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United States Government Accountability Office: 
GAO: 

Report to Congressional Addressees: 

December 2013: 

Indian Health Service: 

Opportunities May Exist to Improve the Contract Health Services 
Program: 

GAO-14-57: 

GAO Highlights: 

Highlights of GAO-14-57, a report to congressional addressees. 

Why GAO Did This Study: 

IHS provides health care to American Indians and Alaska Natives. When 
services are unavailable from IHS-funded health care facilities, IHS's 
CHS program may pay for care from external providers. GAO previously 
identified challenges regarding the timeliness of CHS payments and 
also reported on the number of American Indians and Alaska Natives who 
may gain new health care coverage beginning in 2014 as a result of 
PPACA. PPACA mandated GAO to review the CHS program. In this report, 
GAO examined (1) the length of time it takes external providers to 
receive payment from IHS after delivering CHS services; (2) the 
performance measures IHS has established for the amount of time it 
takes to process CHS provider payments; (3) the factors that affect 
the length of time it takes IHS to pay CHS providers; and (4) how new 
health care coverage options included in PPACA could affect the CHS 
program. To conduct this work, GAO analyzed fiscal year 2011 CHS 
claims data, which included data on timeframes for paying external 
providers. GAO also interviewed IHS officials, including officials in 
four IHS areas, and reviewed relevant agency documents and statutes. 

What GAO Found: 

For Indian Health Service (IHS) contract health services (CHS) 
delivered in fiscal year 2011, a majority of claims were paid within 6 
months of the service delivery date, but some took much longer. 
Specifically, about 73 percent of claims were paid within 6 months of 
service delivery, while about 8 percent took more than 1 year. The CHS 
payment process consists of three main steps: (1) the local CHS program 
issues a purchase order to the provider authorizing payment (either 
before service delivery, or after, such as in emergency situations), 
(2) the provider submits a claim for payment, and (3) IHS pays the 
provider. GAO found that the first step took the longest—-often taking 
more than 2 months. 

IHS uses three measures to assess the time it takes to approve and 
then process payments to CHS providers. Two of the measures concern 
the first step in the payment process (purchase order issuance) and 
the third concerns the final step (making the payment). One of the 
measures IHS uses to assess the timeliness of the first step is the 
average time it takes to issue a purchase order after a service has 
been delivered; IHS’s current target for this measure is 74 days. 
However, the measure does not provide a clear picture of timeliness 
for this activity as it combines data for two different types of CHS 
services—those for which payment eligibility was determined prior to 
service delivery and those for which eligibility was determined after 
service delivery. IHS officials told GAO that when eligibility is 
determined prior to service delivery, it may take only one day from 
the date of service to issue the purchase order. Including this type 
of service in the calculation, therefore, lowers the overall average. 

The complexity of the CHS program affects the timeliness of provider 
payments. As outlined in the Indian Health manual, IHS program 
officials make decisions on what care will be funded on a case-by-case 
basis, evaluating each case against a number of eligibility 
requirements involving multiple steps. This process can lead to 
payment delays. Officials noted that delays also can occur when 
processing payments and that staffing shortages can affect the 
timeliness of payments. Some program officials noted that their 
staffing levels were below standards established by IHS. 

New coverage options in the Patient Protection and Affordable Care Act 
(PPACA) may provide an opportunity to simplify CHS eligibility 
requirements. PPACA made significant changes to the Medicaid program 
and included new health care coverage options that may benefit many 
American Indians and Alaska Natives beginning in 2014. IHS officials 
reported the agency developed the current CHS program eligibility 
requirements to manage CHS program funding constraints. In particular, 
some of the complexities of the program were designed to allow the 
program to operate within the constrained levels of program funding. 
With the availability of new coverage options under PPACA, some 
constraints on CHS program funds could be alleviated, providing IHS an 
opportunity to streamline service eligibility requirements and expand 
the range of services it pays for with CHS funds. 

HHS concurred with two of GAO’s recommendations, but did not concur 
with the recommendation to allow available funds to be used to improve 
CHS staffing levels. GAO believes its recommendation would provide IHS 
more flexibility to achieve its staffing ratio standards and improve 
the timeliness of CHS payments. 

What GAO Recommends: 

GAO recommends that IHS revise an agency measure of the timeliness 
with which purchase orders are issued, use available funds as 
appropriate to improve the alignment between CHS staffing levels and 
workloads, and proactively develop potential options to streamline CHS 
eligibility requirements. 

View [hyperlink, http://www.gao.gov/products/GAO-14-57]. For more 
information, contact Kathleen M. King at (202) 512-7114 or 
kingk@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

More than Two-Thirds of CHS Claims Were Paid within 6 Months but Some 
Took Much Longer to Pay: 

IHS Has Three Timeliness Measures for Processing Provider Payments, 
but the Two Involving Purchase Order Issuance Do Not Provide a Clear 
Picture of Timeliness: 

Complexity of the CHS Program, CHS Staffing and Funding Availability, 
and Variations in Program Practices Can Affect the Timeliness of 
Payments to Providers: 

New Coverage Options in PPACA May Provide IHS an Opportunity to 
Simplify CHS Eligibility Rules: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the Department of Health and Human Services: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Table: 

Table 1: IHS Medical Priority Levels for Contract Health Services: 

Figures: 

Figure 1: Two Paths for Patient Care to Be Funded by Contract Health 
Services (CHS) Program: 

Figure 2: Percentage of Contract Health Services (CHS) Claims Paid 
within Certain Time Intervals, for Services Delivered in Fiscal Year 
2011: 

Figure 3: Percentage of Contract Health Services (CHS) Claims Paid 
within 3 Months, 6 Months, and 1 Year of Service Delivery, for 
Services Delivered in Fiscal Year 2011, by IHS Area: 

Figure 4: Percentage of Claims Processed within Certain Time Intervals 
in Each Step of the Contract Health Services (CHS) Payment Process, 
for Services Delivered in Fiscal Year 2011: 

Abbreviations: 

CHS: contract health services: 

CHSDA: contract health service delivery area: 

FI: fiscal intermediary: 

GPRA: Government Performance Results Act: 

HHS: Department of Health and Human Services: 

IHS: Indian Health Service: 

PPACA: Patient Protection and Affordable Care Act of 2010: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

December 11, 2013: 

Congressional Addressees: 

The Indian Health Service (IHS), an agency within the Department of 
Health and Human Services (HHS), is charged with providing health care 
services to the approximately 2.1 million American Indians and Alaska 
Natives who are members or descendants of federally recognized tribes. 
[Footnote 1] These services are provided at federally or tribally 
operated health care facilities,[Footnote 2] which receive IHS funding 
and are located in 12 federally designated geographic areas overseen 
by IHS area offices.[Footnote 3] These facilities vary in the services 
they are able to provide; for example, some facilities offer 
comprehensive hospital services, while others offer only primary care 
services. When services are not available at these facilities, the 
facilities may use IHS's contract health services (CHS) program funds 
to obtain care for eligible patients from external health care 
providers, including hospitals and office-based physicians. 

At the local level, the CHS program is administered by individual CHS 
programs generally affiliated with IHS-funded facilities. IHS has 
oversight authority over local CHS programs that are affiliated with 
IHS-operated facilities.[Footnote 4] The local CHS programs determine 
whether to pay for services from external providers based on 
requirements that are unique to CHS. 

This report is one in a series of reports we have conducted in the 
last 3 years that have examined the CHS program.[Footnote 5] In our 
previous reports, we identified challenges cited by providers with the 
CHS program payment process.[Footnote 6] We found, for example, that 
according to providers, sometimes it took months or years to receive 
payment after providing a service, which added to the burden of both 
patients and providers.[Footnote 7] In addition, we reported on the 
number of American Indians and Alaska Natives who may gain new health 
care coverage beginning in 2014[Footnote 8] as a result of provisions 
in the Patient Protection and Affordable Care Act (PPACA) of 2010. 
[Footnote 9] 

PPACA mandated GAO to examine the administration of the CHS 
program.[Footnote 10] This report focuses on the timeliness of CHS 
payments to providers and how changes in PPACA could affect the CHS 
program. Specifically, this report examines: 

1. the length of time it takes external providers to receive payment 
from IHS after delivering CHS services; 

2. the performance measures that IHS has established for the amount of 
time it takes to process CHS provider payments; 

3. the factors that affect the length of time it takes IHS to pay CHS 
providers; and: 

4. how new health care coverage options included in PPACA could affect 
the CHS program. 

To determine the length of time after service delivery that payments 
are made, we obtained IHS data on paid CHS claims for health care 
services delivered in fiscal year 2011 that were authorized by IHS-
operated CHS programs in 10 areas and that were paid as of February 
2013; a total of approximately 398,000 claims.[Footnote 11] Claims 
data from fiscal year 2011 were the most recent sufficiently complete 
data available for our analysis. We assessed the reliability of IHS's 
federal CHS program claims data by reviewing documentation and 
discussing the data with knowledgeable officials. We also performed 
data reliability checks, such as examining the data for missing values 
and obvious errors, to test the internal consistency and reliability 
of the data. We determined that the data were sufficiently reliable 
for our purposes. 

To examine IHS's performance measures for the amount of time it takes 
IHS-operated CHS programs to process provider payments, we reviewed 
relevant statutes, agency documentation, and interviewed officials 
from IHS headquarters, areas, and CHS programs. 

To determine the factors that affect the length of time to pay 
providers, we interviewed IHS officials in selected areas and CHS 
programs. We conducted interviews in four areas: Albuquerque, 
Billings, Navajo, and Oklahoma; and within each of these areas, at 
three local IHS-operated CHS programs. We selected these 4 areas and 
12 programs to reflect a range in the length of time for paying CHS 
claims based on previous claims data. In our interviews, we asked 
officials about their procedures for processing CHS referrals and the 
factors they believed affected the length of time to pay providers. In 
addition, we interviewed IHS's fiscal intermediary, who is responsible 
for the final processing of payments to providers. We also reviewed 
relevant statutes and agency regulations and documentation. 

To determine the effect that new coverage options available in PPACA 
might have on the CHS program, we reviewed relevant statutes and our 
recent report on eligibility among American Indian and Alaska Natives 
for new coverage options available in PPACA.[Footnote 12] 

We conducted this performance audit from November 2012 to November 
2013 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

CHS Program Organization: 

IHS facilities and their associated CHS programs are located in 12 
geographic areas, each overseen by an IHS area office led by an Area 
Director. Ten of the 12 areas include at least some IHS-operated 
facilities; these 10 areas oversee local CHS programs in 33 states. 
IHS headquarters sets CHS program policies and oversees the areas. 
Each IHS area contains multiple local CHS programs. The areas 
distribute funds to the local CHS programs in their areas, monitor the 
programs, and establish procedures and provide guidance and technical 
assistance to the programs. 

CHS Program Funding and Service Eligibility Requirements: 

The CHS program is funded through annual appropriations and must 
operate within the limits of available appropriated funds.[Footnote 
13] Based on the regulations that IHS has established for the CHS 
program, a number of requirements must be met in order for a service 
to be eligible for CHS payment.[Footnote 14] Based on the 
requirements, before approving a service for payment, local CHS 
programs must consider the following: 

* Is the patient a member or descendant of a federally recognized 
tribe or someone with close ties to the tribe? To be eligible for CHS 
payment, the service must be for a patient who is a member or 
descendant of a federally recognized tribe or someone who maintains 
close economic and social ties with the tribe. 

* Does the patient reside within the Tribal Contract Health Service 
Delivery Area (CHSDA)? For a service to be paid for with CHS funds, it 
must be for a patient who resides in the Tribal CHSDA. Unless 
otherwise established, the CHSDA encompasses the reservation, the 
counties that border the reservation, and other specified lands. 
[Footnote 15] Exceptions exist for students who are temporarily absent 
from their CHSDA during full-time study and individuals who are 
temporarily absent from the CHSDA for less than 180 days due to travel 
or employment. 

* Are alternate health care resources available to the patient? Many 
users of IHS services are also eligible for other sources of payment 
for care, including Medicaid, Medicare, and private insurance. 
[Footnote 16] The CHS program is typically the payer of last resort. 
[Footnote 17] Therefore, before a service is approved for CHS payment, 
the patient must apply for and use all alternate resources that are 
available and accessible. Services from an IHS facility are also 
considered a resource, so CHS funds cannot be used for services 
reasonably accessible and available at IHS facilities. 

* Did the CHS program receive timely notification of services provided 
from a non-IHS facility? In non-emergency cases, the local CHS program 
should be notified and the service approved for payment prior to the 
patient receiving care. In cases where the patient was not referred 
for care by an IHS provider, such as with emergency room services, the 
CHS program must be notified within 72 hours of when the service was 
delivered. Notification may be made by the individual, provider, 
hospital, or someone on behalf of the individual in order for the 
service to be eligible for CHS payment. The notification time is 
extended to 30 days for the elderly and disabled. 

* Are the services considered medically necessary and listed as one of 
the established area medical or dental priorities? To be eligible for 
payment under the CHS program, the service must be considered 
medically necessary and listed as one of the established IHS area's 
medical or dental priorities. A program committee that is part of the 
local CHS program evaluates the medical necessity of the service, for 
example, at a weekly meeting. IHS has established four broad medical 
priority levels of health care services eligible for payment and a 
fifth for excluded services that cannot be paid for with CHS program 
funds. Each area is required to establish priorities that are 
consistent with IHS's medical priority levels and are adapted to the 
specific needs of the CHS programs in its area. CHS programs that are 
affiliated with IHS-operated facilities must assign a priority level 
to services based on the priority system established by their area 
offices. Funds permitting, these CHS programs first pay for the 
highest priority services and then for all or some of the lower 
priority services they fund.[Footnote 18] Our prior work has found 
that available CHS program funds have not been sufficient to pay for 
all eligible services.[Footnote 19] At some IHS facilities, the amount 
of CHS funding available was only sufficient to cover cases with the 
highest medical priority--Priority 1--emergent or acutely urgent care 
services that are necessary to prevent immediate death or serious 
impairment of health. (See table 1 for a description of the medical 
priority levels and related services.) 

Table 1: IHS Medical Priority Levels for Contract Health Services: 

Medical priority level: Level I; 
Services included in priority level: Emergent/acutely urgent care 
services, such as trauma care, acute/chronic renal replacement 
therapy, obstetrical delivery and neonatal care. 

Medical priority level: Level II; 
Services included in priority level: Preventive care services, such as 
preventive ambulatory care, routine prenatal care, and screening 
mammograms. 

Medical priority level: Level III; 
Services included in priority level: Primary and secondary care 
services, such as scheduled ambulatory services for nonemergent 
conditions, elective surgeries, and specialty consultations. 

Medical priority level: Level IV; 
Services included in priority level: Chronic tertiary and extended 
care services, such as rehabilitation care, skilled nursing facility 
care, and organ transplants. 

Medical priority level: Level V; 
Services included in priority level: Excluded services, such as 
cosmetic plastic surgery and experimental procedures that programs may 
not pay for with CHS program funds. 

Source: GAO analysis of IHS documents. 

[End of table] 

After considering these questions, local CHS programs review each case 
based on the availability of funding and may defer or deny requests to 
pay for services when program funds are not available. If the CHS 
program determines that a service can be funded, it issues a purchase 
order for the service. 

CHS Payment Process: 

In general, three entities are involved in the CHS payment process: 
(1) the local CHS program, (2) the provider, and (3) IHS's fiscal 
intermediary (FI). The timing of the CHS program's and the provider's 
involvement depends on whether the service was prompted by a referral 
from an IHS provider prior to the date of service--called IHS 
referrals, or prompted by the patient seeking care without first 
obtaining a referral from an IHS provider--these are typically 
emergency services and called self-referrals. 

IHS Referrals: 

IHS referrals are cases in which an IHS-funded provider refers a 
patient for care to an external provider. The local CHS program 
receives the referral and evaluates it against the eligibility 
requirements. Once the CHS program receives the needed information to 
make its determination, it will: 

* approve the service for payment and issue a purchase order to 
obligate the funds and send copies of the purchase order to the 
provider and to the FI; 

* defer funding if it meets all the eligibility criteria, but funds 
are not available; or: 

* deny the service. 

If the service is approved, the local CHS program typically works with 
an external provider to set up an appointment for the patient to 
receive the service and issues the purchase order to the provider--
either before the service is provided or shortly after the service is 
provided. After performing the service, the external provider submits 
the purchase order along with the claim for payment to the FI. Once 
the FI receives the claim and purchase order from the external 
provider, it verifies the purchase order and patient data, evaluates 
whether alternate resources are available, and, if appropriate, makes 
the required payment. If there are any issues with the claim, such as 
missing information from the CHS program or provider, the FI will put 
the claim in a hold status until the issues are resolved. 

Self-referrals: 

Self-referrals are typically emergency situations where the patient 
receives services from external providers without first obtaining a 
referral from an IHS-funded provider. After the services are 
delivered, the provider seeks approval from the CHS program for 
payment for the services. With self-referrals, the steps taken by the 
CHS program to evaluate the referral against the program's eligibility 
requirements to determine whether the service is eligible for CHS 
payment do not begin until after the service is provided. In these 
cases, the local CHS program may have to communicate with the external 
provider, for example, requesting information about the services 
provided. Similar to IHS referrals, once the CHS program receives the 
needed information to make an eligibility determination, it will 
approve the service for payment and issue a purchase order to obligate 
the funds; defer funding the service; or deny the service. For 
approved self-referral services, once the FI receives the claim and 
purchase order from the external provider, it follows the same 
procedures for processing the payment as for IHS referrals. (See 
figure 1 for an overview of the approval and payment processes for IHS 
referrals and self-referrals.) 

Figure 1: Two Paths for Patient Care to Be Funded by Contract Health 
Services (CHS) Program: 

[Refer to PDF for image: process illustration] 

1. Payment process with referral from IHS provider (IHS referral): 

2. Patient goes to an IHS-funded facility for treatment. 

3. Provider gives patient a referral to an external provider if 
treatment is not available. 

4. CHS program reviews the referral with the input of its CHS 
committee to determine whether it meets all eligibility requirements. 

5. CHS program approves referral if requirements are met and funding 
is available. 

6. CHS program issues purchase order authorizing payment; or: step 8. 

7. External provider delivers services: Service delivery to payment. 

8. CHS program issues purchase order after the provider delivers 
service. 

9. External provider submits claim and any alternate resource 
explanation of benefits to the CHS program fiscal intermediary for 
reimbursement. 

10. Fiscal intermediary validates and pays claim. 

Payment process without referral from IHS provider (self-referral): 

1. Patient goes directly to an external provider for treatment. 

2. External provider delivers services: Service delivery to payment. 

3. External provider submits claim and pertinent medical records to 
the CHS program. 

4. CHS program reviews the claim and pertinent medical records with 
input of its CHS committee to determine whether it meets all 
eligibility requirements. 

5. CHS program approves claim if requirements are met and funding is 
available. 

6. CHS program issues purchase order authorizing payment. 

7. External provider submits claim and any alternate resource 
explanation of benefits to the CHS program fiscal intermediary for 
reimbursement. 

8. Fiscal intermediary validates and pays claim. 

Source: GAO interviews with IHS officials and analysis of IHS 
documents. 

[End of figure] 

For services that are ultimately paid for under the CHS program, 
whether they are IHS or self-referrals, the CHS payment process 
consists of three main steps that encompass the time from the date a 
service is delivered to the date the provider is paid. 

1. Local CHS program issues the purchase order. The time for this step 
can be measured by the length of time between when a service is 
provided and when the local CHS program issues the purchase order 
(Sometimes the purchase order is issued before the service is 
provided, such as for some IHS referrals; in these cases this step has 
no effect on the time it takes to pay the provider.) 

2. External provider submits a claim to IHS's FI. The time for this 
step can be measured by the length of time between when the CHS 
program issues the purchase order and when the FI receives the claim. 

3. The FI pays the claim. The time for this step can be measured by 
the length of time between when the FI receives a claim from an 
external provider and when the payment is made. 

Health Care Coverage Options in PPACA Affecting American Indians and 
Alaska Natives: 

PPACA made significant changes to the Medicaid program and included 
new health care coverage options that may benefit American Indians and 
Alaska Natives. In 2014, Medicaid eligibility will expand in states 
opting to participate, such that all individuals with incomes at or 
below 138 percent of the federal poverty level will be eligible for 
the program, including previously ineligible categories of 
individuals, such as childless adults.[Footnote 20] Also in 2014, 
health insurance exchanges will be available--health insurance 
marketplaces in which individuals and small businesses can compare, 
select, and purchase health coverage from participating carriers. 
[Footnote 21] For individuals obtaining insurance through the 
exchanges, PPACA provides premium tax credits for those meeting 
certain income requirements and cost-sharing exemptions for qualifying 
American Indians and Alaska Natives.[Footnote 22] Finally, in 2015, 
states may implement the new Basic Health Program option, under which 
the federal government will give states 95 percent of the premium tax 
credits and cost-sharing subsidies that would have been provided if 
the individuals had enrolled in the exchanges, to allow states to 
provide coverage for individuals with incomes between 138 and 200 
percent of the federal poverty level.[Footnote 23] 

In previous work, we found that, after these changes are implemented 
many American Indians and Alaska Natives may gain new health care 
coverage options. For example, we estimated that more than half of 
American Indians and Alaska Natives may be eligible either for cost-
sharing exemptions and premium tax credits for insurance obtained 
through the exchanges, or eligible for health care coverage through 
the new Basic Health Program or Medicaid, including those who are 
currently eligible for Medicaid but not enrolled, and those who will 
be newly eligible under 2014 eligibility rules. A significant 
proportion of American Indians and Alaska Natives reflected in this 
potential new enrollment live in IHS service areas.[Footnote 24] 

More than Two-Thirds of CHS Claims Were Paid within 6 Months but Some 
Took Much Longer to Pay: 

For CHS services delivered in fiscal year 2011, a majority of 
providers' claims were paid within 6 months of the service delivery 
date, but some took much longer. More than one-third (38 percent) of 
claims processed by IHS-operated CHS programs were paid within 3 
months after services were delivered. Another 35 percent were paid 
between 3 and 6 months of service delivery. The percentage of claims 
paid more than 6 months after service delivery was much smaller, with 
19 percent of claims being paid between 6 months and 1 year after 
services were delivered, and about 8 percent paid more than 1 year 
after services were delivered. (See figure 2) 

Figure 2: Percentage of Contract Health Services (CHS) Claims Paid 
within Certain Time Intervals, for Services Delivered in Fiscal Year 
2011: 

[Refer to PDF for image: vertical bar graph] 

Time interval: 0 to 3 months; 
Percent of Claims Paid: 38%. 

Time interval: more than 3 months to 6 months; 
Percent of Claims Paid: 35%. 

Time interval: more than 6 months to 9 months; 
Percent of Claims Paid: 13%. 

Time interval: more than 9 months to 1 year; 
Percent of Claims Paid: 7%. 

Time interval: more than 1 year; 
Percent of Claims Paid: 8%. 

Source: GAO analysis of IHS claims data. 

Note: Analysis was limited to claims processed by IHS-operated CHS 
programs and included all claims for services delivered in fiscal year 
2011 that were paid as of February 2013. 

[End of figure] 

The amount of time it took to pay providers was not the same across 
all IHS areas. The areas varied in the amount of time between the date 
a service was provided and the date the claim was paid, particularly 
with respect to the percentage of claims that were paid within 3 
months and within 6 months of service delivery. For example, although 
more than one-third of claims IHS-wide were paid within 3 months or 
less of service delivery, across IHS areas this percentage ranged from 
18 percent in Albuquerque to 48 percent in Billings. Similarly, the 
percentage of claims paid within 6 months or less of service delivery 
ranged from 59 percent to 80 percent, also in Albuquerque and 
Billings, respectively. There was less variation among IHS areas in 
the percentage of claims paid within 1 year or less of service 
delivery, ranging from 87 percent in Albuquerque to 94 percent in 
Nashville. For 8 of the10 IHS areas we reviewed, 90 percent or more of 
their claims were paid within 1 year of service delivery. (See figure 
3.) 

Figure 3: Percentage of Contract Health Services (CHS) Claims Paid 
within 3 Months, 6 Months, and 1 Year of Service Delivery, for 
Services Delivered in Fiscal Year 2011, by IHS Area: 

[Refer to PDF for image: vertical bar graph] 

IHS area: Aberdeen; 
Percent of claims paid within 3 months of service delivery: 33%; 
Percent of claims paid within 6 months of service delivery: 69%; 
Percent of claims paid within 12 months of service delivery: 90%. 

IHS area: Albuquerque; 
Percent of claims paid within 3 months of service delivery: 19%; 
Percent of claims paid within 6 months of service delivery: 59%; 
Percent of claims paid within 12 months of service delivery: 87%. 

IHS area: Bemidji; 
Percent of claims paid within 3 months of service delivery: 34%; 
Percent of claims paid within 6 months of service delivery: 73%; 
Percent of claims paid within 12 months of service delivery: 93%. 

IHS area: Billings; 
Percent of claims paid within 3 months of service delivery: 48%; 
Percent of claims paid within 6 months of service delivery: 80%; 
Percent of claims paid within 12 months of service delivery: 93%. 

IHS area: Nashville; 
Percent of claims paid within 3 months of service delivery: 47%; 
Percent of claims paid within 6 months of service delivery: 78%; 
Percent of claims paid within 12 months of service delivery: 94%. 

IHS area: Navajo; 
Percent of claims paid within 3 months of service delivery: 40%; 
Percent of claims paid within 6 months of service delivery: 76%; 
Percent of claims paid within 12 months of service delivery: 93%. 

IHS area: Oklahoma; 
Percent of claims paid within 3 months of service delivery: 31%; 
Percent of claims paid within 6 months of service delivery: 69%; 
Percent of claims paid within 12 months of service delivery: 91%. 

IHS area: Phoenix; 
Percent of claims paid within 3 months of service delivery: 41%; 
Percent of claims paid within 6 months of service delivery: 72%; 
Percent of claims paid within 12 months of service delivery: 92%. 

IHS area: Portland; 
Percent of claims paid within 3 months of service delivery: 46%; 
Percent of claims paid within 6 months of service delivery: 75%; 
Percent of claims paid within 12 months of service delivery: 92%. 

IHS area: Tucson; 
Percent of claims paid within 3 months of service delivery: 40%; 
Percent of claims paid within 6 months of service delivery: 69%; 
Percent of claims paid within 12 months of service delivery: 88%. 

Source: GAO analysis of IHS claims data. 

Note: Analysis was limited to claims processed by IHS-operated CHS 
programs and included all claims for services delivered in fiscal year 
2011 that were paid as of February 2013. 

[End of figure] 

Among the three main steps in the payment process, the step that most 
often took the longest in the payment process was the first step--the 
time from date of service to the issuance of the purchase order. For 
services delivered in fiscal year 2011, purchase orders were issued in 
1 month or less after services were delivered for 41 percent of 
claims. For another 40 percent of claims, purchase orders were issued 
more than 2 months after services were delivered; and in about half of 
these cases, the purchase order was issued more than 4 months after 
the service was delivered. In comparison, the second step--the time 
from the date the purchase order was issued to the date the FI 
received the claim from the provider--took 1 month or less for 61 
percent of the services, and the third step--the time from the date 
the FI received the claim to the date payment was made--took 1 month 
or less for 83 percent of the claims. (See figure 4.) 

Figure 4: Percentage of Claims Processed within Certain Time Intervals 
in Each Step of the Contract Health Services (CHS) Payment Process, 
for Services Delivered in Fiscal Year 2011: 

[Refer to PDF for image: stacked vertical bar graph] 

Service delivery to purchase order issuance[A]: 
1 month or less: 41%; 
More than 1 month to 2 months: 19%; 
More than 2 months: 40%. 

Purchase order issuance to claim receipt:
1 month or less: 61%; 
More than 1 month to 2 months: 21%; 
More than 2 months: 18%. 

Claim receipt to payment: 
1 month or less: 83%; 
More than 1 month to 2 months: 8%; 
More than 2 months: 8%. 

Source: GAO analysis of IHS claims data. 

Notes: Analysis was limited to claims processed by IHS-operated CHS 
programs and included all claims for services delivered in fiscal year 
2011 that were paid as of February 2013. Claims associated with 
purchase orders issued before the date of service were included in the 
analysis. Percentages may not add to 100 due to rounding. 

[A] For claims associated with purchase orders issued before the date 
of service, the timeframe from service delivery to purchase order was 
considered to be 1 month or less. 

[End of figure] 

IHS Has Three Timeliness Measures for Processing Provider Payments, 
but the Two Involving Purchase Order Issuance Do Not Provide a Clear 
Picture of Timeliness: 

IHS uses three measures to assess how long it takes to approve and 
then process payments to CHS providers. Two of these measures concern 
the first step in the payment process time it takes local CHS programs 
to approve payments to providers and issue purchase orders to them--
but neither of these measures provides a clear or complete picture of 
the timeliness of these activities, which constitute the most time-
consuming period within the provider payment process, according to our 
analyses. IHS also has a timeliness measure for the final step in the 
provider payment process--the time it takes IHS's FI to make payment 
to providers once it receives claims from them.[Footnote 25] 
Descriptions of the three timeliness measures follow. 

Government Performance Results Act (GPRA) measure. The first of two 
measures that IHS uses to assess the timeliness of the first step in 
the provider payment process is the average time it takes for IHS to 
issue a purchase order after a service has been provided. IHS 
established this measure in fiscal year 2009 in response to GPRA, and 
has set annual targets for the measure since then. GPRA requires 
federal agencies to develop performance plans with annual goals and 
measures. (Hereafter, we refer to this as the GPRA measure.) 

For fiscal years 2009 and 2010, IHS set the target for the GPRA 
measure at 82 days and 78 days, respectively. IHS missed the target by 
28 days in 2009 and by 4 days in 2010. IHS kept the target at 78 days 
in fiscal year 2011, then lowered it to 74 days in 2012 and met these 
targets in both years. For fiscal year 2013, IHS kept the target at 74 
days, and an IHS official said it would remain there for fiscal year 
2014. According to IHS officials, the basis for the GPRA measure's 
target was a health care industry consultant's report showing average 
times that other health insurers, including private insurers and 
Medicaid, took to pay claims. 

Although clear targets have been established for the GPRA measure, the 
way the measure is calculated does not result in a clear picture of 
whether the goal of the measure is being achieved. In our previous 
work, we found that successful performance metrics should demonstrate 
the degree to which desired results are achieved.[Footnote 26] 
According to IHS, the goal of the GPRA measure is to decrease the 
average number of days from the provision of services to purchase 
order issuance. However, the GPRA measure does not provide a clear 
picture of the timeliness of purchase order issuance because it 
combines self-referrals with some IHS referrals when calculating the 
average time it takes for IHS to issue a purchase order, even though 
the timing of when purchase orders are issued relative to service 
delivery can be very different for the two referral types. The GPRA 
measure calculates the average time it takes to issue purchase orders 
for services for which the purchase order was issued after the service 
was provided. This includes all self-referrals, where none of the work 
to determine whether the service is eligible for CHS payment can be 
started before the service is delivered because IHS does not know 
about it until after the service has been delivered. However, it also 
includes some IHS referrals--referrals for which all of the work to 
determine whether the service is eligible for CHS payment generally is 
completed before the service is delivered. Some local CHS programs 
said they wait to issue purchase orders for IHS referrals until 
shortly after they confirm that the services were actually delivered. 
Officials from one local CHS program told us that for these referrals, 
it may take only one day from the date of service to issue the 
purchase order. Including these IHS referrals in the calculation of 
the GPRA measure gives an unclear picture of performance because the 
inclusion of IHS referrals lowers the overall GPRA average. IHS 
officials agreed that the calculation of the GPRA measure mixes IHS 
referrals with self-referrals, and CHS officials at one area office 
said the measure would be more useful if IHS and self-referrals were 
analyzed separately. However, IHS officials told us that because the 
agency's claims data system does not include a data field that tracks 
referral type, it does not have a way to separate the two different 
types of referrals that would allow the agency to systematically 
determine the average time it takes to issue purchase orders by 
referral type. 

IHS officials expressed varying opinions about the utility and quality 
of the GPRA measure. Some officials noted that before the measure was 
established, there was no timeliness performance measure for the CHS 
program. These officials told us that the measure has helped to 
identify local CHS programs that have implemented practices that help 
improve timeliness of payments. But officials also criticized the GPRA 
measure, noting that many of the factors that help to determine 
whether an area or local CHS program meets the target are not within 
the area's or the program's control, such as how quickly a program 
receives information from providers. 

The time it takes to make a decision about a claim. The other measure 
that IHS uses to assess the timeliness of the first step in the 
provider payment process is how long it takes from the time IHS is 
notified of a claim to when the agency makes a decision about it. 
Under a statutory provision, IHS must approve or deny the claim within 
5 days of receiving "notification" of a provider's claim for a service 
or accept the claim as valid.[Footnote 27] (Hereafter, we refer to 
this provision as the 5-day rule.) According to IHS officials, the 
agency has interpreted the rule's clock as beginning once a claim is 
"clean," or "completed," meaning that all information necessary to 
determine whether the claim should be approved, deferred, or denied 
has been obtained. IHS officials told us, however, that it is in 
obtaining this information--including medical records to determine 
medical priority and the availability of alternate resources--that 
delays most typically occur. Thus, the 5-day rule's clock does not 
begin until after completion of the part of the process in which IHS 
officials believe delays most typically occur. Although IHS officials 
said the agency's interpretation of the 5-day rule currently is not 
included in any official written guidance, they said the agency plans 
to include an explanation of its interpretation of the rule in 
revisions to the CHS chapter of the Indian Health Manual, which 
officials said is expected to be completed by early 2014. 

The time it takes the FI to pay the claim. The third measure that IHS 
uses to assess the timeliness of the payment process focuses on the 
last step in the process--the length of time that the FI should take 
to process payments to providers once it receives claims from them. 
IHS's contract with its FI specifies that at least 97 percent of clean 
claims are to be paid within 30 days of receiving the claim from the 
provider. Similar to the 5-day rule, the FI defines clean claims as 
those containing all required information, including the purchase 
order; passing all IHS and FI agreed-upon internal checks; and not 
requiring additional investigation by the FI. The FI issues monthly 
reports to IHS documenting its compliance with this provision. 
According to these reports, this target was met every month from 
January 2012 through July 2013.[Footnote 28] 

Complexity of the CHS Program, CHS Staffing and Funding Availability, 
and Variations in Program Practices Can Affect the Timeliness of 
Payments to Providers: 

The complex processes for determining whether a service is eligible 
for CHS funding can affect the timeliness of provider payments and 
result in delays. Even after a local CHS program determines that a 
service is eligible for CHS funding, complexities in the payment 
process managed by IHS's FI can result in delays. In addition, CHS 
officials reported that staffing shortages and limited funding 
contribute to delays in processing payments to providers. Local CHS 
programs also reported varying practices for assessing eligibility and 
approving CHS funding, which may contribute to variations in 
timeliness for provider payments. 

Complex Processes for Determining Whether a Service Is Eligible for 
CHS Funding Can Affect the Timeliness of Provider Payments: 

IHS's process for determining whether services are eligible for CHS 
program funds is complex and different from processes used by other 
payers, which can affect the timeliness of provider payments. Unlike 
other payers that offer a defined set of benefits--including Medicare, 
Medicaid, and private insurers--the CHS program makes decisions about 
what care will be funded on a case-by-case basis, so that each time a 
referral for care is received by a local CHS program, it is evaluated 
against a number of eligibility requirements as well as against 
available funding. Evaluating a service against each of the service 
eligibility requirements involves multiple steps, some of which depend 
on the CHS program receiving information from providers, patients, and 
others, and delays can occur during the evaluation of some of these 
eligibility requirements, according to CHS officials. In some cases, 
making these eligibility determinations can be fairly involved, and 
can ultimately affect the amount of time it takes for a provider to 
receive payment after the service is delivered. The effects of this 
process on payment times is greater for self-referrals--situations in 
which the service was provided before it was approved for payment--
because the entire process for determining whether the service was 
eligible for CHS payment does not begin until after the service was 
delivered. According to IHS officials, the agency developed the CHS 
program eligibility regulations in order to carefully manage and 
stretch limited CHS funding to provide the most critical services to 
the most patients. 

Two aspects of the process for determining eligibility for CHS program 
funding were frequently reported as resulting in payment delays: (1) 
determining whether a service meets the area's medical priorities and 
(2) identifying all available alternate resources. Officials from 8 of 
12 local CHS programs we interviewed reported payment delays related 
to determining whether a service met the area's medical priorities, 
and officials from 8 of 12 local CHS programs reported payment delays 
related to identifying all available alternate resources. 

Determining medical priority can result in delays because local CHS 
programs must obtain from the provider medical records with sufficient 
detail to assess whether a service is medically necessary and falls 
within the established medical priorities. Officials reported that, 
while in some cases the necessary records have been provided 
relatively quickly (e.g., within a week) in other cases it has taken 
much longer. For example, some local CHS programs reported situations 
when it has taken weeks or months to obtain necessary medical 
documentation, and one program reported situations when it has taken 
as long as 1 to 2 years to receive this documentation. Program 
officials noted different reasons for these delays. For example, 
officials reported situations where providers have sent documentation 
to the wrong CHS program when the providers were unaware in which 
CHSDAs the patients resided. Another reason cited by local CHS program 
officials for delays in receipt of medical documentation included 
situations in which incomplete documentation was provided and the 
program needed to follow up with the provider. 

Officials reported a number of situations in which determining whether 
the patient has alternate resources to pay for the service, has 
resulted in delays. For example, some local CHS program officials told 
us that when they believe a patient is eligible for alternate 
resources--such as Medicaid--they have the patient apply for those 
resources, and will hold off on approving a service for CHS funding 
until the determination is made on the application. Officials from one 
local CHS program said that Medicaid determinations in their state can 
sometimes take months. In another example, officials from one local 
CHS program stated that for situations involving car accidents or a 
fall on private property, determining liability can take a long time, 
and availability of alternate resources cannot be determined until 
decisions on liability have been determined. In another example, 
officials from one CHS program said delays can occur when patients do 
not inform the CHS program of the alternate resources available to 
them, necessitating the CHS program doing the research itself. 

Program officials also reported some delays related to the other three 
aspects of the process for determining eligibility for CHS payment. 
For example, officials from one CHS program said determining whether a 
patient is a member of a federally recognized tribe can result in a 
delay if they have never seen the patient before, and must obtain 
documentation of that patient's tribal affiliation. Similarly, 
officials from one CHS program said determining whether a patient 
resides in its CHSDA can result in a delay when the program needs to 
wait on documentation from patients confirming their addresses. 
Finally, one local CHS program reported that determining whether the 
program has been notified within required timeframes can result in a 
delay when an incorrect decision is made to deny the service, which is 
later overturned. 

The complexity of determining whether services delivered to American 
Indians and Alaska Natives are eligible for CHS funding can also 
result in misunderstandings in which providers think payments have 
been delayed, when in fact the services provided were not eligible for 
payment. For example, IHS officials told us that sometimes patients do 
not understand CHS rules and seek emergency care from external 
providers, expecting the CHS program to cover it, when they are in 
fact not eligible for CHS. The officials also said that providers will 
send claims to the CHS program, assuming the patient and service are 
eligible, and expect to be paid. IHS does not issue eligibility cards 
to beneficiaries that would indicate to external providers their 
eligibility for CHS services or information about which local CHS 
program is responsible for payment. In a previous GAO review of the 
CHS program, several providers noted that, in the absence of a process 
they can use prior to providing service to determine patient 
eligibility for the CHS program, they submit claims for payment to the 
CHS program for all patients who self-identify as American Indian or 
Alaska Native or as eligible for the CHS program.[Footnote 29] IHS 
officials said that they believe situations such as these--in which 
the provider will never be paid because the patient or service was not 
eligible, as opposed to situations in which the service is eligible 
but the payment process is prolonged--accounted for the majority of 
provider complaints about the timeliness of CHS payments. 

Local CHS program officials noted that providers' lack of 
understanding of the complex CHS approval process was due in part to 
provider staff turnover or was exacerbated when the provider's billing 
functions were located out of state, which could result in delays in 
providing information needed to determine eligibility. These officials 
noted that education of provider staff was an ongoing necessity for 
CHS programs. Some IHS officials also noted that providing such 
training took staff time away from processing referrals. Officials 
from a number of CHS programs noted that they meet regularly with some 
of their high-volume providers to reconcile specific outstanding 
cases, and that over time these meetings have helped improve 
providers' understanding of the unique rules and procedures of the CHS 
program. However, officials also mentioned that turnover among 
provider staff often necessitated starting the process of educating 
providers again. 

Complexities Associated with the CHS Processes for Paying Providers 
Also Can Affect Timeliness: 

Even after a service has been approved for CHS funding and a purchase 
order has been issued, delays can occur because of complexities in the 
last step in the payment process, which is managed by IHS's FI. 
Officials said this can occur because the providers do not understand 
the CHS process used by the FI. For example, officials said some 
providers do not understand that after receiving a purchase order, 
they also need to submit the claim to the FI to be paid. 

Officials from local CHS programs and from the FI also reported 
examples where delays occurred because claims submitted by providers 
to the FI could not be matched to a corresponding purchase order in 
the FI's system. According to FI officials, it will issue only one 
payment for each purchase order. However, some purchase orders are 
intended to cover multiple services, such as for a series of physical 
therapy treatments. FI officials reported that providers sometimes 
submit claims for services that pertain to only a portion of the 
services authorized on the purchase order. In these cases, the FI pays 
for those services and closes out the purchase order. When providers 
submit subsequent claims related to other services that were 
authorized on the original purchase order, the FI is unable to pay the 
provider because the purchase order was closed. The provider then must 
go back to the CHS program to request a new purchase order and payment 
to the provider is delayed until the new purchase order is issued and 
submitted to the FI. 

In addition to delays in payments to providers from issues matching 
claims and purchase orders, claims may be put on hold by the FI for 
other payment processing issues. One of the most common causes for 
claims being put on hold by the FI is when alternate resources have 
been confirmed, but the FI is waiting for information from the 
provider showing the amount paid by the other resources and the 
remaining amount that the provider is claiming from IHS. 

CHS Staffing and Funding Availability Also Can Affect Timeliness of 
Payments to Providers: 

Local CHS program officials said insufficient CHS program staffing 
levels have affected their ability to issue timely purchase orders. 
IHS's staffing standards model established a staffing ratio based on 
the annual number of purchase orders authorized for health care 
services by a facility.[Footnote 30] Some CHS program officials noted 
that their number of staff was below these standards. Further, local 
CHS program officials in programs that had a very small number of CHS 
staff (e.g., two or three) said that a vacancy or extended leave for 
even one staff person could affect the timeliness of issuing purchase 
orders--and one of these programs reported that related delays could 
be significant. Furthermore, IHS officials noted that, pursuant to 
agency practice, CHS funding has been used only to pay for services 
and not to increase staffing levels. As a result, recent increases in 
CHS funds have resulted in increased workloads, but staffing levels to 
manage the workloads have not increased. Staffing levels can affect 
the timeliness of payment for services, particularly for self-
referrals where the entire process for determining eligibility for CHS 
payment does not begin until after the service is provided. 

Officials from a few CHS programs also noted that funding issues could 
result in delays issuing a purchase order authorizing CHS funding, 
which would delay payments. In our prior work, some providers told us 
that delays in receiving payment from CHS of several months, or in 
some cases years, tended to occur when the CHS program's funding for 
the fiscal year had been depleted.[Footnote 31] Again, as with other 
issues we have noted, funding shortages affect the amount of time it 
takes to pay providers for self-referrals more than IHS referrals 
because the self-referral service is already provided before the 
program determines if funds are available while for an IHS referral, 
the service can be postponed until funds become available. 

Local CHS Program Practices for Implementing CHS Eligibility 
Regulations Vary, which May Contribute to Variations in Timeliness for 
Aspects of the Provider Payment Process: 

We found variation in local CHS program practices for implementing CHS 
eligibility rules, which may contribute to the variation in timeliness 
of the provider payment process across IHS areas. IHS officials said 
they allow flexibility in local CHS program practices because each has 
a different set of circumstances to consider. These circumstances 
include challenges regarding CHS funding levels among areas, state 
Medicaid program procedures for verifying eligibility, providers' 
familiarity with the CHS program, and the number of staff available to 
determine CHS eligibility for services. 

During our interviews, IHS area and local CHS program officials 
reported differences in practices that could contribute to variation 
in the amount of time overall it takes to pay providers. Examples of 
these differences include: 

Consideration of alternate resources. Local CHS programs varied in the 
actions they took while they were determining the extent of patients' 
alternate resources. One practice IHS area office officials said some 
local CHS program staff used, in certain circumstances, was to issue 
purchase orders to providers before patients' alternate resources were 
confirmed. In these cases, if the FI paid the claim before alternate 
resources were confirmed, the FI would seek to recover from the 
provider any overpayments for services covered by these alternate 
resources. 

In contrast, some IHS area and local CHS program officials told us 
they do not issue purchase orders authorizing CHS payment for services 
until the availability of all possible alternate resources has been 
determined. Officials in one IHS area noted that they do this to 
preserve their limited CHS funds and provide access to care to as many 
patients as possible. Officials in this area reported that they were 
not able to fund all Priority 1 cases and that issuing purchase orders 
and obligating CHS funds before alternate resources were confirmed 
could cause them to exhaust their CHS funds even earlier. 

Requests for information from providers. Officials from some local CHS 
programs reported that they set time limits for providers to submit 
medical documents and deny CHS funding if providers do not submit the 
documents within that time. These limits ranged from a week to 45 
days, and some of these programs automatically issued a denial if the 
medical documentation was not provided either at the same time the 
program was notified that services had been provided or by the 
specified time limit. CHS officials said these denials could be 
reconsidered if sufficient medical documentation were subsequently 
provided. In contrast, officials from another CHS program reported 
that it does not have established time limits within which providers 
must submit medical documentation. 

Determination of medical priority. One practice that certain local CHS 
program officials reported was to make all decisions about the medical 
priority of requested services at their program's weekly medical 
committee meeting. In contrast, another reported practice was to have 
almost all medical priority determinations made by a clinician as soon 
as all necessary information is received. (Those determinations are 
subsequently reviewed by the committee.) A combination of both of 
these practices was also reported by another CHS program we spoke to, 
in which decisions on less complex cases were made by a clinician as 
soon as all necessary information was received, while determinations 
for more complicated cases waited until the next weekly medical 
committee meeting, 

New Coverage Options in PPACA May Provide IHS an Opportunity to 
Simplify CHS Eligibility Rules: 

New health care coverage options available to many IHS beneficiaries 
as a result of provisions in PPACA could provide IHS with an 
opportunity to simplify the complex eligibility rules of the CHS 
program. IHS has stated that its overall service goal is to elevate 
the health status of American Indians and Alaska Natives to the 
highest possible level. However, as we and others have reported, 
limits on available resources have affected the services available to 
American Indians and Alaska Natives through the CHS program. For 
example, although funding for the CHS program significantly increased 
in recent years, IHS has reported that at current funding levels, most 
programs are approving only medically emergent referrals (Priority 1) 
and less urgent, routine or preventive care is deferred or denied 
pending additional appropriations. According to IHS, limits on 
available funding for the CHS program have caused the agency to 
establish its complex requirements for determining eligibility for CHS 
funds--including reliance on a medical priority rating system and 
limiting eligibility to individuals who reside in CHSDAs. These 
mechanisms are intended to enhance IHS's ability to stretch limited 
CHS dollars and extend services to more American Indians and Alaska 
Natives. As we previously reported, however, many American Indians and 
Alaska Natives may gain new health care coverage beginning in 2014 as 
a result of PPACA, which could alleviate some constraints on CHS 
program funds.[Footnote 32] 

If a better match is achieved between available funding and overall 
CHS program demand, IHS could have the opportunity to streamline 
eligibility requirements for the CHS program and to expand the 
services it pays for with CHS funds, assuming appropriation levels for 
the CHS program are maintained. Because the CHS program is generally 
the payer of last resort, if more American Indians and Alaska Natives 
gain new coverage, services that would have previously been paid for 
by the CHS program will be paid for by other payers. In addition, 
because some American Indians and Alaska Natives will have access to 
benefits packages through these other coverage options--benefits 
packages that may be more comprehensive than the IHS benefits 
available to them now--more may choose to obtain care outside of the 
IHS system entirely. This could help free up some CHS program funds, 
potentially creating a better match between available funding and 
overall program demand. 

Some uncertainty remains, however, about the extent to which American 
Indians and Alaska Natives will obtain new health care coverage when 
PPACA is fully implemented. For example, not all states may choose to 
expand their Medicaid programs. In addition, we have reported 
previously on the challenges American Indians and Alaska Natives may 
face enrolling in Medicaid and other public insurance programs. 
[Footnote 33] Some barriers are unique to the American Indian and 
Alaska Native population--such as individuals believing they should 
not have to apply for other public insurance programs because the 
federal government has a duty to provide them with health care as a 
result of treaties with Indian tribes. In our prior work, we 
recommended that IHS increase its direct outreach to American Indians 
and Alaska Natives who may be eligible for new coverage options to 
help ensure significant new enrollment in these options.[Footnote 34] 

Conclusions: 

The current CHS program's eligibility requirements reflect the method 
that IHS has chosen to stretch its funding to ensure that the most 
critical health services can be provided to the maximum number of 
beneficiaries. However, determining eligibility for CHS funding--
including the need to ascertain each time a referral is received 
whether the patient met residency requirements and the service met 
medical priorities--is inherently complex. As currently structured, it 
is highly unlikely that the CHS program will be as quick a payer as 
some other payers because of the cumbersome steps involved in 
determining eligibility for each service. 

PPACA will expand existing sources of health coverage and create new 
ones for American Indians and Alaska Natives, and this could affect 
the CHS program in a number of ways. In particular, if these changes 
significantly reduce the demand placed on CHS program funds, IHS may 
have the opportunity to not only pay for a greater range of services 
but also restructure the CHS program to include less stringent 
eligibility requirements. For example, increased availability of CHS 
funding due to increased access among American Indians and Alaska 
Natives to other sources of health care coverage options under PPACA 
could give IHS the opportunity to establish a set of defined benefits 
for IHS beneficiaries, which would alleviate the need for CHS programs 
and providers to carry out time-consuming medical priority 
determinations. The opportunity also may arise for IHS to make other 
changes, such as issuing a form of eligibility card to CHS-eligible 
patients to help providers understand when to send claims to IHS, and 
to which local CHS program a claim should be sent, helping improve the 
timeliness of provider payments. 

In the interim, while the changes from PPACA are taking effect, IHS 
has the opportunity to continue to make improvements to the CHS 
program, including how it assesses the timeliness of provider payments 
and how it aligns CHS program staffing levels with workloads, and to 
proactively consider ways to streamline CHS eligibility requirements. 

Recommendations for Executive Action: 

In an effort to ensure that IHS has meaningful information on the 
timeliness with which it issues purchase orders authorizing payment 
under the CHS program and to improve the timeliness of payments to 
providers, we recommend that the Secretary of HHS direct the Director 
of IHS to: 

* modify IHS's claims data system to separately track IHS referrals 
and self-referrals, revise the GPRA measure for the CHS program so 
that it distinguishes between these two types of referrals, and 
establish separate timeframe targets for these referral types; and: 

* improve the alignment between CHS staffing levels and workloads by 
revising its current practices, where appropriate, to allow available 
funds to be used to pay for CHS program staff. 

In addition, as HHS and IHS monitor the effect that new coverage 
options available to IHS beneficiaries through PPACA have on CHS 
program funds, we recommend that the Secretary of HHS direct the 
Director of IHS to proactively develop potential options to streamline 
program eligibility requirements. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to HHS for review and received 
written comments, which are reprinted in appendix I. In its comments, 
HHS concurred with two of our recommendations and did not concur with 
one recommendation. 

HHS concurred with our recommendation that IHS modify its claims data 
system to separately track IHS referrals and self-referrals, revise 
the GPRA measure for the CHS program so that it distinguishes between 
these two types of referrals, and establish separate timeframe targets 
for these referral types. HHS also concurred with our recommendation 
that as HHS and IHS monitor the effect that new coverage options 
available to IHS beneficiaries through PPACA have on CHS program 
funds, IHS proactively develop potential options to streamline program 
eligibility requirements. HHS agreed with the premise that Medicaid 
eligibility expansion and private insurance for more American Indians 
and Alaska Natives will reduce the demand for CHSD services and noted 
that IHS will monitor the effects of new coverage on program funds and 
develop options to improve and streamline the CHS program processes. 

HHS did not concur with our recommendation that IHS improve the 
alignment between CHS staffing levels and workloads by revising its 
current practices, where appropriate, to allow available funds to be 
used to pay for CHS program staff. In its response, HHS stated its 
intent to continue to only use CHS appropriations to purchase health 
care services and not to fund program staff, noting that available CHS 
program funds have not been sufficient to pay for all services and 
that at some facilities, funding was only sufficient to cover cases 
with the highest medical priority. We acknowledge the difficult 
challenges and choices faced by CHS programs when program funds are 
not sufficient to pay for all needed services. However, IHS has noted 
the importance of the agency maintaining an adequate workforce and has 
established staffing standards for the CHS program. As we reported, 
some IHS officials noted that their number of staff was below the 
staffing ratio established in IHS's staffing standards model, and 
local CHS program officials told us that insufficient CHS program 
staffing levels have affected their ability to issue timely purchase 
orders. Further, recent increases in CHS funding for services have 
resulted in increased workloads, while staffing levels to manage the 
workloads have not increased. For these reasons, we continue to believe 
that IHS should improve the alignment between CHS staffing levels and 
workloads, making use of all available funding, including CHS program 
funds, when appropriate, to do so. 

We are sending copies of this report to the Secretary of Health and 
Human Services, the Director of the Indian Health Service, appropriate 
congressional committees, and other interested parties. In addition, 
the report is available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-7114 or kingk@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of the report. GAO staff who made major contributions to 
this report are listed in appendix II. 

Signed by: 

Kathleen M. King: 
Director, Health Care: 

List of Addressees: 

The Honorable Maria Cantwell: 
Chairwoman: 
The Honorable John Barrasso: 
Vice Chairman: 
Committee on Indian Affairs: 
United States Senate: 

The Honorable Peter DeFazio: 
Ranking Member: 
Committee on Natural Resources: 
House of Representatives: 

The Honorable Don Young: 
Chairman: 
The Honorable Colleen Hanabusa: 
Ranking Member: 
Subcommittee on Indian and Alaska Native Affairs: 
Committee on Natural Resources: 
House of Representatives: 

The Honorable Tim Johnson: 
United States Senate: 

The Honorable Lisa Murkowski: 
United States Senate: 

The Honorable John Thune: 
United States Senate: 

[End of section] 

Appendix I: Comments from the Department of Health and Human Services: 

Department of Health & Human Services: 
Office of The Secretary
Assistant Secretary for Legislation: 
Washington, DC 20201: 

November 22, 2013: 

Kathleen M. King: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Ms. King: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) report entitled, "Indian Health Service: Opportunities May Exist 
to Improve the Contract Health Services Program" (GAO-14-57). 

The Department appreciates the opportunity to review this report prior 
to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

General Comments of The Department of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Indian Health Service: Opportunities May Exist To Improve The 
Contract Health Services Program" (GAO-14-57): 

The Department appreciates the opportunity to review and comment on 
this draft report. 

Recommendation 1: 

Modify IHS's claims data system to separately track IHS referrals and 
self-referrals, revise the GPRA measure for the CHS program so that it 
distinguishes between these two types of referrals, and establish 
separate timeframe targets for these referral types. 

HHS Response: 

HHS concurs. IHS's referral data system will be modified to separately 
track IHS referrals and self-referrals, revise the GPRA measure for 
the CHS program so that it distinguishes between these two types of 
referrals and establish separate timeframe targets for these referral 
types. 

Recommendation 2: 

Improve the alignment between CHS staffing levels and workloads by 
revising its current practices, where appropriate, to allow available 
funds to be used to pay for CHS program staff. 

HHS Response: 

We do not concur. As documented in this report, prior GAO work has 
found that available CHS program funds have not been sufficient to pay 
for all eligible services. At some facilities, the amount of CHS 
funding available was only sufficient to cover cases with the highest 
medical priority — Priority 1 — emergent or acutely urgent care 
services that are necessary to prevent immediate death or serious 
impairment of health. CHS appropriations will continue to be used to 
purchase needed health care services for American Indian/Alaska Native 
(Al/AN) patients and not for CHS program staff. 

Recommendation 3: 

As HHS and IHS monitor the effect that new coverage options available 
to II IS beneficiaries through PPACA have on CHS program funds, we 
recommend that the Secretary of HHS direct the Director of IRS to 
proactively develop potential options to streamline program 
eligibility requirements. 

HHS Response: 

We concur with the GAO premise that Medicaid eligibility expansion and 
private insurance for more AI/ANs will reduce aggregate CHS demand. 
CHS restrictions currently apply CHS funds to a sub-set of AI/ANs and 
for a sub-set of health conditions. Since members of Federally 
recognized Tribes can be exempt from the shared responsibility and the 
requirement to be insured and 21 states are not expanding their 
Medicaid coverage, IHS will proactively monitor the effects of new 
coverage to IHS beneficiaries through ACA on CHS program funds and 
develop options to improve and streamline CHS program processes. 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Kathleen M. King, Director, (202) 512-7114 or kingk@gao.gov: 

Staff Acknowledgments: 

In addition to the contact name above, Gerardine Brennan, Assistant 
Director; George Bogart; Julianne Flowers; Natalie Herzog; Linda 
McIver; Laurie Pachter; and Michael Rose made key contributions to 
this report. 

[End of section] 

Related GAO Products: 

Indian Health Service: Most American Indians and Alaska Natives 
Potentially Eligible for Expanded Health Coverage, but Action Needed 
to Increase Enrollment. [hyperlink, 
http://www.gao.gov/products/GAO-13-553]. Washington, D.C.: September 
5, 2013. 

Indian Health Service: Capping Payment Rates for Nonhospital Services 
Could Save Millions of Dollars for Contract Health Services. 
[hyperlink, http://www.gao.gov/products/GAO-13-272]. Washington, D.C.: 
April 11, 2013. 

Medicaid Expansion: States' Implementation of the Patient Protection 
and Affordable Care Act. [hyperlink, 
http://www.gao.gov/products/GAO-12-821]. Washington, D.C.: August 1, 
2012. 

Indian Health Service: Action Needed to Ensure Equitable Allocation of 
Resources for the Contract Health Service Program. [hyperlink, 
http://www.gao.gov/products/GAO-12-446]. Washington, D.C.: June 15, 
2012. 

Indian Health Service: Increased Oversight Needed to Ensure Accuracy 
of Data Used for Estimating Contract Health Service Need. [hyperlink, 
http://www.gao.gov/products/GAO-11-767]. Washington, D.C.: September 
23, 2011. 

Indian Health Service: Updated Policies and Procedures and Increased 
Oversight Needed for Billings and Collections from Private Insurers. 
[hyperlink, http://www.gao.gov/products/GAO-10-42R]. Washington, D.C.: 
October 22, 2009. 

Medicare and Medicaid: CMS and State Efforts to Interact with the 
Indian Health Service and Indian Tribes. [hyperlink, 
http://www.gao.gov/products/GAO-08-724]. Washington, D.C.: July 11, 
2008. 

Indian Health Service: Health Care Services Are Not Always Available 
to Native Americans. [hyperlink, 
http://www.gao.gov/products/GAO-05-789]. Washington, D.C.: August 31, 
2005. 

[End of section] 

Footnotes: 

[1] IHS defines an Indian tribe as any Indian tribe, band, nation, 
group, Pueblo, or community, including any Alaska Native village or 
Native group, which is federally recognized as eligible for the 
programs and services provided by the United States to Indians because 
of their status as Indians. 42 C.F.R. § 136.21(g)(2012). 

[2] Under the Indian Self-Determination and Education Assistance Act, 
as amended, federally recognized Indian tribes can enter into self-
determination contracts or self-governance compacts with the Secretary 
of Health and Human Services to take over the administration of IHS 
programs for Indians previously administered by IHS on their behalf. 
Self-governance compacts allow tribes to consolidate and assume 
administration of all programs, services, activities, and competitive 
grants administered throughout IHS, or portions thereof, that are 
carried out for the benefit of Indians because of their status as 
Indians. In contrast, self-determination contracts allow tribes to 
assume administration of a program, programs, or portions thereof. See 
25 U.S.C. §§ 450f(a) (self-determination contracts) and 458aaa-4(b)(1) 
(self-governance compacts). 

[3] IHS's 12 areas are: Aberdeen, Alaska, Albuquerque, Bemidji, 
Billings, California, Nashville, Navajo, Oklahoma City, Phoenix, 
Portland, and Tucson. All areas but Alaska and California include IHS-
operated facilities. 

[4] Of the 243 local CHS programs, 66 are affiliated with IHS-operated 
facilities. The remaining 177 CHS programs are affiliated with 
tribally operated facilities. 

[5] GAO, Indian Health Service: Most American Indians and Alaska 
Natives Potentially Eligible for Expanded Health Coverage, but Action 
Needed to Increase Enrollment, [hyperlink, 
http://www.gao.gov/products/GAO-13-553] (Washington, D.C.: Sept. 5, 
2013); Indian Health Service: Capping Payment Rates for Nonhospital 
Services Could Save Millions of Dollars for Contract Health Services, 
[hyperlink, http://www.gao.gov/products/GAO-13-272] (Washington, D.C.: 
Apr. 11, 2013); Indian Health Service: Action Needed to Ensure 
Equitable Allocation of Resources for the Contract Health Service 
Program, [hyperlink, http://www.gao.gov/products/GAO-12-446] 
(Washington, D.C.: Jun. 15, 2012); and Indian Health Service: 
Increased Oversight Needed to Ensure Accuracy of Data Used for 
Estimating Contract Health Service Need, [hyperlink, 
http://www.gao.gov/products/GAO-11-767] (Washington, D.C.: Sept. 23, 
2011). 

[6] [hyperlink, http://www.gao.gov/products/GAO-11-767] and 
[hyperlink, http://www.gao.gov/products/GAO-13-272]. 

[7] [hyperlink, http://www.gao.gov/products/GAO-11-767]. 

[8] [hyperlink, http://www.gao.gov/products/GAO-13-553]. 

[9] Pub. L. No. 111-148, 124 Stat. 119, as amended by the Health Care 
and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 
Stat. 1029. For the purposes of this report, references to PPACA 
include the amendments made by the Health Care and Education 
Reconciliation Act of 2010. 

[10] See Pub. L. No. 111-148, § 10221, 124 Stat. 119, 935 (2010) 
(enacting S. 1790, as reported by the Committee on Indian Affairs in 
the Senate in December 2009, into law with amendments); S. 1790, 111th 
Cong. §§ 137, 199 (2009). 

[11] We did not obtain data on CHS claims that were authorized by 
tribally operated facilities, which account for approximately 54 
percent of total CHS program payments. This review focused entirely on 
data and activities of CHS programs affiliated with IHS-operated 
facilities. These programs are located in 10 of the 12 IHS areas. 

[12] [hyperlink, http://www.gao.gov/products/GAO-13-553]. 

[13] IHS received about $800 million for the CHS program for fiscal 
year 2013. 

[14] Eligibility requirements for CHS are in addition to meeting the 
requirements for direct care services. 

[15] Tribal groups or IHS may submit requests to re-designate a CHSDA. 
These requests are reviewed by IHS and are subject to public comment. 

[16] Medicaid is a jointly funded federal-state health care program 
that covers certain low-income individuals and families. Medicare is 
the federal government's health care insurance program for individuals 
aged 65 and older and for individuals with certain disabilities or end-
stage renal disease. 

[17] See 25 U.S.C. §§ 1621e, 1623; 42 C.F.R. § 136.61 (2012). There 
are certain exemptions to the CHS program's designation as a payer of 
last resort. For example, certain tribally funded health insurance 
plans are not considered alternate resources and the CHS program must 
pay for care before billing the tribally funded insurance plan. The 
CHS program must also pay for care provided to eligible American 
Indians and Alaska Natives before the crime victim compensation 
program, a federal program that provides compensation to victims of 
criminal violence. 

[18] Tribal CHS programs must use medical priorities when making 
funding decisions but, unlike CHS programs affiliated with IHS-
operated facilities, tribal programs may develop systems that differ 
from the set of priorities established by IHS. 

[19] GAO, Indian Health Service: Health Care Services Are Not Always 
Available to Native Americans, [hyperlink, 
http://www.gao.gov/products/GAO-05-789] (Washington, D.C.: Aug. 31, 
2005); and [hyperlink, http://www.gao.gov/products/GAO-11-767]. 

[20] PPACA established 133 percent of the federal poverty level as the 
income limit for expanded Medicaid eligibility; however, it also 
specifies that an individual's income be reduced by an amount 
equivalent to 5 percent of federal poverty level when determining 
Medicaid eligibility, which effectively raises the eligibility limit 
for newly eligible Medicaid recipients to 138 percent of the federal 
poverty level. See Pub. L. No. 111-148, §§ 2001(a)(1), 2002, 124 
Stat., 271, 279; Pub. L. No. 111-152, § 1004(e), 124 Stat. 1036 
(codified at 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII) and 42 U.S.C. § 
1396a(e)(14)(B)(I)). 

[21] PPACA directed states to establish state-based exchanges by 
January 1, 2014. In states electing not to establish and operate such 
an exchange, PPACA requires the federal government to establish and 
operate such an exchange in the state. Pub. L. No. 111-148 §§ 
1311(b)(1), 1321(c), 124. Stat., 173, 186 (codified at 42 U.S.C. §§ 
18031(b) and 18041(c). 

[22] PPACA provides for a federal premium tax credit for eligible 
individuals obtaining insurance through an exchange with incomes equal 
to or exceeding 100 and up to 400 percent of the federal poverty 
level, and who do not have access to public insurance, such as 
Medicaid. See Pub. L. No. 111-148, §§ 1401, 10105(a) - (c), 10108(h), 
124 Stat. 213, 906, 914 ; Pub. L. No. 111-152, §§ 1001, 1004, 124 
Stat. 1030, 1034(codified at 26 U.S.C. § 36B); 26 C.F.R. § 1.36B-
2(a)(2013). In addition, American Indians and Alaska Natives who 
obtain insurance through an exchange are eligible for exemptions from 
cost-sharing, such as deductibles and copays, if they are members of 
federally recognized tribes and have a household income of not more 
than 300 percent of the federal poverty level or if the services are 
provided by Indian Health providers, regardless of the enrollee's 
income. See Pub. L. No. 111-148, § 1402(d), 124 Stat. 222 (codified at 
42 U.S.C. § 18071(d)). 

[23] Pub. L. No. 111-148, §§ 1331, 10104(o), 124 Stat. 199, 902 
(codified at 42 U.S.C. § 18051). 

[24] [hyperlink, http://www.gao.gov/products/GAO-13-553]. 

[25] IHS does not have a performance measure for the second step of 
the payment process--the time between the date the purchase order is 
issued and the date IHS's FI receives the claim from the provider 
seeking payment. IHS has little involvement in this step of the 
payment process. During this period, the provider submits the claim to 
the FI; IHS has not established a deadline for the provider to do this. 

[26] GAO, Executive Guide: Effectively Implementing the Government 
Performance and Results Act, [hyperlink, 
http://www.gao.gov/products/GAO-GGD-96-118], (Washington D.C.: June 
1996); and Agencies' Strategic Plans Under GPRA: Key Questions to 
Facilitate Congressional Review, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-10.1.16] (Washington D.C.: May 
1997). 

[27] See 25 U.S.C. § 1621s. 

[28] Our analysis showed that 83 percent of claims were paid by the FI 
within 1 month of receiving the provider's claim. This difference 
between our analysis and the FI reports may be explained by the fact 
that our analysis included claims that were at one time not clean. 

[29] [hyperlink, http://www.gao.gov/products/GAO-11-767]. 

[30] According to the model, each facility that issues 50 or more 
purchase orders should have a CHS Manager staff and one CHS staff 
position for every 700 purchase orders issued annually. Plus, the 
facility should have a data entry clerk if the CHS program uses the 
automated system for referrals. 

[31] [hyperlink, http://www.gao.gov/products/GAO-11-767]. 

[32] [hyperlink, http://www.gao.gov/products/GAO-13-553]. 

[33] See GAO, Medicare and Medicaid: CMS and State Efforts to Interact 
with the Indian Health Service and Indian Tribes, [hyperlink, 
http://www.gao.gov/products/GAO-08-724] (Washington, D.C.: Jul. 11, 
2008). 

[34] [hyperlink, http://www.gao.gov/products/GAO-13-533]. 

[End of section] 

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