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Indian Health Service The Federal Health Program for American Indians and Alaska Natives

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Contract Health Services

Operation Doctor and Nurse

ISSUE

The contract health services (CHS) funds are used to supplement and complement other health care resources available to eligible American Indians and Alaska Natives (AI/AN). Most of the CHS programs fund the highest medical priority cases.

BACKGROUND

Under the CHS program, primary and specialty health care services that are not available at IHS or tribal health facilities are purchased from private health care providers. This includes hospital care, physician services, outpatient care, laboratory, dental, radiology, pharmacy, and transportation services.

The combination of medical inflation (particularly for providing services in rural and remote locations), an increasing Indian population, and limited competitive pricing and options requires strict adherence to specific guidelines to ensure the most effective use of CHS resources. These guidelines apply to qualifying factors such as medical priorities of care and eligibility requirements.

STATUS

In order to budget the CHS resources so that as many services as possible can be purchased from private providers, the IHS uses a medical priority system. The IHS is the Payor of Last Resort, which requires patients to exhaust all health care resources available to them from private insurance, state health programs, and other federal programs before IHS can pay through the CHS program.

The IHS CHS program continues to negotiate contracts with providers to ensure that competitive pricing for the services are provided, in spite of the limited number of providers available in many rural communities.

OPTIONS/PLANS

The enactment of the Medicare Prescription Drug Improvement and Modernization Act of 2003 requires Medicare participating hospitals that provide inpatient hospital services to accept Medicare-like rates as payment in full when providing services to IHS beneficiaries referred for services. The small market share of individual IHS/tribal/urban Indian health programs has made it difficult for these programs to negotiate discounted rates with private hospitals, and many of these programs historically have had to pay full billed charges that substantially exceed the rates paid by the Medicare program. The Medicare-like rates now enable these programs to realize some savings for the services they purchase from private providers.

ADDITIONAL INFORMATION

For referral to the appropriate spokesperson, contact the IHS Public Affairs Staff at 301-443-3593.

January 2014

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