appropriation structure for CSC, the CSC funding level will automatically adjust to fully fund the amount needed for CSC. Absent action from Congress, any increases in CSC need will fall under the annual appropriations bill for Interior, Environment and Related Agencies overall appropriations cap. Congress must budget for estimated CSC need within the tight discretionary budget caps, putting other parts of IHS and other programs in the same legislation like Department of Interior or Environmental Protection Agency at risk. We have already seen these impacts in the reductions that Congress took to the IHS Services and Facilities accounts to fully fund CSC in FY 2024 and previous years. During the oral argument in the Becerra v. San Carlos Apache Tribe Case, IHS estimated that CSC need will be in excess of $2 billion per year.

CSCAG Discusses Consultation Comments and Next Steps

The CSCAG met on October 24th to discuss comments heard and submitted during the consultation and subsequent comment period. Overall, IHS was responsive to comments requesting the agency to accept “good faith” certifications of expenditures, as opposed to a sworn attestation under penalty of perjury. The agency noted that, in regard to the “non-beneficiaries” issue, that there was a consensus among Tribal comments that IHS should not adjust its CSC methodology based on whether a Tribe serves non-beneficiaries because of how burdensome implementing such a process would be. However, IHS explained that there would be an accounting of non-beneficiaries at some level since there is a cost associated with serving non-beneficiaries. IHS also committed to sharing with the CSCAG, by October 31, a matrix that provides guidance to IHS negotiators for navigating the non-beneficiary issue. The CSCAG ultimately could not reach a consensus on the non-beneficiary issue and were unable to provide a recommendation to Director Tso at the October 24th meeting. The CSCAG will meet again on November 7th, after IHS has circulated its non-beneficiary matrix, to determine the advisory group’s next steps.

How IHS is Proceeding

The agency is implementing the Supreme Court’s decision in the following steps, 1) resolve pending litigation, 2) resolve Contract Disputes Act claims already in process and/or claims pending submission, 3) review past decisions impacted by the Court’s decision (FY 2021 Lost Reimbursement Funds authorized by the American Rescue Plan Act), 4) methodology development & forward-looking policy updates. IHS stated that it plans to launch the new methodology developed through this consultation in the Spring of 2025.

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