Deparment of Health and Human Services

OFFICE 
INSPECTOR GENERAL

INDIAN HEALTH SERVICE

MEDICARE AND MEDICAID PAYMENTS

MAAGE:MNT ADVISORY REPORT

t.IlVJCE$. 
Richard P. Kusserow 
INSPECTOR GENERAL 
"0  MAY 1991 
;clt""Ia  Deparment of Health and Human Services

OFFICE 
INSPECTOR GENERAL

INDIAN HEALTH SERVICE

MEDICARE AND MEDICAID PAYMENTS

MAAGEMENT ADVISORY REPORT

~ St.IlV'CES . 
Richard P. Kusserow 
INSPECTOR GENERAL 
+ OEI-
'0  07-89-00941 
;clt"dla  EXECUTIVE SUMMARY

PURPOSE 
To assess the appropriateness of  (lS) 
retaning or elimnating the Indian Health Service 
Ca 
multi-year account now that all of the IHS hospita facilties have met the Health  Financing 
Admnistration (HCFA) requirements for parcipation in the Medcar and Medcaid Progrs. 
BACKGROUND 
Cunnt legislation requires that Medcar and Mecaid payments due to ms hospitas be held 
hi 
by the Secrta ofDHHS in the Secretar  spial fund acount and use by  exclusively 
for makng improvements in hospita  ar necssar to achieve compliace with 
facilties that 
HCFA' s conditions of parcipation. The legislation provide for the siplei a fund account only 
Secrta 
until such time that the  certfied that substatially all of the  facties have met 
these conditions and standads. rns reuirs that paymnts due ms hospita facilties be routed 
by the Medicar Fiscal Intennedar and the Medcaid State Agencies thugh IHS Centr 
tu "
Offce, which in  apportons" the funds to IHS ara offces for distrbution to the individual 
rns hospitas.

FINDINGS 
Substantially all of the rns hospital facilties have met the HCFA conditions of 
parcipation since 1981. In fact, at the tie of our review, all of them met those 
conditions. 
The "Indian Health Car Improvement Act" contiues to pennt Medcar and Medcaid 
monies to be deposited into the Secretar s special fund account even though all of these 
facilties have met the HCF A conditions of parcipation. 
The Secrta s special fund account for Medcar and Medcaid payments is vulnerable to 
abuse. 
RECOMMENDATIONS 
The IHS should phase out the Secretar s special fund account and expetio sly develop 
methods and procedurs by which all IHS hospitas can diectly receive and account for 
the use of Medicare and Medicaid funds. 
progr 
The IHS should seek legislation to expand the demonstrtion  authorize by 
Public Law 100-713 to a more representative sample ofmS facilties and to modfy the 
restrctions imposed on the use of these funds.  ............................ ................ ........  ........................ .................................................... ................................  ............................... ...... ... ...........................
.................................................................. ...........
TABLE OF CONTENTS

EXECUTIVE SUMMARY 
INRODUCTION.................................................................................................... ..

Purpose.............. .............................................. .....................................................

Background.................. ........................................ ...... ..........................................

FINDINGS .............................. 

REC 0 MMEND A TI 0 NS .............. 

DISCUSSION .......... 

CO MMENTS...................... .................................... ........ 

APPENDICES 
APPENDIX A: ASMB Comments................................................................. A

APPEND IX B: HCFA Comments ...................................................................

APPENDIX C: PHS Comments .....................................................................
 INTRODUCTION

PURPOSE 
To assess the appropriateness of retaning or eliminatig the Indian Health Servce (lS)
facilties multi-year account now that substatially all of the IHS hospita facilties have met the 
Health Cae Financing Admnistrtion (HCFA) reuirments for parcipation in the Medcar 
and Medicaid programs. 
BACKGROUND 
Indan Health Care Improvement Act  was 
On September 30, 1976, Public Law 94-437, 
enacted by Congress. This law mad an exception to Sections 1395f(c) and 1395n(d), which 
prohibits payment of Medicar and Medcaid monies for tratment provide in Fedray owned 
hospita and skied nuring facilties. The law reuirs Medcar contrtors to deposit 
Medicare and Medcaid funds, which ar claied by ilS facilties, into the Secta  spal
fund account which is to be used to make improvements in its facilties. The funds deposited 
durng one fiscal year can be used durng that year and durg tWo succeeg year for expenses 
related to achieving and maintaing HCFA's stadads for prvider parcipation. The law 
furer provides under subsection (c) that the restrctions impose concering the collection and 
use of these funds would cease to apply once the Secta detenes and certfies that 
substatially all of the ilS hospitas and skilled nurixngv fa cilties ar in compliance with 
XI  Medca 
requirements and conditions as specifed under Title  and  for  and Medcaid 
parcipation. 
On Januar 4, 1975, Public Law 93- Indian SelfDetermnation and Edationa Assistance 
638, 
Act  was enacted by Congrss. Congressional fmdings, as  ar that "the 
state in Section 2(a)(1), 
progr  reta 
prolonged Federa domination of Indian servce  has served to  rather than 
enhance the progress of Indian people and their communities by depriving Indians of the 
opponunity to develop leadership skills crcial to the realzation of self-goverent, and has 
denied to the Indian people an effective voice in the planning and implementation of program 
for the benefit of Indians which ar responsive to the tre nee of the Indian communities. 
On November 23, 1988 Public Law 100- Indian Health Care  1988", was 
713,  Amendents of 
frm 
enacted by Congress. This law authorize ilS hospitas to collect tratment charges 
private insurce companies. Furer, this law authorize the establishment of a demonstrtion 
progr, 
beginning in October 1991 and ending September 30, 1995, in which four ilS hospita 
facilties, operatig under  Alaka Native organizations,'would 
contract by Indian trbes or 
directly bil and receive reimbursement frm Medcar, Medcaid and third par insurce 
progr 
sources. The goal of this demonstrtion  is to detennne if these ilS hospitas 
capable of biling, receiving and accounting for the use of these funds without 
direct IHS Headquarer s intervention, which is in accordce with  Indian Self 
the 
Determination and Educational Assistance Act  , Public Law 93-638, reauthorize as Public Law  progr,  Secta wil 
100-472. Upon conclusion of the  the  repon to Congrss concerning 
whether dict biling and reimburment should be expanded to other IHS hospita facilties 
contrt. 
which are operated under 
We have conducted discussions with offcias of IHS, the Joint Commssion on Accrtation of 
Health Ca Organizations (JCAHO), HCFA, and the Fiscal Intennedar for IHS Medcar 
claims, Blue Cross of New Mexico, concerning the rns hospitas' certcation status, the 
deficiencies identified in these facilties and the routing of Medcar and Medcaid payments. In 
addition, previous government repons addressing Medcar and Medcaid funding to ilS 
hospita facilties were analyze. We have also contated Congressional sta to obtan the 
legislative history of Public Law 94-437 and Public Law 100-713.  FINDINGS

parcipatn 
Substantially all of the IHS hospitalfacilities have met the HCFA condions of 
In fact, at the time of our review, al of them met those condtions. 
since  1981. 
The Genera Accounting Offce issued a letter repott, number B-211198, Subject: 
Medicare/Medicaid Fund Can Be Better Used To Correct Deficiencies in Indian Health 
Service Facilities" (GAO HRD-83- date August 16, 1983. In this document, the GAO 
22), 
advised the Secrta, that as of September 30, 1981, all of the rns facilties met the Medicare 
and Medicaid stadas, and that the Medicar and Medcaid funds were now being used to 
corrct stafmg deficiencies and to fund maintenance of the hospita facilties and equipment. 
The llS records establish that the majority of the rns hospitas were certed for Medcar and 
1977, and that the last IHS hospita was certfied for Medcar and 
Medicaid parcipation in 
ar accrte 
Medicaid parcipation in December 1983. All but tWo of the IHS hospitas  by the 
JCAHO. The remaning tWo facilties ar certed by the HCFA. It should be note that rns 
does not operate any skilled or intennedate car nuring facilties. 
The uindian Healh Care Improvement Act" continues to permit Mediare and Mediaid 
monies to be deposited into the Secretary s special fund account even though all of these 
facilitis have met the HCFA conditions for partcipaton. 
1395qq(a) is an exception to the prohibitions contaned in Sections 42 D.
Title 42  C. 
1395f(c), and 1395n(d), which prohibited the issuance of Medcar and Medcaid payments to 
Federa facilties. Subsection (c) of this Title dited that Medcar and Medcaid payments be 
makg 
placed in a special fund and used for the exclusive purose of  any improvements as may 
be needed to achieve compliance with the applicable Medcar and Medcaid conditions and 
al of 
requirements. This section of the law is operative only unti such time that substatially 
stada.  Secta 
met these conditions and  Once the  determes and 
the rns facilties have 
rns facilties have met these conditions and requirments, the facilties would 
certfies that the 
progrs. 
then be eligible to receive payments diectly from the Medcare and Medicaid  These 
funds would then be available for payment of operating expenses. 
stadas, 
However, even though all the IHS facilties meet Medcar conditions and  the 
certed 
Secreta has not officially detennined and  that this is the case. As a result, the 
s speia fund account 
Medicare and Medicaid funds continue to be deposited into the Secrta 
instead of being sent dictly to the IHS hospitas which provided the car and biled the 
Medicare and Medicaid programs.

progr 
The IHS records establish that in Fiscal Year 1989, the Medcar  issued payments for 
tratments at IHS hospitas totalling $35, 103,789 and Medcaid payments were mae which 
totalled $39,716,363. The total Medicar and Medcaid reimbursement was $74 820,152.  The Secretar s special fund account for Mediare and Mediaid payments is vulnerable to 
abuse. 
The Secta 
s special fund account is vulnerable to abuse due to the legislative provision that 
th 
allows the funds to be used over the cour of  fiscal years. Evidence of the vulnerabilty of 
this fund to abuse was reently uncovere by our offce. In one Ara Offce, we found that in 
excess of $2 millon of funds appropriated for Indian youth alcoholism progrs under Public 
Law 99-570 were apparntly divened to the Medcar and Medcaid facilties fund for the 
progr 
purose of caring over unspent  funds into the next fiscal year. Without this diversion 
these funds would have revert to the Treasury. We have referred this situation to our Offce of 
Audit Services for furer review.  RECOMMENDATIONS

The IRS should phase out the Secretary s speciafund account and expeditiously develop 
methods and procedures by which all IRS hospital can directly receive and account for the 
use of Medicare and Medicaidfunds. This can be accomplished by: 
The Assistant Secretar for Health developing and implementig appropriate accounting 
systems at all hospitals to bil, receive and account for the expenditure of Medicare and 
Medicaid funds. 
ilS should initiate action to develop appropriate accountig systems for use by al IHS 
hospitals. In addition, the IHS should establish appropriate audit controls and oversight to 
assure that the monies received and expended by the individual hospitas are utilzed in ac
cordance with legal requirements. 
For those facilities, which are so small that it is not economically feasible to have account
ing staf on site to implement this recommendation, an alternative would be to establish 
the responsibilty for accounting and expenditure control at the area offce rather than at 
the hospital facility. 
The HCFA Administrtor, in cooperation with the Assistat Secrtar for Health, preparng 
documents for the Secretar to offcially detennne and certfy that substantialy all of the 
IHS hospita facilties ar in compliance with the HCFA conditions for parcipation in the 
Medicare and Medicaid programs. 
This determination and cenification wil remove the restrctions on the dict payment and 
use of Medicar and Medicaid monies by ilS hospital facilties, as contaned in Title 
c. Section 1395qq(c). With the restrctions removed, individual IHS hospitas could 
be placed into direct payment when IHS has notified HCFA that appropriate accountig 
systems and audit controls are in place. 
The Assistant Secretar for Health, in cooperation with the Assistant Secretar for Manage
ment and Budget, eliminating the Secretar s special fund account into which Medicar 
and Medicaid payments are now deposited. The account could be phased out over several 
years. As each hospita or area office developed acceptable financial management 
capabilties, it could directly receive and use for operating expenses those Medicare and 
Medicaid payments which it collected. However, Medicare and Medicaid funds collected 
by those hospitals or area offices not yet capable of managig them could be deposited 
into the Secreta s special fund account to be maaged as currently done by IHS. Ul
timately all hospitals or area offces would maage their own Medicar and Medicaid 
funds and the multi year account would be eliminated entiely.  In eliminating the Secreta s Special fund account, the caning-over of funds would be 
governed by standad GAO fmancial management priciples, which depend on "purpose 
of use" and canover procedures (e.g. capita funds can be cared over). 
We recommend accomplishing the above four steps within five years. 
We believe that the ilS should expeditiously begin implementing the preceding 
recommendation. However, if this is not possible: 
IHS should seek legislation to expand the demonstration program authorized by Public Law 
100-713 to a more representative sample of IHS facilities and to modify the restrctions 
imposed on the use of these funds. 
progr 
The demonstration  authorized by Public Law 100-713 authorized no more than four 
IRS facilities to receive dict Medicare and Medicaid reimbursement and to utilize these funds 
for facility improvements in order to meet and mainta HCFA's conditions for parcipation. 
progr 
This demonstrtion  could be expanded to include facilties of varous bed sizes and to 
detennine the  audit contrls that are best suited for use in smaller 
tye of accountig system and 
and larger facilties. 
The demonstration project could be expanded to include IHS facilties that parcipate in either 
the Medicare and/or the Medicaid program. Funher, the demonstration program should be 
modified to allow the use of Medicare and Medicaid funds for facilty operating expenses other 
than those related to maintaining HCFA' s conditions for parcipation. This would be in line with 
payments made to other federally supponed providers such as community health centers and 
migrant health centers.  DISCUSSION

The proposal: 
is consistent with the goals of the Indian Self Determnation and Educational 
Assistance Act; 
would provide an incentive for IHS hospital facilities to aggressively pursue 
collection of Medicare, Medicafidu, an;d  third part payments since they would be 
allowed to retain and use these 
would eliminate an accounting structure which is vulnerable to abuse; and, 
would promote the development offinancial management systems and exertise 
necessary for IHS hospitals to achieve greater management effectiveness. 
mata 
The proposal would allow funds now being exclusively tagete to  Medcar and 
Medicaid certcation reuirments to be used for operating expenses. Ths would not 
Dirto 
jeopardize the certfication of the hospitas, since the Serce Unit  would be responsible 
for ensurng that within annual funds available, includig reimburements, mataing Medcar 
nee 
progr 
and Medicaid  accredtation would be his or her fU't  for ths 
prorty. Funds 
thugh  norm 
the  appropriations proess and would be subject to 
purose would be reuested 
the usual oversight of the Deparental, OMB, and congrssional budget proesses. Ths would 
progr. 
likely result in grater accountabilty and promote mor effective certcation 
Overal, we believe that the Secrta s special fund for reeipt of Medcar and Medcai 
IH  Medcar certcation 
payments has served its original purose of briging  facilties up to 
stadards. Now rns is faced with new challenges in it s hospita progr. Among them ar: 
the effective collection of thir par payments (includig both private insurce and Medcar 
accountig 
and Medicaid payments); the development of effective financial management and 
Indi 
systems in the hospitals and area offces; and promoting self determnation of  trbes. The 
fmancial management strctue established for past year' problems is inappropriate to tackle the 
new ones.  COMMENTS

dr 
We received comments to the  of this repon frm the Assistat Secreta for Management 
and Budget (ASMB), the Assistat Secta for Health (ASH), and the Admistrtor for the 
Health Care Financing Admnistrtion (HCFA). Based on these comments, we have 
appropriate changes to this repone These comments ar included in Appendices A-C of this 
repone 
The ASMB supponed the 010 findings, but recommende that we expand our descrption of the 
proposal (page 6) to clary that our proposal would alow funds now being exclusively tageted 
to mainta Medicar and Medicaid certfication reuirments to be used for other operatig 
expenses. They also suggested we clarfy that the Service Unit Director of the facilty would 
continue to be responsible for assurng that the IHS facilty met and maintaned Medcar and 
Medicaid progr accrtation. 
We agre with their comments and have incorporated this language in the repone 
The HCFA fully support the 010 recommendations of this report, but noted that they would 
need additional fundig to cover the costs associated with the certficnatieone,  audit and other 
adinistrative costs for HCFA and Medcar contrctors to perfonn  reviews of IHS 
hospita facilties. 
The PHS did not concur with the 010 reommendations. 
PHS believes that the present system, in which Medcar and Medicaid funds ar retued to the 
Areas that provided the services and ar earked only to elimnate deficiencies in each health 
care facilty, has worked well and they see no clinical or admnistrtive advantage to changing 
reuir 
the system. They estimate that implementation of our recommendations would  at least 
10 additional employees at each hospita to perfonn fmancial and certfication functions. 
The PHS also believes that the recommendations would crate accounting diculties. They cite 
that the process of biling and collection is contiuous. Collections received late in the fiscal 
year, if not expended, would reven to Treasur and would not be available to meet payrll costs 
for those staf funded by this activity. Since this is a cash account, adequtathe f unds must be 
cared forward into the next fiscal year to meet payrll costs for at least  pay perod. 
progrs. 
The PHS also did not concur with our recommendation to expand demonstrtion 
pur 
They point out that the demonstration program was designed for the express  of allowing 
trbally contrcted program to diectly bil and receive payments. These trbal contrt 
progrs have accounting systems and other fiscal contrls in place. On the other hand, rns 
canot 
facilties (operated by the Service Units) do not have separte accounting functions and 
meet Treasur and OAO requirments. PHS believes it would be counterprouctive and not cost 
accountig functions and fiscal contrls at local IHS-operated hospitas 
effective to instal these 
and facilties.  OIG RESPONSE TO PHS COMMENTS 
We continue to support our reommendations. 
for a Secta 
The cunnt system which permts nonnal approprations to rns and provides 
bre 
special fund account  arficial distinctions which impai the implementation of sound 
accounting, recordkeeping and management pratices. 
Restrctions that ar imposed o. the use of the Secta  spial fund account hampes the 
progrs.  dicult 
abilty of PHS to plan and maage its  These restrctions make it  for PHS to 
progr. 
utilize these funds to respond to shortalls in IRS health  For example at the FY 1990 
Select Commttee on Indian Affais Budget Hearigl,  the Dirtor of the Indian Health Service 
testified that the IHS projecte a shortal for the  in FY 1989. Based on ths testiony, 
tie (F 
Congrss provided $14 millon above the Prsident s budget reommendation. At that 
1990), the Secrta  carover of $12,698,360. 
s speial fund had a 
We believe that flexibilty is neeed in the use of Medcar and Medcaid reimburements so that 
ilS can fulf11 their mission of providing health car to Native Amricans. 
As far as accounting capabilties ar concerned the PHS cortive  High Risk 
action for the 
Area: Management of the Indian Health Service (PHS-89-0J- cite in  Federal 
HR)"  the 
Managers Financial Integrity Act Report to the President and Congress  date Decmber 1990, 
agr 
item 7, (pages 18-19), appear to  with our position that accounting functions and fiscal 
controls should be implemented at the local hospita level. IRS appropriations for FY 1991 
included $2 millon to implement this policy.  APPENDIX A

ASMB COMMENTS  :. / " .
' '
':-, .  . , -. -. 
\.'  ,. 
DEPARTMENT OF HEALTH !1 HUMAN SERVICES  Office of the Secretary 
Washington . D. C.  020' 
OCT 2 5 1390 
MEMORANDUM TO THE INSPECTOR GENERAL

Attn: 
Alan Levine . 
. Kevin E. 
From  Moley  1-:
' oJ Assistant Secretary for' Kanagement  and Budget 
subj ect :  OIG Management Advisory Report: "Indian Health Service 
-- Medicare and Medicaid Payments, " OEI-07-B9-00941

We have reviewed the OIG Management Advisory Report on IRS

findings, 
Medicare and Medicaid Payments and fully support the 
with one exception. We would propose that the first paragraph in

Discussion  section 
(page 6) be revised to read:
the 
The proposal would allow funds now being exclusively targeted

requirements
to maintain Medicare and Medicaid certificatio 
to be used for other operating expenses. 
This would not 
jeopardize the certification of hospitals, since the Service

Director would be responsible for ensuring that wi thin 
Uni t 
annual funds available, including reimbursements, maintaining

Medicare and Medicaid program accreditation would be his or

her first priority.

We support removing the current restrictions imposed on Medicare

and Medicaid funds, however, we believe we should extend

flexibility on the use of all funds -- both appropriations and

reimbursements -- rather than imposing a different set of

proposing. 
restrictions, as the OIG is  Currently, approximately 
$65 million of Medicare and Medicaid collections are used

annually to fund staff positions, equipment, and some facility

structural improvements which are considered essential to

maintaining accreditation standards. We believe that the way the

for 
management report proposal is drafted, all funds necessary 
the 
maintaining accreditation would be interpreted by the IHS and 
appropriations. 
Tribes as coming solely from annual 
We prefer to lift administrative limitations. This should permit

Service Unit Directors to manage health care delivery within a

combined annual budget allocation, including direct

appropriations and reimbursements. 
Since collections would be 
retained by the billing facility, a strong incentive would exist

for maintaining accreditation so as not to lose the abi 1 i ty to 
for
bill Medicare, Medicaid, and other third party insurers 
services. 
After meeting and maintaining standards of 
rv ice 
participation, any remaining funds could be used by a Se 
ice 
unit Director to expand programs and services to its serv 
population without jeopardizing accreditation, or qual i ty 

care.  APPENDIX 

HCFA COMMENTS  DEPARTMENT OF HEALTH II HUMAN SERVICE  Financing Administraon 
Memorandum 
DEe 3 
Date 
Gai R.  t:rJ 
Wilensky, Ph..
dm;n; 
From 
trtor 
OIG Management Advisory Report: "Indian Health Servce-Medicae and
Subject 
Medicad Payments , OEI-07-89-00941 
The Inpector Genera 
Secrta 
Offce of the 
We have revewed the subject report which concern the appropriteness
retaig  eliating 
or  the Indian Health Servce (ll) facities' multi-year account 
now that substatialy ail of the IHS hospital facities meet the Health Cae 
Financing Admitrtion (HCF A) requiements for parcipation in the Medicae 
progr. 
and Medicad 
The report recommends that the HCF A  clm;ni trtor, in cooperation with the 
Assistant Secreta for Health prepare documents for the Secreta to offcialy
determe and cert that substatilly al of the IH hospita facities are 
compliance with the HCF A conditions for parcipation in the Medicae and 
Medicad progrms. HCF A concurs with this recommendation. HCF A also 
encourages IRS to establish a review sytem immediately upon the adoption of any 
phase-in plan of direct payment to IHS hospitals to ensure that funding is stil used 
to maitain the certification status of the IHS facilties durg the OIG' year 
s S-
plan. 
Should the recommended action be implemented, the IRS hospitals would be 
subject to the same audit and reimbursement guidelines cuently in effect for other 
Medicare  certifcation, audit and other 
hospitals. Additional funding to cover the 
administrarie costs for the IHS hospitals has not been included in our budget 
requests to date, and would require additional funds for the Medicare contractors 
involved. 
ThinK you for the opportunity to review and comment on 
thi fial repone 
Please advise us whether you agree with our position on the report 
recommendation at your earliest convenience.  APPENDIX 

PHS COMMENTS

C - 1
 , "

:- 
-:tL
PDIG
-:'z 
Memorandum 
4 155

Cate 
From  As s i s tan t S  t a I' y for Rea 1 t h 
e c r 
Sui;j  APHdSv iCso mo= er y R:e s?  oornt  0"  If nf diicaen  0 Hfe alts ph e  Sc teonrr iG ceen- e-rMae d1i (c0a Ir Ge)  aMnad  nag Madmi cea
Payments 
Inspe:::or 
Gene:-al, OS 
Attached  ara t:Je  PHS comments .on the subj ect OIG manage::e
ad'; i s 0 ry  report. 
ed  I0  nSo st  cooun ld  i t h the r e ? 0 r t - S r e co mm end a t ion s t h a :
(1) phase out the multi-year facilities account
deve::? me:  ods and proced  res by wh  ch all Indian Eeal:h
Ser7i:e (:  n di:-ec:ly receive and a::o  n: 
5) hos?i:als  fo:-
t:Je use 0: 
M:dicare and Medicaid f  nds, a  d (2) see
P1 e ubi lsi cl a t a: i  = n to  e x ? a n
 t :J e demo n s t :-a t ion pro g r a  au: her i zed b y
facilities 100-713 to a more representative sa ?le 0:
restrictions i 
anc modify the  posed on the use 0: 
::::::5. 
ese 
wit h 
I' e gar: to  t h e fir s : r e c 0 mm end a t ion, the D H H S  He a It h
Ac:o  n:ing 5yste= and its subsystems , currently in place
greatly fa:ili:ate the  nd control bet  een hospitals and IE5

Area O::i::s and meets the require  ents of Office of Managemen: 
and Budge: Cir:ular A-34  Instructions on Budget Execution.

Medicare a  c Medicaid funds a:e deposited into the multi-year
s?e:ial a::ou t in accordance with appropriate statutes and
a?prop:-ia:io:l acts. All 
funds collected from Medicare and
Medicaid a=e returned to the IRS Area Office which collects
the = and are g e n era 11 y ex? end e d b  e S e rv ice Un i t t h a: 
provided the se:-vices.  Y t 
Regarding the second recommendation , the demonstration program
was designed to allow tribally contracted programs to directly

bill and receive payments. Progr  ms that are contracted under
the authority 
of Public La  93-638 have accounting systems and
other fis cal  trols in 
place which are aaequate for a proper
ardshi? of Federal funds. 
s te  IRS facilities which are 
ope=ated by IES do not have separate accounting syste s and

cannot meet the requirements of the Treasury and General

Accounting Office to handle funds and comply with other

financial management requirements. We believe it would be

counterproductive and not cost effective to institute this 
local IRS ope ated hospital or facility.

l)e 
FEE 
1 1991  6. Iv 
OFFiCE Of  o. Ma son, M. D . , Dr. P . R . 
INSPECTOR GENE:\At:
Attach::en=  -- 
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-- ..- 
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PU-.cIC Eu..TH SERVICE CO  ..NTS ON 
TEE OFFICE OF INSPECTOR G  JJVISORY REPOR

" I u IJ..  1l.:..T5 SERVICE-!--EDID' .SR  E Jo_  ..DINTO  _ID  NTS " 
OEI-07-89-00941 
General 
Comments 
e rec=  e Sec=eta=- cete 
encation to haver vice  a=e L  substantial 
(IES) hospitals 
Indian Esal 
 tle 
e re  ents and c:nditions ef T  X-vIII
accmnDliad=ce - Ti  e Sccial Secu=itv Act, while 
a posittle iXIvX oef   en  e su=face 
step for  detee: :aIEtSio, nma y not be  e best interest of

hthoes Jpoi_ ctae:ls:c -: "wr.i lTlh e  of substantial cOI!:;lie."'ce of IES
e restrictions en t e di=  ayment
rEmove 
and use ef Medi a=e and Medicaid monies by IES facilities 
, as

Title 42 U.  , section 1395  (c). Wi
contained  i:nin s . ibl 
removed  pos  at some Medica=e and 
Mec  runes would be a ic7enr te  to ot er IES p==  s c= t

e 1ES a  ual a=  =ia  would bE red  csd ac===  clv. 
der t s present syst  d Medicaid me iss
c=llec  Medica=e  de=iciencies 
y I=5 a=e utilized to c===ec 
sd
c;-_  c:..  - 'c 
nis 
=ative e  fu. ds c=llec =d f=c= Me  ca==
c Medicaid a=e r=elelencte.  ==e  to t  ea whic  c=llec  == a 
scs;e:=  .e. =i=c.sl.l=: -.-  e:c  e!:c.e.:: in t:.e S=:=Tice ur:it t::a.t  :f=="T::  t:.e 
l ti-
The rscc  e m  year facilities 
daticn to phase out 
accou=t  -c,--d develop met ods a d procedu,=es  y which all IES 
J. ..-
vc"'.;  'Uc";;  (1) 1:
J."  J."'  .L  =c:...'-
ti_-(2')-  -
....c.- ..---- --- .Q";  :o' 
c...c.ncor ..__-Io o  I. - P-__  un.._"'g -cy:-s ....=- = 
""c""- C__ 10 ac_.. .."la 10 _c._ 
4l_sntl- E ES Eealt
IES hos"Oitals c
Extre!!elv well. 

c::ou.  e most s"r cuse' C
 histicated 
fle  ible c Svsts! which is ene of
 a.'"C
use, to ccrrectly bill  d collec  Medicare
and Medicsysatemis d fu.'"cin .s.  year 
These funds' are de'Cosited in a multi-
accOw  accord 
law and reguiation and prevent
collecticns  ce  wi
e fiscal yea=, if not e  ended,
received late in 
from reverting to the T=easu-

We believe the present system, L  which Medicare and Medicaid 
funds are promptly and accu=ately collected and 
eleiasm  a tea  t provided the services and are ea.  kreetud--n edo ton 
 ly to
deficiencies in each health care facility, has worked
well and we see  admistrative 
no clinical or  advantage to
changing the system. 
Because there se  s to be a very sianificant difference of

aff 
opinion, we would be pleased to meet with appropriate eIG. s 
and PHS/IHS staff to discuss and elaborate on the PHS pOS.:t
on these very important issues.  -'  .: 
-- --------:-"---- _'  ..-=- --- ..  -;. 
':-=""''' '"  .; , ;..  ..-..  .. ". ..  .~. '(~ ~ =.. --.- . -., "," '---
Page 2

OIG Recommendation 
TE  UL PEA 
OCl 1! H!TI- FACJITIES ACCDrJ AN
EIEDXIEST  IOUS''OL  Y DEVP J!ODS AN PROCEURS BY WHCH.A 
XES 
TE 
HOSFIV..S O.. DIRc:Y RECEIV AN ACCOUN FOR  ISUZSE  OF
MEIC.u: .7.. HEICA FTS. THS QN 
BE ACCDML BY: 
tary 
sistant Secre for Health developing an
entincr a  all
Dro  riate account  cr S7st 
pitals to bIll, - s at

receive and acc;un  for the e:q?encitu=e
of Medicare and Me icaid funds.

e IES should initiate action to develop appropriate 
tin 
ac== 
IES hospitals.
ition  systems for use by 
 all
the IES should establish a Drc  riate audit 
=ls and oversi ht to assure  e monies receive

t- t. 
d ex ended by t. e -individual hos i tals are utilized L 
o. -
c:- r::  e_.l.s. 
-- .. W_ I.,
all t. 
Fe= t cse facilities which are so s  at it is net 
Ec=  cmicallv feasible to have ac=  tinc: sta== en site t 
alte 
J. .Jis.  -r-ecc  endation,  ative would
 e t=
'V:---- ----- c_---_o- a.. 1. e a_ e- c_-=- =; "c-t wc...,--.- ------- 1.;Jc:_.I .-.

I.':-
.1.; 
PES COr..:ents 
We do ne  conc  Tbe IES operatec hos itals currently use the
F-=S EE=.lth Accounting System. This syste! wit.  its subsystems
is c e cf the mest sophisticated and flexible syst  in use.

Ove= $20 billion a year 
d e  enditures a=s

in EES obligations 

==s  eing proc=sse  This system has been used to
co==sc  lly y bill and collect nearly $75 million of Mecicare anc 
Medicaid funds in FY 1989. The recommendation that IES

tia t  action to develop appropriate accounting syst  s for

ini 
therefore, nei  er necessar-I no=
ucse oby st efafll ectiIvES heosp.it als 
The reccmmendation states  at each hos ital should receive and

disburse the receit:ts.  ent 
In order to conrlv with 
d General Accounting Office 

Tre=.su=-J  requed foeo )r r egauladtionds 
itional fince 
addi tio  al posi tions would be 
d certifying officers. These additional positions
ocfficoers mbined with the madated internal controls would' be requed
for a proper separation of duties. The Division of Fiscal

Services  Admistration,
, Health Resources and Services 
estimates that up to 10 full-tiJe employees would be required

to perfc  the required services at each hospital that are now

being performed at the Area Offices.
 ---  --- 
.--=--=-.-": "------ "';  "'; =..--..-"  == ;.- ..,  -- '--,-.-....  ... -.- -::- '---'"---":--:-' -:-_.-.'_; - ---.- .-- -..~~~
----- ----..  -.;;  ; '-,;  ' -"--"- , ,  '"  ...  ..  '"'-  ....   .-,';  ."  ""'"  ..- _-  -- 
Page 3

We believe  s unecessary because Area Offic  s presently
pe:!foDI t.  this  audit: ccn:ols 
e ove=s ght and have in place the 
raessquurre  a eyn ftusn.d s received are expended in accordance iwtsith legal

The EES Health AccountLTIg System aIe. 
subsyst  s, cuently 
in place, greatly fac litate the fund 
i tals  ces and t. e cversiaht of 
cont=ol between hos  and Area Off 
this pa=t of financIal management at hospitals, clinics and

ces. 
Area Offi re!Ients of t. 
The system meets the rs  e Office 
Inst 
of Mana  Ci=c  lar A-34 "  ion on
Budget Eexmenet acndu Butdgieot n  (OMB) 
OIG Recommendation 
sist 
The ECFA ACmnistrator, in coo eration wi 
Seo=eta 
, prepare documents for  e Seoreta 
1 for Healt. 
..;.o:..
of t.  C.1 
in ccmplia:ce with 
e IES hospital facilities  ici;a  a.e 
con  e M=
ticns for  in  =a== 
r-w -
c.ete  c.. ,ceQ  ,i.f.i c,a.t ion wil.l,c r:   cve t:e
r=- ,--.1C --_on- n c: nation  n- c._--_.. payme._ .. a...c. u- c...:  .7_w  -.-c;. :-_. .- -. .;c: 
caid monies bv IES hos ital facilities, as c=nta

1.-- -- .-". 
i- , -C_,-- c.C-'C"  c-;-
.: '-_w - nc. 
'I_..  'c
nto  .J- nen 
wI.  ""c i t 
p=opriate acoounting systems and au 
place.  controls are
PES COIrl!ents 
We de net concu=. The Direotor, IES has the dele

authori tv  e manacrement and o  e Me icare and 
Medica  - pfoor  rtions  eration of  e Inc.i  Eealth 
of Sections 401 and 402 of 
:=ovement Act and, as such, is  e off cial authorized

Care 
Ato cmta.k e the determ; nation of substantial com  liance with the
Eeoause of  is delegation, the Director, IES, is the 
the 
appropriate official to prepare any documentation for 
Secreta=-1, ERS, that would certify substantial compliance as

defined in Sections 401 and 402 of P . L. 94-437, Indi  Health 
Care Improvement Act.  we do not agree that the
Admnistrator of the  Therefore st=ation
Health Care 
ancina 
(ECFA) should prepare documents to fo  at IES

liy certify 
facilities are in compliance with the conditions for

participation. 
In order to better understand the PHS posi tion reg2. ing the

issue of detexmning that IBS facilities are in substantial

s subtted:
compliance, the following info 
ation  -- 
--  .., 
'-- - '"  --;  '"  ='- -- ~~~~ ..,. 
'"  ..,...., '"  --  '" .......:.-.-=:=-- --:  -.'.-.. -.
Page 4

ti ve  arund 
(1 ) Lecris la 
P . L. 94-437 - Indian Hea  Drovement Ac 
aut.  andth  Cacre ollect frcm Medicare 
orizec IR to  bill 
and Mecicaid.

Funds collected are to be placed  a special

fund to l:e used for the p  ose of i:provement:s 
necessar.f to ach.eve complia,"'lce with c::nditions 
and requirements of Tit es 18 and 19. 
The speciiail afun.d "shalllc ceaese .to apply wh  the
Sec:reta-ry, EE, dete  substa."ltially 
es that 
all hos itals and ski led nu=sina facilities are

L"l c 
The stat-:te states that e.y pa:fents received 
shall not l:e used L"l dete  g a? :r::priaticns 
re  ser7ices t= I 
for heal  a."l 
P .  94- at re  u=s  e!lt  f=cm 
L.  43i  states
Medicare. ar  MeCicaid shall l:e used t= 
.c.u--.=..- - 1 =  ..1. -- nc.  t:r  n -
c; c--..-
'.c:  c..  0.1 1  025  c:.;--
continue  a=tici;ation i.  ld 
ca== wc  l:e 
sta."ldards - t

contincrent on meetina 

amendment requres medicare pa:fents to 

a=kec for use in meeting and maintainL

medicare sta."ldards. 
Senate Re?o  100-508, page 22, states " Given 
past Admnistration attempts to offset 

amcu. ts collected from 
program deccreaasesr wie   
Medi  t.i.e 
a."'c.  Medi  caid re mae cleu=as rS !tI.e n t  the 
Comm ttee wishes to  a t 
reimursements 
authori tv to collect 
Medicare- and Medicaid programs  from 
is conditioned
upon such f  e purose
authorized L"dls  bteihng euse d Aonlyc fotr
, that is to achieve and 
maL tain c::mDliance with accreditation
standards. II .. 
( 2) Joint Commssion on L e Ac:reditation of Healt. care 
Orcranizations 
Joint 
IRS was directed bv  e Concress to see.1c 
Commssion accreditation rather than 
rely upon HCF 
hospital! 
certification. At the outset only 22 IES  .. 
:-  ----  =. 
-';-- - .".- . ."-.'",;. "--.--"-" .'=- ,.  - ".-..-- -.  -=-----=,- -~--.-- ~-.-~= -".:-"- =" -- "---'.'-';' , ;'''.' ,; ;- -- -=-- - .-;  ---, ..:.-.   --=  .\.." :.-.-:.:---.:   ---. --.. -:- --.---. .-.-;    -- '-=-";-'  -.- -=-,_.- -=-
Page 5

waetrtea eacdc redited. Through a long process, IES has

accreditatiotni eof  all its hospi als except
one. At the prese:t 
hos:;itals 
there are 42 
accredi ted  certizied by EC?A. 
and one  at  is
ths 
The  justly proud of  accomplis  ent. It
has bIE eenis no s  s feat. It
2."' acccm'Clislhl mtaske ton act: cmDlish 
 rsscl-: of t. 
a d.iect 
is  that  is
targetec and directed use of  e funds c= 
the Secretary' s special fun
 tained 
Joint 
Commssion standards 
are on a con 
oversight, assessment and direct actions relative to

patient care standards for all aspects of cirect

atient and outpatient care. This L"'cl  ces t.
various ancilla=-.i (laboratory, pha::c-.f) 
support
c.""C 
services (biomedical services, fire safety c::ce 
en::orcS!ent). T1ls also L'rc.l  .:ali ty
c.es c:aily 

nc. 
n. 
..7' r"""" 
1 c.,  .; c 
=ft 
1 c"" 
c.- 4. .. ..- '-..-- - 1.;-
J:;  .; C!lc  - Wo_""-
sin  le event, l:ut rather a dyn  c precess L  whic 
"'covering of c:eficienc es whic 
there is a 0co:-n..s1-t an t a
 "!".Coc;"0'=.  - .-.i -i- -a-_-,1,_ -;--  ...:..1.'_;-_0.1.: ._- .". cp,_.   ,.. c:-
hospi tals, as all other accredi  hospi tals

count  Tye 
, have many cited  One deficiencies whic 
ire cor=ection before  nex-: s  yey by 

Joint Commssion.

Failure t:: co==ec  e=iciencies c  result 
loss of Joint  vce One

Commssion ac:rs  tation which w
tin hen cause the facili tv 
to lose its Medica=e and 
icaid provider status and  us lose its ability to

1:e paid  e services providec. At t. 
e present
for 
all Medicare and Medicaid monies collected are

=ked and utilized to correct these deficiencies

i tal 
and maintain each hos  at the hicrhest level of 
and admnistrative  stated 
clinical  excellence. 
earlier, if IES hospitals are dete
 ed to 
substantial  1:e
com-cliance with the reourements 2.'rd
condi tions of Title XVIII and Title XIX of the Social 
possible that some MeCicare and

Security Act, it 
 is 
Medicaid funds could be diverted to other IES
programs, or tha  anual 
t the IES  appropr  tion would
be reduced accordL"'gly. 
Standards are dynamc and eve:  representig
healcthanhging  care. 
changes in the delivery of  These
chancres must be 
addressed if ras facili ties are to  ... 
---
=-- 
~~~
.. 
Page 6

d.ected 
retain their accred. tad status. Loss of the 
funCia 
na t  e of the Medicare and MedicIaEid   would
untowa effect  hea2t.  care
on the 
have  very s  tem.
deli 
rES facilities have 
we agree  at substatially  all 
met the HCFA conditions for paricipation .i Medica=e 
e Joint 
or ac:=edi tation  commssion since 1981
by  ese conditions.
ane  at  all  43 hospitals now meet  tad by the Joint 
o hospitals are ac:=edi 
CoIIssion and  certified by RCFA. However,
one  is 
we are justly proud of our facilities'

while 
accreditation status, we must acknowledge the fact

ey must maintain the accredited status if t."lev 
that  paricipation in both the Medicare 
are to continue 
and Medicaid program. The maintenance of the

ac:=eCi ted status is mandatory if  e facilities are

to c:ntL ue to receive pa:r.ents from  roq=am. 
each 
ast b  ents and also 
we have stated .i 
 dqet 
conqressicnal test  ony, this ac:=mpl.ishm  t is 
one of great importance to  L":Sr a.. .de a l-so to the 
T.he  r=_ t.;.e  acc  -1.--..
=-i
so. 
status of IES facilities  roud and justiifs  iaab felaty of  which IES  This feat has 
ely 
bee  ac:=mplished as a direct res lt of  e ta=;ete
anc. Cirected  d Medicaid funds. 
use of the Medicare 
at if t. 
S has grave concexn t.  e Sec=et  ' s 
The  ecial f 
abolished, the f  ll be directed
to general opis erating expenses.  c.s
This action, while 
flexibili ty,  clincal 
c=es:ti.'"g  would c.epri ve the 
t.;.e one tool 
manat=ers of  that they have to meet 
spec  al funding needs to correct deficiencies
;.e facilities. 
main  The
ain ac:reditation of 

ac:=editation of the facilities and mai. tenance of
dications to
Maedsicasre  standards is one of thet .be"st' e
  highest quality of health care is
=e that 
bei 
would be not meetina
c rendered. To do  less 
and mission. It is for these reasons that

IES  aoal 
at abolishing the Sec=eta- s special

we telieve 

fund is not in the best interest of IHS. 
OIG Recc  endation 
with 
The Assistant Secretary for Health, in cooperation 
agement and Budget,

tehe lL  sistant Secretary for which 
nating the multi-year facilities account into 
d Medicaid payments are now deposited.

Medicare  -- 
.. - 
.-.~.-!.-" -.,. :~-..-,-....:-.'-'-, ~ -~; .-'--,..;_;  .;,.:-~-:,----.-=-.- :---- ~"--;"---.'-  :----  ,'  .' '-- '.. - -~~-.--' ..-: --  -~ ---.--~-. --~- .  -:--.  ~---.- - .-= ----.'~- -'.  ---._ ..~.---'---"-:~--.;--'.-.. :: - :.'. '-.  -y--~--_ --.=.- . -=. .-   . --,'.-.::-- .-.-- .-.. , --.':'"-..'.-=.'' .-.-,-~---:-j..:'    - -. -~ '-.----:".-~.-.-.- .--' .   .---~:. "'.-=--- "- - - '.-:.-~-.= .-----..-- -.-~ - .-- ".. . ..-... '. ..- -.-~.-- "....- ~..:..-   .~ .... --....=.-.:-  .---~;-..  "". ;--~ --:--.'"-,.-."-. -,.~'.-. '-  --~: .  ;;.-. "-".:-.~~'..:;".----;  -. -""."--j"~-~.'~- ; _--,--" .~..-:",--=-.~.-..'  .:".~" "-.'  ,.--~--.-. -~.,::.-.. .__ --.- -~..".. - '--..- ~---". ..-.-'- .-.-:  .--~ ' "-:~.-" -.-:.'~--'-  :- .-..~-. .- ..--'-  ,-- - :.. .-.\..-.;.  . :-~...;.- .. - ;.~--,\ . ".  -.,".-~-~.-. '..:  ""-.-.~.-  .."-..... .-: :~.-_- ..'-.-.;- .. .- - =.~..-...-- .'...~="-.--. '. -. '--~'-, -...-. '- ..--'..- . - .'-- -. -.- ,.--.-_--. '--.--_ .-.- -.:. -. ..-:." :, ,.=.'.'--"-.,.- .-.=  ---..&.-  ,.-.-.,-= ..  ...-.-,-.- =....-   --.-.:-:-'-;
Page 
yea= 
The ec=oun  e phasec cu 
c:::ulc  eve: several
eac  hcs  or a:sa ofiica cevelo ec accs 
maa  ent ca.:abili  i=s, It could
si7e a:lc, use  r OFe=  g e  ses these Medicarg and 
c::llec-:sc. Ecweve:,  ca:e 
.:::a.ic: pa:l!e!l':~ which  1!s 
hcs  " -2 
' V  "! c  '" ="a \...  "1 
1. 
ci=i:es nc  yet c :pe.le ci  't etm:  coclc: be 
ma'"egin,; 
c:s-:cs:. ":ac  e mc1-:-vea= ac=::'t  be menac  a.s 
:'-'2  i:1'::  """'2i  ""_..(8- - =-0:: 
;'ac  t: .l  --..f..  v=---,-...:.
.-_s. ..
\a  :latsci ent  =17. 
e mul:i-yea: ac==un  would be el 
end 
lis 
We =soommenc ac=  -:h ; n  5 yea=s. 
tls wi

PES  C::mmer.ts 
i: 
o nc-:  c:::nc= .  -rlle  === pr:ac-:.;cal =easc:rs t: mci:  i.s 
We  -'2  enc: 
-:rI  -..._w
-; -0  w . 
e=s c: S  "cC:- a  c=s  = C 
t:-'=""":::  -=_t--- m",= d'- -- .""-:""--

,i.
e a
a: a 
t=  tase. 
..-- w-
1T- 
.'t-
Co .. 

-'o  - w.. 
 s17 
=i=  a: S  2 a::==: 
=se ac=i 

$15 mill.icn. 
Rec=mms=ca  ces nc  =;cc  5 .  at cve= t e pa:
c.::-o: ..  =n 3  ::u--1:": -F-- ':eMC"::,.2--= 
hos 
:ma  c. n.-- r- w.-- - ---
c.::- ..  c=- cne  ..\o:...uc:
M": tn- - i. - -'w
=eoC -"""I'' - ..c: 
J. 1  =-lt;,  ... w..

II  a=:c  icnec i  a v  e "Anti-Ce=i=i=n

lscal17  ' beicn   of Q!E Ci=C' l:.= :No. A-
!:lst::..Ic!'t:i:oesne  e=r=.
 -E.:1i=:=dme;e!lt- :E::Sts cm:C !  icn. f.::unc! 
Tb.e eli.:la .;cr. c:: m1.1ti- ea= au-:  o:i"t-" for t. e e=  endit=e c: 
f'"nc.s will rgsult i:l the i:s:3 cf f  j,ds - collected. late  eac:, 
scal vsa=.  csa f  ncs ccllsc  ed wi  the las  30 to

Fer t 
q t.
f6'l0= -C;7S. cf 
e!: ===  fiessct. :j,l qvs a=-, tehe.
"'c, :r  csi v=:oc.sssq of 
 an ap:;o ior.ment ane. t:e

allccat  or. of f  d Ser7ics Ur ts will mcs
oe 
c::r:a.  rss'tl-: cisn t=  A=eas 
 lcs:s oi  must. be 
l V'  fiIc. if all f-:c's 
i."l which they 
s!=en  - t. e fiscal year  e.-a collec-ed. 
Ccnc=ess :sc=  i%e  d established the multi-

is issue
 anc: 
1=5 cees not wish to lose a:.1Y f-.c.s. MeClca:s 
ac:cunts . 
um, t. 
icai  s ccllects  must have, at a mi  e ibili  Page 8

to be used for one-full fiscal year beyond the year in which

they were collected. 
The process of billing  s contiuous.

and collection 
Collections received late in the fiscal year, if not expended

reasur 
wpoulad ryeverrt oto 
ll costs for those satnadf  wfouunldde dn obty  bteh asv aaiclatb vlei  ttyo .m eSeintce
this is a , adeqte funds mut  forAa 
cash account,  be caried 
payrll 
into the next fiscal year to meet  -acto sts fer at least 
thee pay  his buffer is imo  because the costs 
periods. 
of payroll are fixed andc ath e flow of collectons is vaiable.

inevitale 
A disru'Ctiont eof: chaetailothn   would be the  resul t of 
furlough or  of staff caused by a lack of funds to
meet pay=oll costs. 
Medicare and Medicaid funds are deposited into t. e multi-year 
s'Cecial account in accordance with the statute and

he OM atJtJortions ths. authoritY to 
aaD'sCr o-tJrciataioni alctes. !
 i for by t. e public law- appropriating t.  f':"la.s for t."l5 
operations of t.?Je IES. All func: collected from Mec..icare and 
which collec-:s then
Medicaic. are retu- ed to the Area Office 
c."ld are generally expended by the Service trn! t  a t provided 
the services.

OIG Reccmrendation 
&J:
SiO .. TH DEHONSTRON 
PTE  ROms G  UL  LEGI5LON  TO
A1JORIZED BY  II  A HOR 
RERES  -AIV SHLE POUBCF LA IOO-71.3  FACIITS  ro  HODIF TH
RESTRCTIONS D!OSED ON TH USE OF THSEAN  FTroS  . 
PHS Comments

of seekig
We do not concur. We question the appropriateness 
legislation to expand t.?Je demonstration prograJ authorized by 
designed for the 
P. L. 100- he demonstration program was 
pu71r3. ose of  am to 
expres s  allowing tribally contrctedt hprto  
payments. Program  are
directly bill and receive 
contracted under authority of  638 have accou-"ltig
P. L. 93-
systems in place and have other fiscal controls which meet all

requirements. 
IES facilities (those operated by the Service 
Uni t) do not have separate accountig functions and canot meet 
the requirements of the Treasur and GAD to handle funds and 

other accounting functions. As we have stated elsewhere in

these comments  ot cost

ths 
1 it would be counterproductive and 

effective to institute  action at the local IES-operated 
or facili ty. 
hospi tal