Supreme Court agrees to hear San Carlos Apache appeal on health care funding

The Supreme Court said Monday it will consider a claim by the San
Carlos Apache tribe that the federal government is shortchanging it on
funds it needs to operate tribal health services.

The case turns on whether the Indian Health Service should reimburse
the tribe’s overhead costs for health services it delivers with the
support of third-party insurers, like Medicaid or private insurance. In
the case of the San Carlos Apache, that amounted to $3 million in
overhead expenses over a three-year period, according to court documents.

The IHS claims
it already pays tribes an administrative fee to offer health services.
Requiring it to pay overhead for services paid for by a third party
would be a “sweeping” expansion of its obligations that would cut the
budget for health care for “some of the most underserved tribal
communities in the country.”

When asked for comment, IHS
said it does not comment on pending litigation. But an attorney for the
tribe called the case “another effort by IHS to penalize tribal
governments trying to maximize quality health care for their communities
with extremely limited resources.”

“On two prior occasions the Supreme Court has rejected government
efforts to restrict contract support cost payments to tribes operating
self-determination contracts (Cherokee Nation and Ramah Navajo),” Lloyd
Miller, the attorney, said in a text message Monday.

The San Carlos Apache is one of two tribes, along with the Northern Arapaho Tribe
of Wyoming, suing IHS over the agency’s obligations under the Indian
Self-Determination and Education Assistance Act. Among other things, the
act allowed tribes to take over operation of health services that had
been provided by IHS.

In exchange, the IHS paid the tribes the cost of care it would
otherwise have been providing, as well as a “contract support costs” fee
to cover tribes’ administrative costs.

The law also allows tribes to bill third-party insurers and keep the
payments, as long as the money goes back into tribal health care. But a
lower court noted that “there is a hole” in that plan, since tribes are
stuck with the additional cost of processing the third-party payment.

“When Tribes operate the enlarged program, they incur increased
overhead expenses, such as increased auditing and financial management
costs,” the San Carlos Apache said in their appeal to the Supreme Court.
“If the government refuses to reimburse these overhead expenses, Tribes
must divert program income away from (health care) services.”

Both parties agree that IHS is woefully underfunded, leading to
“‘persistent health disparities’ in American Indian communities.”
According to documents in the case, IHS spends $4,078 per capita,
compared to $8,109 for Medicaid and $13,185 for Medicare.

But IHS claims that forcing it to pay for third-party overhead would
make things worse by saddling the agency with additional costs estimated
between $800 million and $2 billion a year.

Appeals courts
in the 9th and 10th judicial circuits sided with the San Carlos Apache
and the Northern Arapaho Tribe, respectively. IHS appealed to the
Supreme Court, saying that if those rulings are allowed to stand, tribes
that collect third-party payments “would be able to significantly
expand their IHS funding” while noncontracting tribes “would likely face
reduced programs or services.”

The tribes agreed
with IHS that the Supreme Court should hear the case and settle the
issue, but that it should uphold the circuit courts’ decisions.

“The Tribe’s request for reimbursement of contract support costs is
not a cash grab, as the government implies,” the San Carlos Apache
filing says. “Rather, it is the Tribe’s attempt to obtain the funding it
needs and deserves under the statutes to start closing the healthcare
gap.”