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General Memorandum 14-017

General Memorandum 14-017
Indian Health Service FY 2014 Appropriations; Contract Support Costs Fully Funded

On January 17, 2014, President Obama signed the Consolidated Appropriations Act, 2014, as Public Law 113-76. This Act includes all twelve FY 2014 appropriations bills, and we report here on the Indian Health Service (IHS) budget. The IHS has developed its FY 2014 Operating Plan as required by PL 113-76 which provides for full funding for Contract Support Costs and makes reductions in order to stay within the overall IHS spending cap. Some details of the IHS budget are not yet available (i.e, amount and allocation of staffing package funding for new facilities; pay raise funding), and we will report as that information becomes available.

The IHS FY 2014 Operating Plan may be found here: http://www.ihs.gov/budgetformulation/includes/themes/newihstheme/documen...

FUNDING OVERVIEW

The Act provides $4.4 billion for the IHS which is $303.7 million over the FY 2013 post-sequester amount and is $78.3 million over the FY 2013 enacted (pre-sequester amount). There is a significant increase ($139.6 million) for Contract Support Costs to provide full funding and a 3.7 percent inflationary increase ($35 million) for Purchased/Referred Care to maintain current services. Most account increases, however, will be absorbed by the one percent federal pay raise for which the Administration requested $6 million and staffing package funding for new facilities (approximately $65 million). Most IHS programs were not restored to their FY 2013 pre-sequestration levels.

The IHS made the following reductions from the FY 2013 post-sequestration levels as follows in order to find the remaining funds necessary to fully fund CSC:

• $5 million from Indian Health Professions
• $1 million from Tribal Management
• $1 million from Self-Governance

LEGISLATIVE PROVISIONS

As mentioned above, the Acts includes funding to fully fund Contract Support Costs; thus it does not contain an aggregate cap as has been in past appropriations statutes. It does, consistent with the Interior appropriations acts for FYs 1999-2013, attempt to limit the ability of the IHS and BIA to fund past-year shortfalls in Contract Support funding from remaining unobligated balances for those fiscal years (section 406). This provision has been included in the appropriations act for many years and has not precluded recovery on past-year CSC claims.

Sec. 406. Notwithstanding any other provision of law, amounts appropriated to or otherwise designated in committee reports for the Bureau of Indian Affairs and the Indian Health Service by Public Laws 103-138, 103-332, 104-134, 104-208, 105-83, 105-277, 106-113, 106-291, 107-63, 108-7, 108-108, 108-447, 109-54, 109-289, division B and Continuing Appropriations Resolution, 2007 (division B of Public Law 109-289, as amended by Public Law 110-5 and 110-28), Public Laws 110-92, 110-116, 110-137, 110-149, 110-161, 110-329, 111-6, 111-8 and 111-88, 112-10, 112-74 and 113-6 for payments for contract support costs associated with self-determination or self-governance contracts, grants, compacts, or annual funding agreements with the Bureau of Indian Affairs or the Indian Health Service as funded by such Acts, are the total amounts available for fiscal years 1994 through 2014 for such purposes, except that for the Bureau of Indian Affairs, tribes and tribal organizations may use their tribal priority allocations for unmet contract support costs of ongoing contracts, grants, self-governance compacts or annual funding agreements.

Maintain the Restriction of IHS Funds in Alaska to Regional Native Organizations. The Act continues the provision that provides that IHS funds for Alaska be made available only to regional Alaska Native health organizations (with some exceptions).

Sec. 424. (a) Notwithstanding any other provision of law and until October 1, 2013, the Indian Health Service may not disburse funds for the provision of health care services pursuant to Public Law 93-638 (25 U.S.C. 450 et seq.) to any Alaska Native village or Alaska Native village corporation that is located within the area served by an Alaska Native regional health entity.

(b) Nothing in this section shall be construed to prohibit the disbursal of funds to any Alaska Native village or Alaska Native village corporation under any contract or compact entered into prior to May 1, 2006, or to prohibit the renewal of any such agreement.

(c) For the purpose of this section, Eastern Aleutian Tribes, Inc., the Council of Athabascan Tribal Governments, and the Native Village Eyak shall be treated as Alaska Native regional health entities to which funds may be disbursed under this section.

IDEA Data Collection Language. The Act continues to authorize the BIA to collect data from the IHS and tribes regarding disabled children in order to assist with the implementation of the Individuals with Disabilities Education Act (IDEA):
Provided further, That the Bureau of Indian Affairs may collect from the Indian Health Service and tribes and tribal organizations operating health facilities pursuant to Public Law 93-638 such individually identifiable health information relating to disabled children as may be necessary for the purpose of carrying out its functions under the Individuals with Disabilities Education Act. (20 U.S.C. 1400, et. seq.)

Prohibition on Implementing Eligibility Regulations. The prohibition on the implementation of the eligibility regulations, published on September 16, 1987, is continued.

Services for non-Indians. The provision that allows the IHS and tribal facilities to extend health care services to non-Indians, subject to charges, is continued. The provision states:

Provided, In accordance with the provisions of the Indian Health Care Improvement Act, non-Indian patients may be extended health care at all tribally administered or Indian Health Service facilities, subject to charges, and the proceeds along with funds recovered under the Federal Medical Care Recovery Act (42 U.S.C. 2651-2653) shall be credited to the account of the facility providing the service and shall be available without fiscal year limitation.

Assessments by DHHS. The Act continues the provision that has been in Interior appropriations acts for a number of years which provides that no IHS funds may be used for any assessments or charges by the Department of Health and Human Services "unless identified in the budget justification and provided in this Act, or approved by the House and Senate Committees on Appropriations through the reprogramming process."

Limitation on No-Bid Contracts. The Act continues the provision regarding the use of no-bid contracts. The provision specifically exempts Indian Self-Determination agreements and reads:

Sec. 412. None of the funds appropriated or otherwise made available by this Act to executive branch agencies may be used to enter into any Federal contract unless such contract is entered into in accordance with the requirements of the Chapter 33 of title 41 United States or chapter 137 of title 10, United States Code, and the Federal Acquisition Regulations, unless:

(1) Federal law specifically authorizes a contract to be entered into without regard for these requirements, including formula grants for States, or federally recognized Indian tribes; or

(2) such contract is authorized by the Indian Self-Determination and Education and Assistance Act (Public Law 93-638, 25 U.S.C. 450 et seq., as amended) or by any other Federal laws that specifically authorize a contract within an Indian tribe as defined in section 4(e) of that Act (25 U.S.C. 450b(e)); or

(3) Such contract was awarded prior to the date of enactment of this Act.

FUNDING FOR INDIAN HEALTH SERVICES

FY 2013 Enacted $3,914,599,000
FY 2013 Post-Sequester $3,712,278,000
FY 2014 Admin. Request $3,982,498,000
FY 2014 Enacted $3,982,842,000

SPECIAL DIABETES PROGRAM FOR INDIANS

While the entitlement funding for the Special Diabetes Program for Indians (SDPI) is not part of the IHS appropriations process, those funds are administered through the IHS. The SDPI is currently funded through FY 2014 at $150 million, minus a two percent reduction ($3 million) due to the sequestration of non-exempt mandatory programs. (PL 112-240).

HOSPITALS AND CLINICS

FY 2013 Enacted $1,844,397,000
FY 2013 Post-Sequester $1,749,072,000
FY 2014 Admin. Request $1,865,630,000
FY 2014 Enacted $1,790,904,000

The Administration had proposed $3.8 million for pay increases and $50.87 million for staffing and operation of new facilities.

Included in the total is $11,380,000 for the Indian Health Care Improvement Fund; $3,793,000 for Health Information Technology; and $8,967,000 for the Domestic Violence Prevention initiative.

DENTAL SERVICES

FY 2013 Enacted $165,191,000
FY2013 Post-Sequester $156,653,000
FY 2014 Admin. Request $168,225,000
FY 2014 Enacted $165,290,000

The Administration had proposed $415,000 for pay increases and $8.78 million for staffing and operation of new facilities.

MENTAL HEALTH

FY 2013 Enacted $78,171,000
FY 2013 Post-Sequester $74,131,000
FY 2014 Admin. Request $79,873,000
FY 2014 Enacted $77,980,000

The Administration had proposed $185,000 for pay increases and $4.09 million for staffing and operation of new facilities.

ALCOHOL AND SUBSTANCE ABUSE

FY 2013 Enacted $195,245,000
FY 2013 Post-Sequester $185,145,000
FY 2014 Admin. Request $196,405,000
FY 2014 Enacted $186,378,000

The Administration had proposed $415,000 for pay raises and $1.69 million for staffing and operation of new facilities.

Included in the total is $15,513,000 for Methamphetamine/Suicide Prevention and Treatment Initiative.

PURCHASED/REFERRED CARE
(Formerly Contract Health Services)

FY 2013 Enacted $844,927,000
FY 2013 Post-Sequester $801,258,000
FY 2014 Admin. Request $878,575,000
FY 2014 Enacted $878,575,000

Congressional committees have noted to the IHS that the terms Contract Health Services and Contract Health Costs are often confused. In response, IHS has renamed the Contract Health Services account as the Purchased/Referred Care (PRC) program.

Congress concurred with the Administration's proposed $35 million increase for the cost of medical inflation, which was calculated at 3.7 percent. The funding is described as being enough to maintain the current level of services. The Administration's requests in FYs 2012 and 2013 for inflationary and program increases totaling
$179 million were not approved by Congress.

The IHS reports that due to increases since FY 2010, some programs have been able to approve referrals in priorities below those of Priority One (life or limb care). However, in FY 2012 PRC denied an estimated 186,353 referral services. It is well-recognized by IHS and tribal healthcare providers that many cases are not reported for referral because the funding has been exhausted.

The IHS noted in its budget justification that the demand for PRC, which always exceeds the available funding, will be even more in demand as five hospitals have been or are planned to be replaced by ambulatory health centers with no inpatient services. Those health centers will be required to purchase inpatient care from the private sector using PRC funding.

Catastrophic Emergency Health Fund (CHEF). Within the total PRC amount is $51.5 million for CHEF, which is the same as FY 2012 and a little higher than the FY 2013 level of $48.8 million.

PUBLIC HEALTH NURSING

FY 2013 Enacted $69,894,000
FT 2013 Post-Sequester $66,282,000
FY 2014 Admin. Request $71,194,000
FY 2014 Enacted $70,909,000

The Administration had proposed $179,000 for pay increases and $4.38 million for staffing and operation of new facilities.

HEALTH EDUCATION

FY 2013 Enacted $17,454,000
FY 2013 Post-Sequester $16,552,000
FY 2014 Admin. Request $17,677,000
FY 2014 Enacted $17,001,000

The Administration had proposed $40,000 for pay increases and $580,000 for staffing and operation of new facilities.

COMMUNITY HEALTH REPRESENTATIVES

FY 2013 Enacted $61,482,000
FY 2013 Post-Sequester $58,304,000
FY 2014 Admin. Request $61,661,000
FY 2014 Enacted $58,345,000

The Administration had proposed $134,000 for pay raises and $120,000 for staffing and operations costs for the Cherokee Nation Health Center.
HEPATITIS B and HAEMOPHILUS
IMMUNIZATION (Hib) PROGRAMS IN ALASKA

FY 2013 Enacted $1,925,000
FY 2013 Post-Sequester $1,826,000
FY 2014 Admin. Request $1,931,000
FY 2014 Enacted $1,826,000

The IHS reports that in 2012 at least 60 percent of American Indian/Alaska Natives in Alaska with chronic Hepatitis B or C infection were screened for liver cancer and inflammation. There continues to be an increase in newly diagnosed Hepatitis C, and IHS states it "may be due in part to the CDC recommendation to screen (without assessment of risk) all 'baby boomers' for hepatitis C infection." The IHS estimates that within 5-10 years, an estimated 25-33 percent of persons with chronic Hepatitis C will need therapy for Hepatitis C. (CJ-113-114)

URBAN INDIAN HEALTH

FY 2013 Enacted $42,949,000
FY 2013 Post-Sequester $40,729,000
FY 2014 Admin. Request $40,729,000
FY 2014 Enacted $40,729,000

The Administration had proposed $65,000 for pay raises.

Among the priorities for FY 2014 are to increase outreach to assure that urban AI/ANs are utilizing the benefits of the Indian Health Care Improvement Act; provide third party billing training; increase the number of urban Indian health programs using RPMS/Electronic Health Records; and to increase the number of accredited programs.

INDIAN HEALTH PROFESSIONS

FY 2013 Enacted $40,563,000
FY 2013 Post-Sequester $38,467,000
FY 2014 Admin. Request $40,602,000
FY 2014 Enacted $33,466,000

The Administration had proposed $6,000 for pay raises.

Programs funded under Indian Health Professions and their estimated FY 2014 amounts if they were funded under the Administration's $40 million request: Health Professions Preparatory and Pre-Graduate Scholarships ($3.57 million); Health Professions Scholarships ($10.7 million); Extern Program ($1.18 million); Loan Repayment Program ($21.4 million); Quentin N. Burdick American Indians Into Nursing Program ($1.77 million – five grants); Indians Into Medicine Program ($1.16 million – three grants); and American Indians into Psychology ($757,386 – three grants).

The Act allows for up to $36 million to be utilized for the Loan Repayment Program – IHS Area Offices and Service Units are authorized to provide supplemental funds. In FY 2012 the Loan Repayment Program received $5.2 million from the Hospitals and Clinics program.

The Act continues the provision that allows funds collected on defaults from the Loan Repayment and Health Professions Scholarship programs to be used to recruit health professionals for Indian communities:

Provided further, That the amounts collected by the Federal Government as authorized by sections 104 and 108 of the Indian Health Care Improvement Act (25 U.S.C. 1613a and 1616a) during the preceding fiscal year for breach of contracts shall be deposited to the Fund authorized by section 108A of the Act (25 U.S.C. 1616a-1) and shall remain available until expended and, notwithstanding section 108A(c) of the Act (25 U.S.C. 1616a-1(c)), funds shall be available to make new awards under the loan repayment and scholarship programs under sections 104 and 108 of the Act (25 U.S.C. 1613a and 1616a)

TRIBAL MANAGEMENT

FY 2013 Enacted $2,575,000
FY 2013 Post-Sequester $2,442,000
FY 2014 Admin. Request $2,577,000
FY 2014 Enacted $1,442,000

Funding is for new and continuation grants for the purpose of evaluating the feasibility of contracting the IHS programs, developing tribal management capabilities, and evaluating health services. Funding priorities are, in order, 1) tribes that have received federal recognition or restoration within the past five years; 2) tribes/tribal organizations that are addressing audit material weaknesses; and 3) all other tribes/tribal organizations.

DIRECT OPERATIONS

FY 2013 Enacted $71,594,000
FY 2013 Post-Sequester $67,894,000
FY 2014 Admin. Request $71,845,000
FY 2014 Enacted $67,894,000

The IHS states in its budget submission that 56.5 percent of the Direct Operations budget would go to Headquarters and 43.5 percent to the twelve Area Offices. Tribal Shares funding for Title I contracts and Title V compacts are also included.

The Administration had proposed $192,000 for pay raises.

SELF-GOVERNANCE

FY 2013 Enacted $6,039,000
FY 2013 Post-Sequester $5,727,000
FY 2014 Admin. Request $6,049,000
FY 2014 Enacted $4,727,000

The Self-Governance budget supports implementation of the IHS Tribal Self-Governance Program including funding required for Tribal Shares; oversight of the IHS Director's Agency Lead negotiators; technical assistance on tribal consultation activities; analysis of Indian Health Care Improvement Act new authorities; and funding to support the activities of the IHS Director's Tribal Self-Governance Advisory Committee.

CONTRACT SUPPORT COSTS

FY 2013 Enacted $472,191,000
FY 2013 Post-Sequester $477,488,000
FY 2014 Admin. Request $477,205,000
FY 2014 Enacted $587,376,000

Congress rejected the Administration's proposal to legislatively cap each tribe's payment of CSC below full funding and instructed the IHS and the BIA to fully fund Contract Support Costs. The $587 million provided in the IHS Operating Plan for FY 2014 is estimated to meet the full CSC need. Congress called on the Administration to work with them and with tribes on a long-term solution to meet the legal obligation of paying CSC. A work plan and announcement of consultation with tribes is to be completed within 120 days of enactment (May 17, 2014). The IHS and the BIA will begin consultation on this matter on March 11 at the National Congress of American Indians Winter Session in Washington, DC.

Indian Self-Determination (ISD) Fund. The IHS Operating Plan for FY 2014 provides for up to $10 million for an Indian Self-Determination Fund to support new or expanded self-determination contracts, grants, self-governance compacts or annual funding agreements.

FUNDING FOR INDIAN HEALTH FACILITIES

FY 2013 Enacted $441,605,000
FY 2013 Post-Sequester $428,569,000
FY 2014 Admin. Request $448,139,000
FY 2014 Enacted $451,673,000

MAINTENANCE AND IMPROVEMENT

FY 2013 Enacted $53,721,000
FY 2013 Post-Sequester $50,919,000
FY 2014 Admin. Request $53,721,000
FY 2014 Enacted $53,614,000

Maintenance and Improvement (M&I) funds are provided to Area Offices for distribution to projects in their regions. Funding is for the following purposes: 1) routine maintenance; 2) M&I Projects to reduce the backlog of maintenance; 3) environmental compliance; and 4) demolition of vacant or obsolete health care facilities. Of the total funding requested, $51.3 million will be allocated to sustain the condition of federal and tribal healthcare facilities buildings, $2 million for environmental compliance projects, and $500,000 for demolition projects. No funds will be allocated "to improve the condition of the healthcare facilities or make improvements to support healthcare delivery." (CJ-150)

The IHS estimates that as of October 2012, the Backlog of Essential Maintenance list is $462 million (up $35 million from October 2011).

The IHS in its budget request stated that the budget request was inadequate, stating it will only "enable the IHS to maintain the condition of the IHS real property portfolio at, or slightly below the existing level … does not provide for the expected increase in health care facility space…" (CJ 149-150)

FACILITIES AND ENVIRONMENTAL HEALTH SUPPORT

FY 2013 Enacted $204,231,000
FY 2013 Post-Sequester $193,578,000
FY 2014 Admin. Request $207,206,000
FY 2014 Enacted $211,051,000

The Administration had proposed $565,000 for pay increases and $7.2 million for staffing and operation of new facilities.

MEDICAL EQUIPMENT

FY 2013 Enacted $22,582,000
FY 2013 Post-Sequester $21,404,000
FY 2014 Admin. Request $22,582,000
FY 2014 Enacted $22,537,000

The IHS said in its budget justification that they expected to distribute the
FY 2014 requested funds as follows: $16.6 million for new and routine replacement medical equipment at over 1,500 federally- and tribally-operated health care facilities;
$5 million for new medical equipment in tribally-constructed health care facilities; and $500,000 each for the TRANSAM and ambulance programs.

CONSTRUCTION

Construction of Sanitation Facilities

FY 2013 Enacted $79,582,000
FY 2013 Post-Sequester $75,431,000
FY 2014 Admin. Request $79,582,000
FY 2014 Enacted $79,423,000

Four types of sanitation facilities projects are funded by the IHS: 1) projects to serve new or like-new housing; 2) projects to serve existing homes; 3) special projects such as studies, training, or other needs related to sanitation facilities construction; and
4) emergency projects. The IHS sanitation facilities construction funds cannot be used to provide sanitation facilities in HUD-built homes.

The IHS in its budget justification proposed to distribute up to $48 million to the Area Offices for prioritized projects to serve existing homes; up to $5 million for projects to clean up and replace open dumps on Indian lands; and $2 million will be reserved at IHS Headquarters ($1 million for special projects and emergency needs; $500,000 to collect homeowner data and demographic information in three IHS Areas; and $500,000 for improving data collection systems to help fund a Water Resource Center to develop teaching materials and techniques for homeowners and communities to support usage in a way that promotes health). The Water Resource Center is in partnership with the Alaska Native Tribal Health Consortium which received $250,000 in FY 2012 and is expected to be funded for five years through FY 2016.

Construction of Health Care Facilities

FY 2013 Enacted $81,489,000
FY 2013 Post Sequester $77,238,000
FY 2014 Admin. Request $85,048,000
FY 2014 Enacted $85,048,000

The Administration proposed no new health care facilities starts, but proposed to fund the following:

• Kayenta Health Center – continue construction of the health care facility and begin construction of the staff quarters ($57 million)
• San Carlos Health Center complete construction of the staff quarters ($12.5 million)
• Southern California Regional Youth Treatment Center in Hemet – complete construction ($15.5 million).

The IHS notes the strong tribal interest in the Joint Venture Construction Program:

The Joint Venture Construction Program (JVCP) allows IHS to enter into agreements with Tribes that construct their own health facilities. The funding for the construction of the health facility comes from the Tribe through their own resources, financing or other funding sources; IHS health care facility construction appropriations are not used for construction of facilities in the JVCP. Tribes apply for the JVCP during a competitive process and projects that are approved enter into agreements with IHS. Upon projected completion of construction by the respective Tribe, the IHS agrees to request Congressional appropriations for additional staffing and operations based on the Tribes' projected dates of completion, fully executed beneficial occupancy and opening.

Between FY 2001 and FY 2012, seventeen joint venture project agreements signed by IHS and Tribes were initiated and nine have been completed. The JVCP continues to receive strong support by Tribes based upon the 55 positive responses to the FY 2009 congressionally directed solicitation for the JVCP FY 2010-FY 2012 cycle. (CJ-156)

OTHER

TRANSAM Equipment, Ambulances, Demolition Fund. The Act provides funding of up to $500,000 to purchase TRANSAM equipment from the Department of Defense and $500,000 to be deposited in a Demolition Fund to be used for the demolition of vacant and obsolete federal buildings. Up to $2.7 million is for the purchase of ambulances.

THIRD PARY COLLECTIONS

The IHS estimates a total IHS and tribal Medicare, Medicaid and private insurance collections of $1,081,038,000 in FY 2014.

Medicare $140 million federal; $64 million tribal
Medicaid $612 million federal; $166 million tribal
Private Insurance $90 million

If we may provide additional information or assistance regarding FY 2014 Indian Health Service appropriations, please contact us at the information below.

# # #

Inquiries may be directed to:
Karen Funk (kfunk@hobbsstraus.com)

Available Documents for Download ( any referenced attachments are included in download )


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