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     Indian Health Manual

Part 2, Chapter 3:  Manual Exhibit 2-3-D

Contract Health Services Medical Care


  1. Comprehensive Acute Care Hospital Based Service Unit
  2. Intermediate Acute Care Hospital Based Service Unit
  3. Limited Acute Care Hospital Based Service Unit
  4. Outpatient Health Center Based Service Unit
  5. Contract Health Program Based Service Unit


  1. Responsibilities
  2. Types of Services


  1. Level I
  2. Level II
  3. Level III
  4. Level IV
  5. Level V
  6. Excluded Services - Examples


Because funding levels, geographic access, health conditions, local health resources, and third-party coverage vary to a great extent among Indian Health Service (IHS) Areas and service units, each Area must maintain an Area medical priorities list consistent with the IHS guidelines.  Tribally managed programs that elect to follow IHS regulations may utilize the IHS medical priorities as a guideline.

  1. Comprehensive Acute Care Hospital Based Service Unit.  A Comprehensive Acute Care Hospital Based service unit is a secondary care referral hospital with intensive care, 24-hour emergency room, inpatient surgery, and high risk obstetrics.  Capable of providing clinical specialty services in internal medicine, OB/GYN, pediatrics, surgery, and selected sub-specialties.


    Anchorage Native Medical Center
    Gallup Service Unit Phoenix Service Unit
    Tuba City Regional Health Corporation

  2. Intermediate Acute Care Hospital Based Service Unit.  An intermediate acute care hospital based service unit:
    1. Provides primary care hospital with 24-hour emergency room, intensive care, and inpatient surgery services (at least part time).
    2. Performs obstetrical deliveries.
    3. Provides clinical specialty services in internal medicine, pediatrics, OB/GYN, and surgery.
  3. Examples:

    Shiprock Service Unit
    Claremore Service Unit
    Pine Ridge Service Unit
    Santa Fe Service Unit
    Yukon-Kuskokwim Delta Tribal Facility
    Blackfeet Service Unit

  4. Limited Acute Care Hospital Based Service Unit.  A limited acute care hospital based service unit is a primary care hospital:
    1. Staffed primarily by family physicians with 24-hour emergency room services;
    2. Provides no inpatient surgery services.
    3. Provides limited obstetrical services.
    4. May or may not perform on-site deliveries.
    5. Provides limited pediatrics and internal medicine.
  5. Examples:

    San Carlos Service Unit
    Zuni Service Unit
    Fort Yates Service Unit
    Red Lake Service Unit
    Acoma-Canocito-Laguna Service Unit
    Clinton Service Unit
    Sells Service Unit
    Cherokee Service Unit
    Winnebago Service Unit

  6. Outpatient Health Center Based Service Unit.  An outpatient health center based service unit does not have an IHS/Tribal hospital within the service unit:
    1. Provides a general complement of outpatient services.
    2. Staffed by family physicians, open 5 or more days per week.
    3. Provides limited emergency services.
  7. Examples:

    Shawnee Service Unit
    White Earth Service Unit
    Yakima Service Unit
    Rocky Boy Tribal Health
    Southern Colorado Ute Service Unit
    Lower Brule Service Unit
    Kayenta Service Unit
    Central Valley Indian Health Program

  8. Contract Health Program Based Service Unit.  The contract health program based service units are composed of mostly Tribal programs and school health centers.  There is no direct care hospital and minimal outpatient services within the service area.  Patients are referred to the private sector for all inpatient and the majority of outpatient services.


    Duckwater School Health Center
    Minnesota River Service Unit
    Modoc Indian Health Project, Inc.
    Mille Lacs Ne-la-Shig Health Center
    Northwestern Washington Service Unit Health Board


    1. The IHS Chief Medical Officer.  The IHS Chief Medical Officer (CMO) is responsible for maintaining the Indian Health Service (IHS) medical priorities list.  The CMO, will review, update, and distribute the medical priorities list IHS-wide every four years.
    2. Area Director.  Each Area Director will:
      1. Develop an Area medical priorities list that is consistent with the IHS medical priorities list annually.
      2. Submit a copy of their respective Contract Health Service (CHS) updated medical priorities list to the Director, Division of Contract Care.
      3. Integrate the Area Office medical priorities list with the annual spending plans, since the availability of funds determines the level of medical care that can be provided.
    3. Director, Office of Resource Access and Partnerships.  The Director, Office of Resource Access and Partnerships (ORAP), will review appeals and issue final opinions on CHS care that has been denied because of medical priorities.
    4. Chief Executive Officer.  It is expected that each Chief Executive Officer will establish CHS management committees to develop and implement spending plans and authorize payment for CHS referrals in compliance with the Area's medical priorities list.
    1. Preventive Services.  The IHS requires a high priority for preventive health care services.  Preventive services (Level II services) are distinguished from emergency care, sophisticated diagnostic procedures, treatment of acute conditions, and care primarily intended for symptomatic relief or chronic maintenance.  Most services listed as Level II are available at IHS direct care facilities.  If no direct care capabilities are available at the IHS or Tribal service unit direct care facility, the service unit CHS Officer has to deny these types of services or purchase the services using CHS funds.
    2. Excluded Services.  Level V (Excluded Services) includes cosmetic procedures (see Appendix II Priority Level V Part A,) and experimental and other procedures excluded from authorization for CHS payment (see Appendix II Priority Level V Part B).  The Director, Office of Clinical and Preventive Services (OCPS), will review the Area CHS medical priorities list on an annual basis and notify all Area CMO of any additions or deletions.  The list is based upon the Medicare Coverage Issuance Manual.
      1. Cosmetic Procedures.  The Fiscal Intermediary (FI) will not pay a claim for a potentially cosmetic procedure listed in Appendix II Priority Level V - Part A, unless the Area CMO approval is obtained.  This may be granted if one of the listed procedures, normally considered cosmetic, is necessary for proper mechanical function or psychological reasons.
      2. Experimental and other Excluded Procedures.  Payment for the excluded procedures listed in Appendix II, Priority Level V - Part B will not be paid by the FI, unless a formal exception has been granted by the Director, OCPS.  (See IHS Circular No. 93-03, “Cosmetic and Experimental Procedures Review.”)
      3. Payment for Direct Services.  Examples of direct care services that cannot be reimbursed with CHS funds are on-call hours, after hours or weekend pay, holiday coverage (e.g., for x-ray, laboratory, pharmacy).  Controversial types of therapy shall have a rigorous review.  Services such as, disc surgery; hysterectomies; tonsillectomies and adenoidectomies; portacaval shunts; obesity surgery; etc., may necessitate a second opinion process established by the Area CMO.
    3. Referrals.
      1. Elective Referrals Initiated by IHS Providers.  When patients are referred for elective procedures, consultation, outpatient care, or inpatient care, the payment for eligible patients should be authorized only when the care required is medically necessary and falls within established medical priorities.  All referrals will be reviewed and approved in a prescribed manner.  In general, authorization should be made for only one visit at a time, or for a prescribed number of visits.  If additional procedures or care are required, the medical priority of the follow-up request may be different.  Patients should be asked to return for another referral.
      2. Patient’s Condition.  The condition of the patient at the time of the referral will influence the ultimate determination of Level III and IV services.  In order to determine whether or not the needed care is within established medical priorities, the following questions should be considered:
        1. What is the rate of deterioration of the patient’s condition (is the needed service deniable or non-deniable)?
        2. What will be the potential morbidity of the patient, if the desired care is not rendered (are there any uncertain but potentially grave outcomes)?
        3. What is the expected benefit from the evaluation or treatment (will the care likely result in a cure or improvement)?
        4. Is the procedure experimental or purely cosmetic (is the requested service on the excluded list)?
    4. Controversial Types of Therapy.  Controversial types of therapy shall have a rigorous review.  Services such as, disc surgery; hysterectomies; tonsillectomies and adenoidectomies; portacaval shunts; obesity surgery; etc., may necessitate a second opinion process established by the Area CMO.
    5. Request for Payment without Prior Authorization.  When emergency care is performed in non-IHS facilities without prior authorization, a review of the patient’s eligibility status, compliance with notification requirements, and clinical information must be performed prior to approving CHS payment.
      1. The decision to approve or deny payment should not be based solely on the final diagnosis.
      2. Payment should be authorized only for those cases falling within established CHS medical priorities and the individual meeting all other CHS eligibility requirements.
      3. The condition of the patient and manner in which the patient presented for care should be taken into account.
    6. Payment Denial Letters.  If care is denied, patients and providers will not be issued a payment denial letter for “lack of funds.”  The letter will state the reason for denial is because the treatment is not within medical priorities, and the patient is otherwise eligible for CHS, the denial letter shall explain that payment for care is denied because it is not a high enough medical priority.


  1. LEVEL I.
    1. Emergent or Acutely Urgent Care Services.  Emergent or acutely urgent care services are diagnostic or therapeutic services that are necessary to prevent the immediate death or serious impairment of the health of the individual, and which, because of the threat to the life or health of the individual necessitate the use of the most accessible health care available and capable of furnishing such services.  Diagnosis and treatment of injuries or medical conditions that if left untreated, would result in uncertain but potentially grave outcomes.  Categories of emergent or acutely urgent care services include (random order):
      1. Emergency room care for emergent or urgent medical conditions, surgical conditions, or acute trauma.
      2. Emergency inpatient care fir emergent or urgent medical conditions, surgical conditions, or acute injury.
      3. Acute and chronic renal replacement therapy.
      4. Emergency psychiatric care involving suicidal persons or those who are a serious threat to themselves or others.
      5. Services and procedures necessary for the evaluation of potentially life threatening illness or conditions.
      6. Obstetrical deliveries and acute perinatal care.
      7. Neonatal care.
    2. Priority Level I -Diagnosis.  Examples of diagnosis that usually require emergent/acutely urgent care services (not an all inclusive list):

      Musculoskeletal trauma acute
      Cholecystitis, acute
      Congestive heart failure, decompensated
      Dehydration, severe
      Delirium tremens
      Diabetic ketoacidosis
      Drowning, near
      Embolism, cerebral or peripheral
      Epididymitis, acute
      Eye disease, acute
      Flail chest
      Gunshot wounds
      Head injury
      Heat exhaustion and prostration
      Hepatic encephalopathy
      Myocardial infractions
      Myocardial ischemia, acute
      Obstetrical emergencies
      Pelvic inflammatory disease
      Pneumonia, acute
      Premature infant
      Pulmonary embolism
      Pulmonary edema
      Puncture or stab wounds
      Rape, alleged, examination
      Renal lithisasis, acute
      Renal failure, acute
      Respiratory failure
      Spinal column injuries
      Suicide attempt
      Urinary retention, obstruction

  2. LEVEL II.
    1. Preventive Care Services.  Preventive care services are available at most IHS facilities.  Preventive care service is primary health care that is aimed at the prevention of disease or disability.  This includes services proven effective in avoiding the occurrence of a disease (primary prevention) and services proven effective in mitigating the consequences of an illness or condition (secondary prevention).  Categories of services included (random order):
      1. Routine prenatal care
      2. Non-urgent preventative ambulatory care (primary prevention)
      3. Screening for known disease entities (secondary prevention)
      4. Screening Mammograms
      5. Public health intervention
    2. Priority Level II - Diagnosis.  Examples of diagnosis that usually require emergent/acutely urgent care services (not an all inclusive list).

      Audiology screening
      Diabetes maintenance
      Hemophilus prophylaxis
      HIV testing
      Periodic health exams of infants, children, and adults
      Podiatry care for diabetics
      Sexually transmitted diseases, testing and treatment
      Vision examinations
      Cancer screening
      Family planning services
      Hepatitis prophylaxis
      Hypertensive screening, diagnosis, and control
      Laboratory services supporting primary care evaluations
      Meningitis prophylaxis
      Pregnancy and infant care
      Routine PAP smears/Colposcopy
      Tuberculosis screening, prophylaxis, and treatment
      X-ray services supporting primary care evaluations

    1. Primary and Secondary Care Services.  Primary and Secondary Care Services include inpatient and outpatient care services.  The inpatient and outpatient services involve the treatment of prevalent illnesses or conditions that have a significant impact on morbidity and mortality.  This involves treatment for conditions that may be delayed without progressive loss of function or risk of life, limb, or senses.  It also includes services that may not be available at many IHS facilities and/or may require specialty consultation.  Categories of services included (random order):
      1. Scheduled ambulatory services for non-emergent conditions.
      2. Specialty consultations in surgery, medicine, obstetrics, gynecology, pediatrics, ophthalmology, ENT, orthopedics, and dermatology.
      3. Elective, routine surgeries that have a significant impact on morbidity and mortality.
      4. Diagnostic evaluations for non-acute conditions.
      5. Specialized medications not available at an IHS facility, when no suitable alternative exists.
    2. Priority Level III - Diagnosis.  Examples of diagnosis for elective procedures and referrals including:

      Bladder suspension
      Cancer chemotherapy
      Cardiac catheterization
      Cardiology referral (non-acute)
      CT Scan/MRI
      Exercise stress testing
      Eye glasses refractions
      Hearing aids
      Hematology referral
      Lumbar laminectomy
      Nephrology/urology referral
      Neurology evaluations (elective)
      Nuclear medicine
      Physical Therapy
      Podiatry, non-diabetic
      Psychiatric evaluations
      Pulmonary referral
      Pulmonary function testing
      Radiation therapy, palliative
      Surgery referral, elective

  4. LEVEL IV.
    1. Chronic Tertiary And Extended Care Services.  Level IV - Chronic Tertiary and Extended Care Services are services that (1) are not essential for initial/emergent diagnosis or therapy, (2) have less impact on mortality than morbidity, or (3) are high cost, are elective, and often require tertiary care facilities.  These services are not readily available from direct care IHS facilities.  Careful case management by the service unit CHS committee is a requirement, as is monitoring by the Area CMO or his/her designee.  Depending on cost, the referral may require concurrence by the CMO.  Categories of services included (random order):
      1. Rehabilitation care
      2. Skilled nursing facility (Medicare defined)
      3. Highly specialized medical services/procedures
      4. Restorative orthopedic and plastic surgery
      5. Other specialized elective surgery such as obesity surgery
      6. Elective open cardiac surgery
      7. Organ transplantation (HCFA approved organs only)
    2. Priority Level IV - Diagnosis.  Examples of the diagnosis for Level IV -Chronic Tertiary and Extended Care Services that usually require emergent/acutely urgent care services (not an all inclusive list).  Elective procedures and referrals including:

      Coronary bypass (non-acute)
      Facial bone repair
      Pain control programs
      Portable fusion pumps
      Radical neck surgery
      Valvular open-heart surgery
      BCG vaccine (for ovarian cancer)
      Esophageal pH monitoring
      Gastric bypass surgery
      Joint replacement
      Mammoplasty, reconstructive
      Osteoplasty (osteotomy)
      Passive motion exercise devices
      Plastic surgery, reconstructive
      Porta-caval shunt

  5. LEVEL V.
    1. Excluded Services.  Excluded services are services and procedures that are considered purely cosmetic in nature, experimental or investigational, or have no proven medical benefit.  The list of therapies and procedures classified as potentially cosmetic in nature, experimental, or excluded will be reviewed and updated on an annual basis.
    2. Excluded Services - Categories.  Categories of excluded services include:
      1. all purely cosmetic (not reconstructive) plastic surgery;
      2. procedures defined as experimental by the Centers for Medicare and Medicaid Services;
      3. procedures for which there is no proven medical benefit procedures listed as “Not Covered” in the Medicare Coverage Issuance Manual, Section 27,200;
      4. extended care nursing homes (intermediate or custodial care); and
      5. alternate medical practices (e.g., homeopathy, acupuncture, chemical endarterectomy, naturopathy.)
    3. Cosmetic Procedures.  Payment for certain cosmetic procedures may be authorized if these services are necessary for proper mechanical function or psychological reasons.  Approval from the CMO is required.
    1. Excluded Services - Part A.  Examples of cosmetic services that are experimental or excluded.  (Not an all inclusive list.)

      Argon Laser Treatment for Congenital Hemangiomas
      Topical Chemotherapy (Total Face and/or Neck)
      Mastectomy for Gynecomastia
      Mastectomy, Subcutaneous with Delayed Prosthetic Implant
      Removal of Mammary Implant Material
      Reconstruction of Nipple and/or Areola
      Revision (Release of Scar Contracture) of Breast, following Mammoplasty
      Blepharoptosis Repair
      Subcutaneous Injection of “Filling” Material (i.e., Collagen)
      Insertion of Tissue Expanders
      Abrasion (i.e., Keratoses)
      Chemical Peell
      Excision Excessive Skin and Subcutaneous Tissue (Including Lipectomy)
      Suction Assisted Lipectomy
      Cryotherapy for Acne
      Electrolysis Epilation
      Reduction Mammoplasty
      Augmentation Mammoplasty
      Breast Reconstruction
      Application of Halo Type Appliance for Maxillofacial Fixation

    2. Excluded Services - Part B.  Experimental and Other Excluded Services payment is not authorized, unless a formal exception is granted by the Director, Office of Clinical and Preventive Services (OCPS). Exit Disclaimer: You Are Leaving 

      This web site is to be used to determine the International Classification of Diseases, 9th Edition, (ICD-9) “Clinical Codes,” controversial types of therapy shall have a rigorous review.  Services such as, disc surgery; hysterectomies; tonsillectomies and adenoidectomies; portacaval shunts; obesity surgery; etc., may necessitate a second opinion process established by the Area CMO.

      Intestinal bypass surgery
      Intravenous histamine therapy monitoring
      Joint and ligament sclerosing therapy
      Chelation therapy for atherosclerosis
      Cochlear implants (under 18 years of age)
      Cytotoxic food tests
      Electrosleep therapy
      Food allergy testing
      Gastric balloon for treatment of obesity
      Hair transplants
      Heat treatment for pulmonary conditions
      Mammoplasty, cosmetic
      Sex-change operations
      Tattoo removal
      Tinnitus masking
      Plastic surgery (purely cosmetic, not reconstructive)
      Portable hand held x-ray instruments
      Pulmonary embolectomy, transvenous (catheter)
      Electric aversion therapy
      Electric nerve stimulation for motor dysfunction (not pain control)
      In-vitro fertilization
      Ambulatory blood pressure
      Artificial Hearts
      Cellular therapy
      Keratoplasty, refractive
      Colonic irrigation
      External counterpulsation
      Gastric freezing
      Hair analysis
      Pancreas transplants
      Heart/lung transplatation
      Human tumor stem cell drug
      Rhinoplasty, cosmetic
      Sensitivity assays
      Scalp replantation
      Thermogenic therapy

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