U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

44–489 PDF 2008

S. HRG. 110–519 

ACCESS TO CONTRACT HEALTH SERVICES IN 

INDIAN COUNTRY 

HEARING 

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 26, 2008 

Printed for the use of the Committee on Indian Affairs 

( 

(II) 

COMMITTEE ON INDIAN AFFAIRS 

BYRON L. DORGAN, North Dakota, Chairman 

LISA MURKOWSKI, Alaska, Vice Chairman 

DANIEL K. INOUYE, Hawaii 

KENT CONRAD, North Dakota 

DANIEL K. AKAKA, Hawaii 

TIM JOHNSON, South Dakota 

MARIA CANTWELL, Washington 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

JOHN MCCAIN, Arizona 

TOM COBURN, M.D., Oklahoma 

JOHN BARRASSO, Wyoming 

PETE V. DOMENICI, New Mexico 

GORDON H. SMITH, Oregon 

RICHARD BURR, North Carolina 

ALLISON C. BINNEY, Majority Staff Director and Chief Counsel 

DAVID A. MULLON JR., Minority Staff Director and Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on June 26, 2008 ............................................................................... 1 

Statement of Senator Barrasso ............................................................................... 9 

Statement of Senator Dorgan ................................................................................. 1 

Statement of Senator Johnson ................................................................................ 8 

Statement of Senator Murkowski ........................................................................... 7 

WITNESSES

Dixon, Hon. Stacy, Chair, Susanville Indian Rancheria ...................................... 35 

Prepared statement .......................................................................................... 38 

Holt, Hon. Linda, Chair, Northwest Portland Indian Health Board ................... 48 

Prepared statement with attachments ........................................................... 51 

Keel, Hon. Jefferson, Lieutenant Governor, Chickasaw Nation; First Vice 

President, National Congress of American Indians .......................................... 43 

Prepared statement .......................................................................................... 45 

Krein, Marlene, President/CEO, Mercy Hospital .................................................. 32 

Prepared statement .......................................................................................... 33 

McSwain, Hon. Robert G., Director, Indian Health Service, U.S. Department 

of Health and Human Services; accompanied by Dr. Richard Olson, Director, Office of Clinical and Preventive Services, and Carl Harper, Director, 

Office of Research Access and Partnerships ...................................................... 113 

Prepared statement .......................................................................................... 115 

Shore, Brenda E., Director of Tribal Health Program Support, United South 

and Eastern Tribes, Inc. (USET) ........................................................................ 95 

Prepared statement with attachments ........................................................... 98 

Smith, Sally, Chair, National Indian Health Board ............................................. 11 

Prepared statement with attachments ........................................................... 13 

APPENDIX

Antonio, Sr., Hon. John E., Governor, Pueblo of Laguna, prepared statement . 125 

Chavarria, Hon. J. Michael, Governor, Santa Clara Pueblo, prepared statement with attachments ........................................................................................ 141 

Cooper, Casey, Chief Executive Officer, Cherokee Indian Hospital, prepared 

statement .............................................................................................................. 131 

Letters submitted for the record ............................................................................ 203–291 

Marchand, Hon. Michael E., Chairman, Confederated Tribes of the Colville 

Reservation, prepared statement ........................................................................ 129 

Rhoades, Everett R., MD, Consultant, Southwest Oklahoma Intertribal 

Health Board, Discussion Paper entitled, Contract Health Services—A 

Growing Crisis in Health Care for American Indians and Alaska Natives .... 292 

Revis, Tracie, Second Year Law Student, University of Kansas, prepared 

statement .............................................................................................................. 133 

Shirley, Jr., Dr. Joe, President, the Navajo Nation, letter, dated April 30, 

2008 to Hon. Byron L. Dorgan ............................................................................ 137 

(1) 

ACCESS TO CONTRACT HEALTH SERVICES IN 

INDIAN COUNTRY 

THURSDAY, JUNE 26, 2008 

U.S. SENATE, 

COMMITTEE ON INDIAN AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10 a.m. in room 562, 

Dirksen Senate Office Building, Hon. Byron L. Dorgan, Chairman 

of the Committee, presiding. 

OPENING STATEMENT OF HON. BYRON L. DORGAN, 

U.S. SENATOR FROM NORTH DAKOTA 

The CHAIRMAN. I am going to begin the hearing. Our Vice Chair, 

Senator Murkowski, will be here shortly and other members of the 

Committee will be joining us this morning. In the interest of time, 

I want to begin the hearing. 

I am Senator Dorgan. This is the Senate Committee on Indian 

Affairs. We have a hearing today on a very important subject called 

Contract Health Services in Indian Country. 

As you know, the Contract Health Service is a very significant 

and vital part of Indian health care. The program is crucial to providing the full range of health care services to individual Indians. 

In March of this year, I sent out a letter soliciting tribal leaders 

for their thoughts on the current system. In response, the Committee received dozens of letters. This is the stack of letters I received, from reservations across the Country, describing their experience with contract health care—all of them indicating that the 

system is broken. 

One of the main concerns raised is inadequate funding, which 

leads to denials and rationing of health services. I am putting up 

a chart that shows the Contract Health Service is only funded at 

about 50 percent of need. The black represents the amount of 

health care that is funded. The grey represents the amount of 

health care that is unmet and that is lacking with the current 

funding of Contract Health care. 

2 

The program is funded at about $580 million at this point. It is 

estimated that $1.3 billion would be necessary to meet the current 

need. This level of funding results in full-scale rationing, which 

should be a news headline across this Country. Rationing is scandalous and ought to produce headlines, but it doesn’t because it 

goes on every day. 

Chart two shows what Indian health considers to be priority-one 

matters. In these situations, services are necessary to prevent 

death or serious harm. I don’t think you will be able to see all of 

that, but category one, or priority level one, is acutely urgent care. 

We will talk about category one in a moment. 


626a1.eps
3 

The current levels of funding often do not cover the need even 

for priority-one cases; this means that categories two through four, 

you don’t even talk much about since we can’t even meet priorityone cases. Priority two, as you will see, deals with mammograms, 

cancer screenings, knee replacements, some organ transplants. You 

would expect category two to be very significant, but in many cases 

clinics don’t even get to category two because they can’t afford to 

fund category one. 

Chart three illustrates the number of life or limb denials for contract health care and how they continue to increase. These are 

what are called non-priority denials, and you will see the line 

which shows a very substantial increase in the number of denials. 


626a2.eps
4 

I think the process for getting approval and the level of denials 

is out of control. These are necessary services, promised services as 

a result of a trust responsibility. Denying these services harm the 

lives of hundreds of thousands of Native Americans. 

One young woman recently shared with us her experience. I 

want to share it with you and I do that because she allowed us explicitly to do it. Otherwise, I would certainly not. But this is Tracie 

Revis, who is a member of the Creek Nation in Oklahoma. In 2005, 

she was at law school in Kansas. She was diagnosed with pneumonia at the local Indian Health Service clinic. Her situation didn’t 

improve, so she went back home for additional care. The IHS clinic 

told her that she had to go home to the clinic at the nearest reservation in Oklahoma, so she left school and went home. 


626a3.eps
5 

In Oklahoma, the IHS clinic referred Tracie to a specialist to get 

a biopsy on a mass that was discovered in her sternum. During the 

biopsy, the surgeon found a six-inch cancerous tumor. At that time, 

the surgeon decided to cut out three-quarters of that tumor. She 

had not received prior approval, however, for the additional surgical service. Because of this, the Contract Health Service denied 

coverage for the surgery. That resulted in Tracie being personally 

responsible for paying $25,000 in additional costs. 

She then went back to the Contract Health program to get approval for chemotherapy. It took three months to get approval. In 

that time, the tumor tripled in size. Additionally, the facility that 

Tracie was referred to for chemotherapy did not want to treat her 

because there was a history of non-payment by the Indian Health 

Service. After a long battle, the facility finally decided to treat her. 

Over the next year, Tracie would go back to work where she was 

able to get private insurance. Although her cancer returned, she 

was able to get necessary treatment, get coverage for it, and I am 

pleased to say this young woman is now cancer-free and back in 

law school. But the entire experience has left her with a $200,000 

debt, because Contract Health program would not meet the obligations to her. 

I hope she is not embarrassed if I point out that Tracie Revis is 

in the room. Tracie, would you stand? 

[Applause.] 

The CHAIRMAN. Tracie, thank you for sharing your story. It is an 

important story because it describes so much of what we need to 

fix. 


626a4.eps
6 

Finally is the story of Russell Lente. His doesn’t quite have the 

same ending, but I want to tell you the story because it was described to us by people who want the story to be known. Russell 

was a young, talented artist from Isleta Pueblo in Mexico. He loved 

to paint. Russell’s creative works are featured on billboards and 

murals and skateboards even now. He recently lost his battle with 

cancer at age 23. 

When he found out he had cancer, he sought early treatment to 

help him fight the disease, but Contract Health Service denied 

Russell these services. Although he had cancer, the disease had not 

progressed to a stage where it was determined that it would be 

considered priority one, which we all know as ‘‘life or limb’’. I don’t 

understand that. There is something wrong with a system that 

suggests that almost any cancer is not somehow priority one or 

‘‘life or limb’’. But Russell’s story ends at age 23, regrettably. 

A talented young man is lost to all of us, and his story again describes why we need to fix this system. This illustrates the problems faced by tribal members and by Indian communities. It is my 

hope that this hearing will give voice to those affected by the system, those in the system, those providers—some of whom provide 

the care even though they are not reimbursed for it because they 

know Contract Health is not going to pay, but they will assume the 

cost and eat the cost. 

We, as you know, have passed an Indian Health Care bill 

through the Indian Affairs Committee thanks to the excellent work 

of the Vice Chair, Senator Barrasso, Senator Johnson, Senator 

Tester and so many others. It has been passed through the entire 

Senate. We are now waiting for the House to pass an equivalent 

bill so we can go to conference. 


626a5.eps
7 

This is but a first step. We must adequately fund, and we must 

make Contract Health Services work. The stories I have described 

today demonstrate it does not work. There are some success stories, but there are far too many failure stories in a circumstance 

where about half of the money that is needed is not available. So 

you have full-scale rationing of health care for Indians. 

We have two panels today because we have many witnesses. I 

am going to call on others for brief statements, but I wanted to say 

that the witnesses have been asked, as is always the case and has 

always been the case, for a five-minute summary of their full written statements. The full written statements, of course, will be made 

a part of the permanent record. 

So let me call on the Vice Chair, Senator Murkowski. 

STATEMENT OF HON. LISA MURKOWSKI, 

U.S. SENATOR FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. I appreciate 

your calling this hearing. So often when we are talking about Contract Health costs and services, we get into the statistics, we get 

into the percentages. Your introduction this morning of Tracie and 

the story of Russell reminds us that it is not just statistics. These 

are sons and daughters and mothers and uncles. They are real people, and I appreciate you reminding us of that in a very poignant 

way. 

I want to welcome all of the witnesses her today, with a particular welcome to Sally Smith, a leader, Chair of the National Indian Health Board, and also a leader of the Bristol Bay Area 

Health Corporation. Your dedication in the health area, not only in 

the State but around the Country with Indian Health Care, is 

greatly appreciated. I appreciate your making the long haul back 

here and your comments here this morning. 

As you pointed out, Mr. Chairman, Contract Health Services Program is probably one of the most important components of the 

overall Indian health care delivery system, and yet the challenges 

that it faces are quite significant—the vacancy rates for key health 

professionals, the lack of facilities, the ever-increasing cost of 

health care, and then the narrowing medical priorities, and they all 

contribute to either increasing CHS demand or reducing the available services that are out there. 

Up in Alaska, we have the added challenge of transporting our 

Native patients to obtain the care. This is done mostly by airplane. 

We simply don’t have the road systems up north, and so people are 

transported not by car, not by ambulance, but really by air ambulance, if you will, because we don’t have any roads. You can’t really 

see from the chart, but you can look to the numbers there. For 

somebody flying in from Ninilchik to Anchorage to receive care, it 

is an $1,100 airplane ticket. Coming out of Savoonga, it is a $1,000 

airplane ticket. Coming from Old Harbor, which is over in Kodiak, 

it is over $1,300. 

I think these figures are actually several months old. In fact, I 

know that they are several months old and they haven’t been updated since we have seen the astronomical price increases in the 

State as they related to the cost of avgas and how we are moving 

our folks around. So we know that the numbers are much higher. 

8 

I understand that last year, the Bristol Bay Area Health Cor- poration received approximately $697,000 total for CHS, but they 

spent approximately $2 million in patient travel alone. So when 

you look at this imbalance—and that is not counting the cost of the 

service, that is just counting the cost of the air travel. And we all 

know it is not luxury air travel. 

Mr. Chairman, you already mentioned the denials. In looking at 

the IHS data for the tribes that are reporting, in fiscal year 1998 

there were 15,844 denials and 84,090 deferrals. In fiscal year 2006, 

there were 33,000 denials, 158,000 deferrals. In fiscal year 2007, 

there were 35,000 denials—and I am rounding these up—and 

161,751 deferrals. These charts indicate that there has been a 46 

percent increase in denials from efforts to effectively manage the 

available resources. 

We should all be troubled by these declination and these deferral 

rates. But again, as I mentioned and as you have pointed out, this 

isn’t just data that we are discussing. These are Native people. 

These are American Indians all around the Country that are suffering until they can finally access the services that they need. 

We appreciate that funding is a major issue for Contract Health 

Services, but I know that that isn’t the only one. I do appreciate 

the hearing today as a step in examining all of the impediments 

to the program. We recognize that the challenges are large, but we 

have very committed individuals working with us. I am hopeful 

that we will make some progress in addressing it. 

Thanks, Mr. Chairman. 

The CHAIRMAN. Senator Murkowski, thank you very much. 

Senator Johnson? 

STATEMENT OF HON. TIM JOHNSON, 

U.S. SENATOR FROM SOUTH DAKOTA 

Senator JOHNSON. Thank you, Chairman Dorgan, for holding this 

hearing. 

For the nine treaty tribes in my State, the failures of the contract health system cause more pain and more tragedy than anything else they face. The stories are heart-wrenching. People have 

called my office because they have cancer and been told by the IHS 

that they can’t receive treatment because it is not a priority-one 

threat to life and limb. 

In South Dakota, we recently lost a great leader to cancer. Harvey White Woman was a man who lived an honorable life and 

worked for the Lakota Sioux people. After he was diagnosed with 

a rare form of cancer, he received four rejection letters from the 

IHS telling him that his treatment was not a priority. The strain 

this must have put on a man who was already fighting for his life 

is impossible to imagine. 

Sadly, Harvey’s story is not unique and others have gone through 

similar tragedies. While we have worked to increase funding for 

the Indian Health Service, there are problems far beyond funding. 

The Direct Service Tribes and tribal members in my State want 

their stories about Contract Health to be heard and have been 

sending them to my office. Mr. Chairman, I would like to submit 

these stories and have them made part of the Committee record. 

Thank you and I look forward to hearing from the witnesses. 

9 

The CHAIRMAN. Senator Johnson, thank you very much. 

Senator Barrasso? 

STATEMENT OF HON. JOHN BARRASSO, 

U.S. SENATOR FROM WYOMING 

Senator BARRASSO. Thank you very much, Mr. Chairman. 

Before beginning my opening statement, I would like to introduce 

to the Committee the Chairman of Wyoming’s Northern Arapaho 

Tribe, Al Addison. Chairman Addison, would you please stand and 

be recognized? Thank you very much for being with us today. 

[Applause.] 

Senator BARRASSO. As I mentioned during our last hearing, 

Chairman Addison and the Northern Arapaho Tribe continue to 

mourn the loss of three teenage girls who passed away a few weeks 

ago. Chairman Addison, thank you for being here with us today 

amid such terrible circumstances. You and the Northern Arapaho 

tribal members are in our thoughts and in our prayers. 

Mr. Chairman, as a physician, I have worked for over two decades to help the people of Wyoming stay healthy and lower their 

medical costs. This is a challenge in rural and frontier States. Our 

unique circumstances require us to work together, to share resources, and to develop networks. These same principles are critical 

to support and modernize the Indian health care delivery system. 

We all know the serious problems the Federal Government and the 

tribes face to deliver health care services in a cost-effective and efficient and in a culturally sensitive way. 

Wyoming’s Wind River Reservation is home to approximately 

10,500 members of the Eastern Shoshone and Northern Arapaho 

Tribes. It is the third-largest reservation in the United States, covering more than 2.2 million acres. Tribal members in Wyoming 

have worse than average rates of infant mortality, of suicide, substance abuse, alcohol abuse, unintentional injury, lung cancer, 

heart disease and diabetes. When I last visited the Wind River 

Reservation, the tribal leaders told me how difficult it is for them 

to recruit and retain staff, to stretch each dollar to deliver essential 

services, to respond to cultural barriers, and to give families information to make better lifestyle choices. 

I want to commend Rick Brannon. He and the Wind River Service Unit staff have incredible compassion, dedication and do incredibly hard work. Rick and his very capable staff are holding the two 

Wind River Reservation health clinics really together with duct 

tape. Medical inflation, increasing service demands, limited competitive pricing structures and rural access issues are all putting 

severe financial pressures on our clinics in Wyoming. 

In response, their only option is to require strict adherence to a 

medical priority system. Basic care is still available—stitches for a 

cut or antibiotics for a sinus infection or a brace for a sprained 

ankle—but trauma patients injured in a car accident or a house 

fire, they will get immediate emergency treatment. 

Those with medical needs that fall outside the priority system 

may not. An enrolled tribal member may need to see an outside 

specialist to assess a severe skin condition or undergo knee surgery. But if the injury falls outside the priority system, then the 

10 

Indian Health Service clinic will provide pain medication and place 

the patient on a waiting list. 

Due to this situation, Mr. Chairman, many of these patients in 

my State then develop narcotic addictions while waiting for a specialty consultation. Using this medical priority system, my State’s 

Indian Health Service clinics carried a $1 million Contract Health 

Services deficit last year. On top of that, they denied almost $11 

million in medically necessary specialty care. 

Recent Indian Health Service and Contract Health Service fiscal 

intermediary reports show that annual medical costs continue to 

increase, while the level of services offered continues to decrease. 

The cost per visit is increasing, while the purchase services are decreasing. 

We need to reduce the health care disparities among American 

Indians and Alaska Natives. We need continued and sustained improvements in access to treatment and prevention services. I want 

to make sure that the people on the Wind River Reservation and 

all Native people across America have equal access to quality, affordable medical care. That is why I supported the Indian Health 

Care Reauthorization bill that was passed by the Senate earlier 

this year. It is long past time for the House to act on the Senate’s 

legislation. We must act now and get the bill to the President for 

his signature. 

It is equally as important that the care we provide is cost-effective and produces results. The Indian Health Service is not like 

other Federal health care programs. Congress has only limited access to the research data that is needed to modernize and improve 

Indian health care. I know this Committee will continue to focus 

our efforts to improve health care services. To do so, Mr. Chairman, 

we need good data and research to evaluate the current delivery 

system. We need to expose barriers that prevent collaboration and 

networking, that prevent innovation and sharing of resources. 

Today, neither the government nor private advocacy groups can 

explain exactly how all the funds are used to coordinate medical 

services. If we do not know where the resources are being spent, 

the number of programs dedicated to provide services, how these 

programs coordinate the services, or the outcomes achieved, then 

how can we be certain we are maximizing our ability to help the 

people? 

I offered an amendment to the Indian Health Care Improvement 

Act that will provide us this critical information. Once evaluated, 

we will know how best to target Federal funds to programs making 

the greatest impact. Then we can focus on additional areas where 

Native Americans and Alaska Natives need our support. 

Thank you, Mr. Chairman, for holding this hearing. 

The CHAIRMAN. Senator Barrasso, thank you very much. 

I would note, given Senator Barrasso’s statement, that this Committee has two doctors serving on the Committee and that is very 

helpful to us as we deal with Indian health care issues. So we welcome you again. I know Senator Barrasso has contributed a great 

deal since joining our Committee. 

Let me ask again, if I might, of the witnesses that you adhere 

to the five-minute rule. We do have a light up here. When the light 

turns red, you probably know what that means. We have asked if 

11 

Mr. McSwain, the Director of the Indian Health Service would be 

willing, and he is willing, to testify following our first panel. I very 

much appreciate his willingness to do that. It means extra time out 

of his day, but I think it will be very helpful for him to hear the 

witnesses and then allow us and Mr. McSwain to respond to it. 

This Committee, with my support and the support of the Vice 

Chair and others, unanimously supported Mr. McSwain and his 

nomination as Director of the Indian Health Service. We want him 

to succeed. We appreciate his willingness to testify today, but I 

have specifically asked if he would wait until the first panel so that 

he could listen to you. 

Thanks to the panel for being here. Many of you have come long 

distances. You are going to provide some important information to 

us. We will begin with Sally Quinn, speaking of leadership. Sally 

Quinn is Chair of the National Indian Health Board. Excuse me, 

Sally Smith, not Quinn. I apologize. I know Sally Smith. Yes, a 

nickname. 

[Laughter.] 

The CHAIRMAN. Now, they will call you Quinn. 

Ms. SMITH. Yes, they will. Thank you, Senator. 

[Laughter.] 

The CHAIRMAN. I know Sally Smith. I am sorry about that. She 

is Chair of the National Indian Health Board. She will provide the 

national perspective on Contract Health Services. Let me also say 

she played an integral role in helping us pass the Indian Health 

Care Improvement Act. Ms. Smith’s work is very important. 

You may proceed. 

STATEMENT OF SALLY SMITH, CHAIR, NATIONAL INDIAN 

HEALTH BOARD 

Ms. SMITH. Thank you so very much. 

The National Indian Health Board is honored to be able to 

present today on behalf of the 562 federally recognized tribes. On 

a note, though, let me say that I am disappointed that we do not 

have the perspective of the Direct Service Tribes here today as I 

look at the list. The Direct Service Tribes and the Land-based 

Tribes are not testifying today. I believe it is very important that 

the Committee hear their views with regard to Contract Health 

Services so that you can hear the views from throughout Indian 

Country. 

Dr. Greg Vanderwagen, former Chief Medical Officer of the Indian Health Service, spoke on rationing health care, and I quote, 

‘‘We hold them off until they are sick enough to meet our criteria. 

That is not a good way to practice medicine. It is not the way providers like to practice. If I were an Indian tribal leader, I would 

be frustrated.’’ 

The Contract Health Service programs should support all costs 

so any Indian person can access the treatment that will support 

the best patient outcomes, instead of the most cost-effective or costavoidance method to stretch CHS dollars. The CHS program should 

pay for preventive care and medical interventions, instead of authorizing payment for only emergency cases. 

The CHS program need to move into the 21st century by providing adequate funding to address the level of need in Indian 

12 

Country. Congress and the Administration should live up to the 

promises made in treaties, made in good faith, by the ancestors of 

people who are asking today for the ability to control the destiny 

of the quality of life for our people. 

Senators Dorgan and Murkowski, excuse me, before I continue, 

please allow me to express the gratitude of the tribes for the work 

the Committee has done to advance the reauthorization of the Indian Health Care Improvement Act, S. 1200. We are especially 

thankful for the leadership of Senators Dorgan and Murkowski and 

other members of the Committee for their tenacity in ensuring successful passage of S. 1200 by an overwhelming bipartisan vote of 

83 to 10. 

Tribes are also especially grateful to you, Chairman Dorgan, for 

introducing the amendment to the Senate budget resolution to increase the IHS appropriation by $1 billion. And Vice Chair Murkowski, we are appreciative, and I am personally appreciative, for 

your support also of the $1 billion amendment, as well as other 

members of the Committee who voted for its passage. 

I know that due to limited CHS funding, the IHS and tribal programs are, in most cases, only able to authorize CHS funding 

under a medical priorities system that gives most of the funding to 

the priority level one emergent or acutely urgent care services. 

These services are necessary to prevent the immediate death or serious impairment of the health of the individual that if left untreated would result in uncertain, but potentially grave outcomes. 

Native beneficiaries who do not have access to alternate health 

care resources such as private insurance, Medicare or Medicaid 

health care services under the CHS program, are limited to emergency or urgent care services, most of which are not guaranteed. 

If the CHS program paid for other medical priorities like preventive care services such as cancer screenings, specialty consultations, and diagnostic evaluations, early detection and treatment of 

diseases or illnesses could result in substantial savings to the CHS 

program, but more importantly lives would be saved and the quality of life would improve. Without cancer screenings and diagnostic 

evaluations, life-threatening illnesses go untreated and the patient 

dies or lives a short painful life. 

That is not to say that the CHS program doesn’t save lives, however. The IHS estimates, and we heard earlier, that there are $238 

million in unmet CHS needs. In our opinion, this is a very low estimate. Further complicating this estimate is the fact that one of the 

unintended consequences of patients experiencing perpetual denials 

of needed health care services is that they finally stop seeking 

needed care. Therefore, it is difficult to determine an accurate aggregate CHS financial need because Native parents learn from experience that is it futile to request services they know will be denied or deferred. 

This estimate also does not capture deferred or denied services 

from the majority of tribally operated CHS programs, which is 

nearly one-half of all tribes. More importantly, the estimated 

amount of unmet CHS needs does not capture all of the requests 

for CHS services that were denied that could be dubbed bureaucratic reasons, for instance noncompliance with the CHS regulatory 

requirements, emergency notification not within 72 hours, nonVerDate Aug 31 2005 12:58 Oct 14, 2008 Jkt 044489 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 S:\DOCS\44489.TXT JACK PsN: JACKF
13 

1 Established in 1972, NIHB serves Federally Recognized AI/AN tribal governments by advocating for the improvement of health care delivery to AI/ANs, as well as upholding the Federal 

Government’s trust responsibility to AI/ANs. We strive to advance the level and quality of 

health care and the adequacy of funding for health services that are operated by the IHS, programs operated directly by Tribal Governments, and other programs. Our Board Members represent each of the twelve Areas of IHS and are elected at-large by the respective Tribal Governmental Officials within their Area. NIHB is the only national organization solely devoted to the 

improvement of Indian health care on behalf of the Tribes. 2 Interview with Dr. Vanderwagen as documented in the Report published by the U.S. Commission on Civil Rights, Broken Promises: Evaluating the Native American Health Care System, 

September 2004. 

emergency and no prior approval, and that the resident lives outside a CHSDA, and the story goes on. I could go on with a halfdozen stories, if time permits. 

There is grave concern in Indian Country that there is a trend 

of increasing denial of CHS claims which is compounded by the 

continued under-funding of the CHS program. Because CHS programs are so consistently shamefully under-funded, we know that 

there are consequences. Very quickly, let me say it results in poor 

credit ratings, self-imposed impoverishment, helplessness and depression, and the list goes on. You have those in your handout 

there. 

Again, I come armed with stories. If questioned, I would be 

happy to relate the stories from here in Alaska. There is one thing, 

though. I know the Committee has received many letters—Senator 

Dorgan, you have shown those to us—from tribes across the Country. There are so many stories to tell. My hope is that this is not 

the only hearing that will be held on CHS. I strongly encourage to 

hold field hearings in all areas of Indian Country. 

The Direct Service Tribes’ national conference will be held August 5–7 in Spokane. As the Chair of the National Indian Health 

Board, I invite you to hold a field hearing at our NIHB annual consumer conference to be held in Temecula, California September 22– 

25. 

Thank you so very much for the opportunity to provide testimony. I would be happy to answer any questions. 

[The prepared statement of Ms. Smith follows:] 

PREPARED STATEMENT OF SALLY SMITH, CHAIR, NATIONAL INDIAN HEALTH BOARD

Introduction 

Chairman Dorgan, and Vice-Chairman Murkowski and distinguished members of 

the Senate Indian Affairs Committee, I am H. Sally Smith, Y’upik Eskimo and 

Chairman of the National Indian Health Board (NIHB). 1 On behalf of the NIHB, 

it is an honor and pleasure to offer the NIHB’s testimony on access to contract 

health services in Indian Country. During our discussion we will focus on how inadequate contract health services (CHS) funding has created a health care crisis in 

Indian Country and if not corrected, will continue to undermine the Federal Government’s trust responsibility to provide health care to American Indians and Alaska 

Natives (AI/ANs). Today, we will describe how the lack of CHS funding has created 

and perpetuated a system of denials and deferrals that results in rationing of health 

care. As Dr. Craig Vanderwagen, M.D., a former chief medical officer for Indian 

Health Service (IHS), acknowledged in talking about the CHS program: 

‘‘We hold them off until they’re sick enough to meet our criteria. That’s not a 

good way to practice medicine. It’s not the way providers like to practice. And 

if I were an Indian tribal leader, I’d be frustrated.’’ 2

Before I continue, please allow me to express the gratitude of the Tribes for the 

work the Committee has done to advance the reauthorization of the Indian Health 

Care Improvement Act (IHCIA), S. 1200. We are especially thankful for the leadership of Senators Dorgan and Murkowski, and other members of the Committee, for 

14 

3 In 1987, the IHS published final regulations revising the eligibility criteria for direct and 

contract health services to members of Federally-recognized Tribes residing in Health Service 

Delivery Areas. These regulations were intended to make the eligibility criteria for direct and 

contract health services the same. However, these regulations remain subject to a Congressional 

moratorium prohibiting implementation until such time as the IHS conducts a study and submits a report to Congress on the impact of the 1987 final rule. 

their tenacity in ensuring successful passage of S. 1200 by an overwhelming bi-partisan vote of 83–10. Now that the Senate bill passed, Indian Country is working 

hard to ensure passage of the House companion bill, H.R. 1328. We look for continued support from you and ask you to reach out to House Leadership on both sides 

of the Aisle to help us make reauthorization of the IHCIA a reality in this Congressional Session. 

Tribes are also especially grateful to you, Chairman Dorgan, for introducing your 

amendment to the Senate Budget Resolution to increase the Indian Health Service 

(IHS) appropriations by $1 billion. Vice-Chairman Murkowski, we are appreciative 

for your support of the $1 billion amendment; as well as, others members of the 

Committee who voted for its passage. At that time, I was serving as Chair of the 

Department of Health and Human Services (HHS) Tribal Budget Consultation 

meeting, and when I announced that the amendment passed, the audience erupted 

into a huge round of applause. As this committee well knows, the increase in IHS 

funding is vitally needed to address the funding shortfall for CHS, and other health 

care needs such as, increased funding for health care facility construction and contract support costs. 

Snapshot of the Health Status of American Indians and Alaska Natives 

AI/ANS have a lower life expectancy and higher disease burden than all other 

Americans. Approximately 13 percent of AI/AN deaths occur among those under the 

age of 25; a rate three times that of the total U.S. population. Our youth are more 

than twice as likely to commit suicide, and nearly 70 percent of all suicidal act in 

Indian Country involve alcohol. We are 670 percent more likely to die from alcoholism, 650 percent more likely to die from tuberculosis and 204 percent more likely 

suffer accidental death. Disproportionate poverty, poor education, cultural differences, and the absence of adequate health service delivery are why these disparities continue to exist. 

Background: Contract Health Services 

The IHS is the Federal agency with the primary responsible for the delivery of 

health care to AI/ANs. The provision of health care to AI/ANs are provided through 

two types of services: 

1.) direct care services that are provided in IHS or tribally operated hospitals 

and clinics; and 

2.) contract health services (CHS) that are provided by private or public sector 

facilities or providers based on referrals from the IHS or tribal CHS program. 

The IHS established the CHS program under the general authority of the Snyder 

Act, which authorizes appropriations for the ‘‘relief of distress and conservation of 

health of Indians.’’ The IHS first published regulations in 1978. 3 These regulations 

were revised in 1990 to clarify the IHS Payor of Last Resort Rule and today, continue as the effective regulations for the operation of the IHS CHS program and are 

found at 42 CFR Part 136. Pursuant to the Indian Self-Determination and Education Assistance Act (ISDEAA), tribes and tribal organizations may elect to contract or compact for the operation of the CHS program consistent with the CHS eligibility regulations. Approximately 52 percent of the CHS programs are operated by 

tribes and tribal organizations. 

While the majority of services to AI/ANs are provided in IHS or tribally operated 

hospitals and clinics, the IHS and tribal programs authorize services by private or 

public sector facilities or providers pursuant to the CHS regulations when: 

• a direct care facility is not available, 

• the direct care facility is not capable of providing the required emergent or specialty care, or 

• the direct care facility is not capable of providing the care due to medical care 

workload. 

The IHS is a payor of last resort and CHS funds are authorized subject to the 

availability of alternate resources, such as Medicare, Medicaid, or private health insurance. 

15 

The basic eligibility criteria for both direct care and contract health services requires that the person being served is of ‘‘Indian descent belonging to the Indian 

community served by the local facilities and program.’’ For eligibility for direct care 

services, residency is not required in the particular Indian community where services are being sought as long as the person is a member or descendent of a Federally-recognized tribe. However, eligibility for CHS requires residency in a Contract 

Health Service Delivery Area (CHSDA), a geographic area defined by regulation or 

in statute, but in general, includes the reservation and the counties contiguous to 

that reservation. 

CHS regulations require that request for services must be pre-approved by the 

local CHS review committee, consisting of clinical and administrative staff, and determined to be medically indicated and within medical priorities. If emergency services are provided by a non-IHS provider, notification must be made to the local IHS 

or tribal CHS service unit within 72 hours, or 30 days for emergency care provided 

to the elderly or disabled. 

It is worthy of note that the often-quoted ‘‘Don’t get sick after June 1st’’ statement 

stems from the time of year that CHS funding is depleted annually. The NIHB 

Board has embraced the creation of a foundation called ‘‘The June First Fund,’’ 

which would offer Indian people a place to go for funding to access emergency and 

chronic health care financing that would otherwise be depleted by June 1st. This 

program is in its infancy and organizational structures are currently under consideration. While NIHB wholly supports sovereignty and recognizes the obligation of the 

federal government to provide adequate health care services to Indian people, it also 

recognizes that many Indian people die each year, have amputations that could be 

avoided and suffer needlessly—all because the federal obligation to provide health 

care services is not met. 

Medical Priorities 

Due to limited CHS funding, IHS and tribal programs are in most cases only able 

to authorize CHS funding under a medical priority system that gives most of the 

funding to the Priority Level 1: Emergent or Acutely Urgent Care Services. A review 

of the CHS medical priorities provides a picture of services authorized under the 

CHS program based on current funding levels versus what should or could be covered if the CHS program were fully funded. One of the major frustrations for tribal 

programs is the continual need to educate non-IHS providers that the CHS program 

is not an insurance plan and because of limited CHS funding not all medical claims 

for services can or will be paid. The priority system is outlined as follows: 

Priority Level 1: Emergent or Acutely Urgent Care Services are defined as services 

that are necessary to prevent the immediate death or serious impairment of the 

health of the individual and that if left untreated, would result in uncertain but potentially grave outcomes. Examples of Priority Level 1 services are as follows: 

• Emergency room care for emergent/urgent medical conditions, surgical conditions, or acute trauma 

• Emergency inpatient care for emergent/urgent medical conditions, surgical conditions, or acute injury 

• Renal dialysis, acute and chronic 

• Emergency psychiatric care involving suicidal persons or those who are a serious threat to themselves or others 

• Services and procedures necessary for the evaluation of potentially life threatening illnesses or conditions 

• Obstetrical deliveries, acute perinatal care and neonatal care 

Priority II: Preventive Care Services are defined as primary health care aimed at 

the prevention of disease or disability. For those IHS and tribal programs that are 

not able to provide screening and preventive services in direct care IHS or tribal 

facilities, authorization of preventive care services places additional burdens on the 

CHS program funding. Examples of the preventive care services include: 

• routine prenatal care 

• cancer screenings such as mammograms and screenings for other diseases 

• non-urgent preventive ambulatory care 

• public health intervention. 

Priority III: Primary Secondary Care Services involve treatment for conditions 

that may be delayed without progressive loss of function or risk of life, limb or 

senses. Examples include: 

• specialty consultations in surgery, obstetrics, gynecology, pediatrics, etc 

16 

• diagnostic evaluations and scheduled ambulatory visits for non-acute conditions. 

Priority IV: Chronic Tertiary and Extended Care Services include such services as 

rehabilitation care, skilled nursing home care, highly specialized medical procedures 

restorative orthopedic and plastic surgery, elective open cardiac surgery, and organ 

transplantation. 

Priority V: Excluded Services such as cosmetic procedures and experimental services. 

For AI/ANs beneficiaries, who do not have access to alternate health care resources such as private insurance, Medicare or Medicaid, health care services under 

the CHS program is limited to emergency or urgent care services, most of which is 

not guaranteed. For those of you on the Committee, would you tolerate health insurance coverage for you and your family limited to only emergency or urgent care? 

We think not: and it is not tolerable for those AI/AN beneficiaries dependent on the 

CHS for their health care needs not otherwise available in IHS or tribal facilities. 

If the CHS program paid for other medical priorities like preventive care services, 

such as, cancer screenings, specialty consultations, and diagnostic evaluations, early 

detection and treatment of diseases or illnesses would result in substantial savings 

to the CHS program. But more importantly, lives would be saved and quality of life 

would improve. Without cancer screenings and diagnostic evaluations, life threatening illnesses go untreated and the patient dies or lives a short, painful life. 

The Reality: 

The IHS Budget Justification of Estimates for Appropriations Committees FY 

2009, includes the following charts indicate that the annual medical costs continue 

to increase while the level of services provided annually is decreasing. This correlates with increases in the number of deferred and denied CHS services: 

The funding levels for the IHS CHS program have increased since 1990 but have 

not kept up with increases in health care costs: 


626b1.eps
17 

4The IHS contracts with the FI to process CHS claims and make payments consistent with 

IHS CHS eligibility regulations and CHS payment policies. Nearly all of the tribes and tribal 

organizations that operate 52% of the IHS CHS programs do not use the FI for claims processing. Thus, the reports produced by the FI are based on claims from IHS operated CHS programs and only seven of the tribal CHS programs. 5The CHEF is administered by IHS Headquarters and pays for high cost CHS claims. 

Some Promises Met 

The CHS program does save lives. In FY 2006, the IHS fiscal intermediary (FI), 4

Blue Cross/Blue Shield of New Mexico, processed 298,000 purchase orders and, after 

coordination of third party benefits, made payments of approximately $230 million. 

The payments were made for a variety of diagnosis such as: $45 million for injuries 

resulting from such incidents as motor vehicle accidents and gun shot wounds, $31 

million for heart disease, $18 million for cancer treatment, $16 million for end stage 

renal dialysis, $6 million for mental disorders and substance abuse, and $4 million 

for pregnancy complications and premature births. These payments were made on 

behalf of AI/ANs who met the CHS eligibility criteria and medical priorities, in most 

instances, Priority Level 1: emergent or acute urgent care. 

Underfunding and Its Unintended Consequences 

Due to the severe underfunding of the CHS program, the IHS and tribal programs 

must ration health care. Unless the individual’s medical care is Priority Level 1 request for services that otherwise meet medical priorities are ‘‘deferred’’ until funding 

is available. Unfortunately, funding does not always become available and the services are never received. For example, in FY 2007, the IHS reported 161,750 cases 

of deferred services. In that same year, the IHS denied 35,155 requests for services 

that were not deemed to be within medical priorities. In addition, in 2007, IHS was 

not able to fund 895 Catastrophic Health Emergency Fund (CHEF) 5 cases. Using 

an average outpatient service rate of $1,107, the IHS estimates that the total 

amount needed to fund deferred services, denied services not within medical priorities, and CHEF cases, is $238,032,283, as detailed below: 

$20,058,448—CHEF 

$179,057,250—Deferred 

$38,916,585—Denied 

This estimate of $238 million for annual unmet CHS needs is arguably a very low 

estimate. Further complicating this estimate is the fact that one of the unintended 

consequences of patients experiencing perpetual denials of needed health care services is that they will stop seeking care. Therefore, it is difficult to determine an acVerDate Aug 31 2005 12:58 Oct 14, 2008 Jkt 044489 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 S:\DOCS\44489.TXT JACK PsN: JACKF

626b2.eps
18 

curate, aggregate CHS financial need because AI/AN patients learn from experience 

that it is futile to request services that they know will be denied or deferred. This 

estimate also does not capture deferred or denied services from the majority of tribally operated CHS programs (nearly one-half of all tribes). But more importantly, 

the estimated amount of unmet CHS needs does not capture all of the other requests for CHS services that were denied for what could be dubbed ‘‘bureaucratic 

reasons’’; i.e., non-compliance with the CHS regulatory requirements, as indicated 

by the CHS FY 2007 Denial Report: 

The FY 2007 CHS denial report indicates that over 16,000 CHS claims were denied because an IHS facility was available and accessible. While we don’t know all 

the details of why these claims were denied, of the over 600 health care facilities 

operated by the IHS or tribes, only 46 hospitals have emergency room care. The 

health care provider vacancy rates at IHS facilities are 17% for physicians, 18% for 

nurses, and 31% for dentists. In addition, many of the IHS facilities are over 30 

years old and do not have the necessary equipment and staff to provide many of 

the health services needed. When direct care services cannot be provided in an IHS 

or tribal facility, extra demand is placed on the CHS program funding and the facility loses revenue from third party payors. Many of the IHS and tribal facilities are 

located in very remote locations where transportation between a patient’s home and 

the nearest IHS facility can be limited or non-existent. 

Members of the Navajo Nation living in the community of Ganado, Arizona used 

to regularly receive denial of CHS claims until the IHS Navajo Area reached an 

agreement with the Sage Memorial Hospital, a non-IHS provider at the time, to provide services to 18,000 Navajo tribal members residing in the Ganado catchment 

area. Because the closest IHS hospital was approximately 40 miles away from 

Ganado, Navajo tribal members would seek treatment at Sage Memorial Hospital 

located in Ganado. The IHS Navajo Area would deny payment of these services because an IHS facility was available and accessible albeit 40 miles down the road. 

The IHS Navajo Area, using CHS funds, negotiated a contract with Sage Memorial 

Hospital to provide care to Navajo tribal members in the Ganado catchment. Tribal 

members no longer have to travel long distances for their health care and the local 

hospital receives payment for the care provided. This model might not work in all 

tribal communities but represents a 21st century approach to address the health 

care needs of the tribal members. 

The FY 2007 CHS denial report indicates that approximately 21,000 claims were 

denied because the care provided was non-emergency and there was no prior approval. Again, we do not know the underlying facts for why these claims were denied. However, prior approval is required for non-emergency cases and that deterVerDate Aug 31 2005 12:58 Oct 14, 2008 Jkt 044489 PO 00000 Frm 00022 Fmt 6633 Sfmt 6621 S:\DOCS\44489.TXT JACK PsN: JACKF

626b3.eps
19 

6 An emergency medical condition is defined as a medical condition manifesting itself by acute 

symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possess an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual (or, with respect to 

a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, serious 

impairment to bodily functions, or serious dysfunction of any bodily organ or part. 

mination is made by a CHS review committee consisting of both clinical and administrative staff of the facility. But many of the claims could have been denied because 

the services were provided after-hours, (e.g., after 5 pm or over the weekend), when 

many IHS or tribal ambulatory centers are closed. For example, an Indian child 

could break his or her ankle playing softball on a Saturday. Under a prudent 

layperson’s standard, 6 this would be considered an emergency. But the NIHB has 

heard from tribal communities that CHS claims are denied because a ‘‘broken 

ankle’’ is not considered an emergency. Where else in America would a parent hesitate to take their injured child to an emergency room for fear that the services 

would not be covered by their insurance? Many tribal clinics, such as the Oneida 

Tribe of Wisconsin, contract with local hospitals to provide services to its members 

during non-operational hours. 

The FY 2007 CHS denial report shows that 66,000 CHS claims were denied because an alternate resource was available. Some Tribal Leaders object to the IHS 

Payor of Last Resort Rule because AI/ANs should not have to apply for other alternate resources, such as Medicaid, as a condition of receiving health services from 

the IHS—health care is a responsibility of the U.S. government. Unfortunately, the 

IHS is a discretionary program, with limited CHS dollars, and until it becomes an 

entitlement program, is dependent on the availability of other government programs, Medicare, Medicaid or the Veteran’s Administration to supplement the CHS 

program. 

Tribal CHS programs have expressed frustration with having to require its tribal 

members to apply for alternate resources. Due to income fluctuations, such as seasonal employment in the Alaska fishing industry, many tribal members are dis-enrolled from alternate resource programs, such as Medicaid, and then have to reapply. This can be burdensome, especially for the elderly. Tribal members have expressed concerns that CHS claims are denied or payment is delayed due to coordination of third party benefits. Tribal members receive collection notices from providers 

for unpaid medical bills and this ruins their credit history. 

There is grave concern in Indian Country that there is a trend of increasing denial of CHS claims which is compounded by the continued underfunding of the CHS 

program. The result: a failure of the Federal government to fulfill its trust responsibility to Indian people. A major influx of CHS funding is desperately needed to bring 

the CHS program into the 21st century; however, not all of the ‘‘problems’’ in accessing CHS is due to a lack of funding. The CHS eligibility regulations were promulgated thirty years ago; clearly, the delivery of health care in mainstream America 

has changed. The CHS regulations contain requirements such as prior approval, 72 

hour emergency notification, and other regulatory requirements unique to the Indian health system. The regulations are complicated to understand both by the AI/ 

AN patients and non-IHS providers. The CHS regulations were intended to limit the 

IHS’s liability for CHS services, but, because the CHS program is so consistently, 

shamefully underfunded, CHS decisions are driven by the need to save costs to the 

detriment of AI/ANs ability to receive standard health care, which is preventing AI/ 

ANs from living healthy lives. Other unintended consequences, include: 

1. Poor credit ratings because of unpaid medical bills due to CHS denial 

2. Self-imposed impoverishment in order to qualify for Medicaid 

3. Unnecessary prolonging of pain leading to addictions, such as: painkillers 

4. Helplessness and Depression 

5. Untreated conditions can lead to chronic illness that leads to disability 

6. Providers refuse to see AI/AN patients for fear of not being reimbursed for 

services 

7. Community economic loss due to prolonged injury or illness that prevents one 

from working 

Chairman Dorgan, I know your Committee has received many letters from Tribes 

identifying CHS issues in their particular community. For the record, I have included as part of my testimony, two letters submitted by our Board members representing the Bemidji and Billings Area that tell their personal stories and reflect 

many of the same concerns expressed in this testimony. 

20 

The Alaska Perspective 

In addition to being the Chair of the National Indian Health Board, I am also 

the chair of the Board of Directors of the Bristol Bay Area Health Corporation 

(BBAHC), a co-signer of the Alaska Tribal Health Compact which provides health 

care to Alaska Natives in the 45,000 square mile Bristol Bay service area and operates the only inpatient hospital in the region near Dillingham, Alaska. From my 

service with BBAHC, I am well aware of the severe impact which the shortage of 

contract health service funding has on both the IHS and tribally-operated health 

programs in rural areas, especially rural Alaska. 

In Alaska they tell a story about a federal official who telephoned to an Alaska 

Native health care program and asked why, when you send patients to the Alaska 

Native Medical Center (ANMC) in Anchorage, you always send them by air. Why 

don’t you send them by car? The official did not understand that in many parts of 

Alaska there are no roads. We do not have roads between the Kanakanak Hospital 

near Dillingham and many of the villages where we operate out-patient clinics or 

regional clinics. There is no road between Dillingham and Anchorage where the 

IHS-funded Alaska Native Medical Center (ANMC), the tertiary care facility serving 

Alaska Natives throughout Alaska, is located. We are separated from Anchorage by 

a range of snow-capped mountains, and air travel is the only way we can send patients there or to any other hospital facility. 

Although much of our tertiary care is provided by the IHS-funded ANMC, what 

is often overlooked is that our budget must cover the cost of patient transportation 

to Dillingham from the villages and to Anchorage from Dillingham. In fact, the entire contract health care budget which we presently receive is consumed by transportation costs. In FY 2007, BBAHC spent $425,000 in regular seat or charter fair 

for non-emergency cases plus an additional $1,200,000 in Air Medivac costs. This 

cost was up $250,000 from the previous year and, given the rising costs of air travel, 

it can be expected to continue to climb. There has been no adjustment in our contract health funding to enable us to meet these increases. BBAHC has been covering 

the differences between the CHS funding received verses costs expended. For instance, in FY 2007, the BBAHC received $564,000 in CHS funding plus the 

$111,000 for Medivac funding and expended the $425,000 in regular seat or charter 

fare for non-emergency travel and $1,200,000 in Air Medivac costs for a difference 

of $951,000. 

There are, of course, many factors affecting our budget that makes the high cost 

of patient travel even more serious than it seems in isolation. For example, there 

is no adequate provision for maintaining our out-patient clinics. These are provided 

to our program through a system called ‘‘village built clinics.’’ Our member villages 

are relied upon to obtain funding for the construction of out-patient clinics. The clinics are then leased by the villages to the IHS which makes them available to 

BBAHC to operate through the Alaska Tribal Health Compact. The villages remain 

responsible for maintenance and, in theory, they are provided with the funding for 

maintenance through the rental payments from IHS. This system applies to 169 village-based out-patient clinics in rural Alaska. 

While this system enabled us to replace a number of drastically deteriorated clinic 

facilities and to provide clinics in some remote villages where there were none, it 

has not adjusted to the rising costs which affect maintenance and repair as well as 

air transportation. The total amount provided by IHS in rental payments to the 

BBAHC villages in FY 2008 was $3.7 million, the same level it has been at for l9 

years. A recent analysis shows that this level of funding covers only 55 percent of 

the actual cost of maintaining these facilities. In addition, IHS provided these payments unusually late this year and at least one of our clinics was threatened with 

closure due to the absence of maintenance funding. We understand that this problem is not directly related to contract health care, but the increased costs cut acrossthe-board. To the extent that BBAHC must divert funding from providing health 

care to patient transportation or to keeping clinics operational, the quality of our 

direct patient care is impacted. We have made a priority request to the Appropriation Committees to increase the Village Built Clinic lease program funding by 

$3,000,000 in FY 2009 (with an additional increase of $2,000,000 by the end of five 

years). 

On top of this, we should note that for many years the IHS has not funded, in 

accordance with federal law, the administrative costs of our program as required by 

section 106 (a)(2) of the Indian Self-Determination Act. This provision was intended 

to assure that tribes are able to have at least the same level of resources that the 

IHS does in providing health care by assuring that activities which tribe must perform (which IHS does not) or which are paid for by sources other than the IHS 

budget are fully funded in self-determination and self-governance agreements. 

Again, this is not an issue that might seem related to contract health care, but it 

21 

is. In a variety of different ways the federal government is not providing BBAHC, 

as well as many other tribal and Alaska Native health programs throughout the 

United States, with financial support reasonably related to the purposes sought to 

be achieved and, in some case, required by law. 

Recommendations: 

Before I conclude my testimony, I do not want to leave the impression that the 

CHS program is beyond repair—it provides access to vital services that the IHS and 

tribally operated programs cannot provide in their facilities. But I would like to take 

this opportunity to provide the Committee with the Board’s recommendations for 

improving the CHS program. I offer the assistance of the NIHB staff in implementing these recommendations and providing the Committee with any additional 

information or analysis. 

• Hold field hearings in all areas of Indian Country. 

• Require the GAO to conduct a study on CHS: 

—Billing and reimbursement rates paid by CHS programs and comparison of 

reimbursement rates paid by other providers of health services 

—Accessing health care after-hours 

—Number of unpaid medical bills of AI/AN 

—Study to measure the correlation between medication addiction and the rate 

of denied CHS services. 

—Credit scores and impoverishment resulting from CHS denials 

• Work through the Medicare Graduate Medical Education Program to achieve 

lower health professional vacancy rates and improve infrastructure at direct 

care sites 

• Create charity partnerships 

• In consultation with Tribes, update the CHS regulations 

• Congressionally mandated CHS Advisory Committee, of which 51% would be 

Tribal leaders. Other suggested members should be the IHS Director, the Chair 

of MedPAC, provider groups, and academics proficient in health system structural reform. 

I appreciate the opportunity to present testimony on behalf of the NIHB on CHS 

issues in Indian Country. We appreciate your leadership in bringing these issues 

forward for discussion. There is much work to be done and as always, Tribal leaders 

support your endeavors to improve the CHS program and the health of Indian 

Country. 

22 

Attachments 


626b4.eps
23 


626b5.eps
24 


626b6.eps
25 


626b7.eps
26 


626b8.eps
27 


626b9.eps
28 


626b10.eps
29 


626b11.eps
30 


626b12.eps
31 

The CHAIRMAN. Ms. Smith, thank you very much for your testimony. We appreciate that. 

Next, we will hear from Marlene Krein. Marlene Krein is the 

President and CEO of Mercy Hospital in Devils Lake, North Dakota, a wonderful institution that I have visited many times. She 

will share insights from a private provider that is often forced to 

cover the costs of care provided to American Indians when the Contract Health Service program denies their claims. 

Ms. Krein, thank you very much for being with us. You may proceed. 


626b13.eps
32 

STATEMENT OF MARLENE KREIN, PRESIDENT/CEO, MERCY 

HOSPITAL 

Ms. KREIN. Thank you, Senator Dorgan. I appreciate the opportunity to speak before this Committee and tell you some of our stories of how we serve the Native Americans. 

We are a faith-based hospital and our values speak for human 

life and community service. We are located near Spirit Lake Nation, which has approximately 7,000 members. We have served the 

lake region community for 106 years. This also includes the Spirit 

Lake Nation. I do want you to know that I have not been there 106 

years, but just 35. 

[Laughter.] 

Ms. KREIN. It is well known that the Indian Health Contract 

Service has not been funded adequately. Fort Totten has an IHS 

clinic with limited services. They are open Monday through Friday, 

8 a.m. to 4:30 p.m. During after hours, holidays and other days 

when they are closed, the people of Spirit Lake Nation come to 

Mercy Hospital for much of their primary care. IHS only pays for 

priority one and the rest is left unpaid. Currently, we write off approximately $200,000 a quarter for IHS service in our emergency 

department. 

As a small rural provider, we are disproportionately impacted by 

the lack of payment for provision of services that are clearly a Federal obligation. In January of 2008, we assumed responsibility of 

staffing the emergency department 24/7 when the physicians from 

the local clinic said they would no longer cover the ED during their 

office hours. This has increased our costs considerably and now it 

is up to about $1 million for staffing in the emergency room. 

In August of 2000, I had the privilege of testifying before this 

Committee at a field hearing in North Dakota. What has changed 

is the number of Native Americans we serve in the emergency department and it has resulted in larger unpaid bills. I have been an 

employee of Mercy Hospital for 35 years, and the CEO since 1984. 

In the beginning of my tenure when the bills were not paid, I 

turned to Senator Burdick to ask for help. As the years went by 

and the unpaid dollars increased, I then turned to Senator Dorgan 

and Senator Conrad. I very much appreciate all that these Senators have done and do. 

I do understand that IHS does not pay for anything except priority one in the ED, but that leaves me in a difficult position with 

the limited hours of the clinic being open. When there is a need, 

the people of Spirit Lake Nation have nowhere to go except to the 

Mercy Hospital Emergency Department. We serve them because we 

are called to from our heritage and government regulations. 

A few years ago, I decided I needed to be part of the solution, 

not a part of the problem, and began meetings. I have met with 

people at the IHS Spirit Lake Health Center, Spirit Lake Tribal 

Council, the IHS Aberdeen Area Office, and over the years I have 

had numerous meetings in Washington, D.C. as well. At one time, 

the IHS clinic was looking into staying open longer hours. Their 

budget was several million dollars because they would need to hire 

an entire new staff of physicians, nurses, lab and X-ray technologists, et cetera. 

33 

The issues remain, and every time there is a suggestion, and 

there have been very many, there is a roadblock by IHS, the tribe 

or the government. I have nowhere else to go except to you for 

help. It is my responsibility to ensure that Mercy Hospital remains 

open to serve the people of the lake region, which certainly includes 

members of the Spirit Lake Nation. We have a close relationship 

with many of the tribal members as they were born at our hospital, 

and through the years they have put their trust in us. We appreciate this and consider it an honor. 

We also know a solution must be found so that we can continue 

to serve. I believe we can all agree there is a problem with expected care and payment. It may be my pragmatism, but I believe 

we, you and I, the government and Mercy Hospital have a shared 

responsibility to see that the people of the Spirit Lake Nation have 

access to health care 24/7 and that Mercy Hospital is compensated. 

After considerable thought and several avenues that I have tried 

through the years, I believe it is necessary for IHS to contract with 

Mercy Hospital for $500,000 per year for all after-hours care. The 

needs of Spirit Lake Nation and Mercy Hospital will be met, and 

Mercy Hospital would still be providing their share of charity care. 

Thank you for hearing my story, and for any assistance you can 

provide. 

[The prepared statement of Ms. Krein follows:] 

PREPARED STATEMENT OF MARLENE KREIN, PRESIDENT/CEO, MERCY HOSPITAL

History of Mercy Hospital of Devils Lake, North Dakota 

The Sisters of Mercy arrived in Devils Lake in 1895. Rev. Vincent Wehrle, O.S.B., 

had purchased the old public school and moved it across from the church. Farmers 

from around the county helped by digging and hauling stones to secure its foundation. The old school was renovated into a hospital with two wards and eleven private rooms. The hospital was named in honor of Wehrle—St. Vincent de Paul Hospital. Bishop Shanley dedicated the building on October 20, 1895, and the first patient was admitted on November 3, 1895. 

As the town grew, it was soon evident the size of the hospital was inadequate. 

The Sisters purchased eighty acres of land on the highest point in northeastern Devils Lake, and built a new hospital. The cornerstone of Mercy Hospital was laid in 

June of 1902, and the first patient was admitted on June 6, 1902. The new hospital 

had three wards and twenty-five private rooms. 

Through the years Mercy Hospital has re-invented itself to meet the changing 

needs of the times in health care. In 1974 Mercy Hospital was a 115 bed acute care 

hospital, in 1992 Mercy Hospital right-sized to 50 acute care beds, and on January 

9, 2008, became a 25 bed Critical Access Hospital, with a very active Emergency 

Department, seeing more than 950 patients per month. 

Just as the Sisters served the community, 106 years later we hold that commitment in trust. As a Catholic Health Initiatives hospital, we honor the mission the 

Sisters and CHI have entrusted to us. 

Mercy Hospital Emergency Department and Spirit Lake Nation 

Mercy Hospital of Devils Lake, North Dakota is a 25 bed CAH located in an agriculturally based market. We serve a primary service population of approximately 

15,000 people. Approximately twenty-five percent of the primary service population 

is Native Americans. This segment of the population presents special, significant, 

underfunded service requirements. 

Mercy Hospital has a high Medicaid payor mix related to a large local indigent 

population, and has faced long term non payment issues with Indian Health Services for the ED. Fort Totten has an I.H.S. clinic with limited hours of service with 

no after hours care available on week days, weekends, holidays and when providers 

are not present. Because the clinic hours are limited, the people of the Spirit Lake 

Nation often choose to use the Mercy Hospital ED, not only for trauma care, but 

their primary care. The burden to Mercy Hospital, however, is significant because 

I.H.S. pays only for Priority One care in the ED. We understand this and because 

34 

of this non payment, a significant portion of total reported charity is rendered annually to this group of patients. We write off approximately $200,000 a quarter for ED 

care for I.H.S. 

On January 1, 2008, Mercy Hospital assumed responsibility of staffing the ED 24/ 

7 when the physicians from the clinic in Devils Lake stated they would no longer 

cover the ED during their office hours. This increased our ED costs considerably to 

about $1 Million per year, increasing the burden of unpaid ED services provided. 

I had the privilege of speaking before the Committee on Indian Affairs field hearing in North Dakota on August 4, 2000. At that time I.H.S. was not adequately 

funded, and service to the Native Americans in our ED was about 40% of our total 

volume. 

In 2000 Mercy Hospital ED had 8,466 visits a year, and in 2007 the ED visits 

had increased to 11,123. To date in 2008 we see as many patients, with small increases. 

Solutions 

I have been an employee of Mercy Hospital for 35 years, and the CEO since 1984. 

In the beginning of my tenure, when the bills were not paid, I turned to Senator 

Burdick to ask for help. As the years went by the unpaid dollars increased, and I 

then turned to Senator Dorgan and Senator Conrad. I do understand that I.R.S. 

does not pay for anything except Priority One in the ED. But, that leaves me in 

a difficult position, with the limited hours of the I.H.S. clinic being open. When 

there is a need, the people of the Spirit Lake Nation have nowhere to go except to 

the Mercy Hospital ED. We serve them because we are called to from our heritage, 

and Government regulations. 

(See attached report of Mercy Hospital Uncompensated Services to Native Americans 2001–2007) 

A few years ago I decided I needed to be a part of the solution, not a part of the 

problem, and began meetings. I have met with people at the I.H.S. Spirit Lake 

Health Center, Spirit Lake Tribal Council, the I.H.S. Aberdeen Area Office, and 

over the years I have had numerous meetings in Washington, D.C., as well. 

At one time the I.H.S. clinic was looking into staying open longer hours, their 

budget was several million because they would need to hire an entire new staff of 

physicians, nurses, lab and x-ray technologists, etc. 

The issues remain, and every time there is a suggestion, there is a roadblock by 

I.H.S. or the Government. 

I have no where else to go, except to you, for help. It is my responsibility to ensure that Mercy Hospital remains open to serve the people of the Lake Region, 

which certainly includes members of the Spirit Lake Nation. We have a close relationship with many of the tribal members as they were born at our hospital, and 

through the years they have put their trust in us. We appreciate this and consider 

it an honor. We also know a solution must be found so that we can continue to 

serve. 

Conclusion 

I believe we can all agree there is a problem with expected care and payment. 

It may be my pragmatism, but I believe we, you and I, the Government and Mercy 

Hospital, have a shared responsibility to see that the people of the Spirit Lake Nation have access to health care 24/7, and that Mercy Hospital is compensated. 

After considerable thought, recalling all the avenues I have tried, I believe it is 

necessary for I.H.S. to contract with Mercy Hospital for $500,000 per year for after 

hours care. The needs of the Spirit Lake Nation and Mercy Hospital would be met, 

and Mercy Hospital would still be providing their share of charity care. 

Thank you for hearing my story, and for any assistance you can provide. 

35 

The CHAIRMAN. Ms. Krein, thank you very much. We appreciate 

your being here today. 

Next, we will hear from Stacy Dixon, the Chair of the Susanville 

Indian Rancheria in Susanville, California. Chairman Dixon will 

share his tribe’s experience with the shortage of Contract Health 

Service funding, which led their tribe to start charging tribal members a co-pay for some services. 

Chairman Dixon, thank you very much for being here. You may 

proceed. 

STATEMENT OF HON. STACY DIXON, CHAIR, SUSANVILLE 

INDIAN RANCHERIA 

Mr. DIXON. Thank you, Mr. Dorgan. Good morning. Thank you 

for the opportunity to be here today. 


626b14.eps 626b15.eps
36 

My name is Stacy Dixon. I am the Tribal Chairman of the 

Susanville Indian Rancheria, a federally recognized Indian tribe located in Susanville, California. 

I am pleased to testify about a topic of great importance to my 

tribe: the severe under-funding of Contract Health Service in Indian Country. Health care to eligible beneficiaries who reside in 

our geographic area is provided out of the Lassen Indian Health 

Center, a small health care facility built and owned by the tribe located on the Susanville Indian Rancheria. The tribe has been providing health service at the Lassen Indian Health Center under an 

Indian Self-Determination and Education Assistance Act agreement since 1986. 

In 2007, the tribe and the Indian Health Service entered into a 

self-governance agreement under Title V of the Act. Like most of 

the other tribes, we have struggled to achieve and maintain a high 

level of health care service, despite chronic under-funding, especially of CHS funds. CHS, like the rest of IHS-funded programs, is 

extremely under-funded. Conservative estimates are that Congress 

would need to appropriate an additional $333 million per year to 

meet unmet CHS needs nationally. When added to the current IHS 

budget line item for CHS, the CHS budget should be no less than 

$900 million. 

Lack of adequate CHS funding has led to health care rationing 

and barriers to access to care because there are simply no enough 

appropriated funds to meet all needs. Patients eligible for CHS who 

do not get approved for funding are left with a choice between having to pay for service themselves or not getting the service they 

need. 

The impact of CHS under-funding has been particularly devastating in California. In the 1950s, during the termination period, 

the Federal Government withdrew all Federal health care service 

to Indians in California. Health care services to Indian beneficiaries resumed in 1969. As a result of this unique history, none 

of the facilities and programs that tribes use to carry out health 

care functions in California originated as facilities and programs 

previously operated by the IHS. There are also no IHS hospitals in 

California. Tribes have been forced to rely heavily on the CHS programs to pay for specialty and in-patient care. 

In 1986, when my tribe took over the delivery of health care 

services, our goal was simple: to provide the best possible health 

care to our people. We wanted to provide a continuum of care to 

our patients that would include as many possible health services 

to one location as possible so that the care provided by physicians 

who are providers that could be integrated and coordinated. 

The challenge that we have faced with our pharmacy program 

are an illustration of the impact that CHS under-funding and IHS 

under-funding in general has on tribal health programs and tribal 

sovereignty. For many years, the tribe tried to operate its pharmacy program using funds diverted from other health purposes. 

The tribe had to close the pharmacy between January of 2004 to 

June of 2005 because it concluded that it could not afford to do 

that. During this time, prescription drugs had to be purchased from 

local pharmacies. 

37 

To pay for these retail pharmacy services, the tribe used its already limited CHS funds. While the tribe was providing pharmacy 

service with the CHS funds, it had to make significant cuts in the 

CHS service that it had been providing. Some of the services that 

we could no longer provide include services such as CT scans, 

MRIs, podiatry exams, cardiac evaluations, and colonoscopys. 

In 2005, the tribe decided that the problems associated with 

using already-scarce CHS funds to pay for pharmaceutical supplies 

off-site and the other negative consequences of not having a pharmacy on-site could only be corrected by reopening the on-site pharmacy. The tribe resumed pharmacy operations in July of 2005. It 

immediately was able to once again use CHS funds to pay for needed CHS services. 

After much study and analysis, the tribe determined that the 

only to run a financially viable in-house pharmacy program without jeopardizing the CHS funding needed for the other critical services was to charge a small co-pay of $5, along with the acquisition 

cost of the medicine to those patients who could afford it. Indigent 

and elderly patients are exempt from these charges. The tribe implemented these policies in July of 2006. 

Unfortunately, the tribe pharmacy policy became a focus of a 

lawsuit between the IHS and the tribe and remains a lightning rod 

today in the legal and policy debate about what legal authority 

tribes have to supplement health care funding they receive from 

IHS. This January, a Federal judge upheld the legality of our pharmacy policy and affirmed the tribe’s right to determine for itself 

whether to charge beneficiaries for services at a tribally operated 

program. 

The IHS did not appeal the judge’s decision, yet IHS staff is convinced it was wrong. Recently, they have told tribes around the 

Country that they do not plan to follow the Susanville decision, 

that it does not constitute precedent that IHS has to follow. They 

have even gone so far as threaten to cut the funding of any tribe 

that charges beneficiaries. As quoted in an article last week in Indian Country Today, a high IHS official called tribal billing inappropriate and said the IHS is contemplating terminating the relationship with tribes that have been discovered to be doing so. 

The IHS and tribes agree on one important thing. When the Federal Government fails to meet its trust responsibility by chronically 

under-funding CHS and other areas of IHS budget, it is inappropriate to force Indian beneficiaries to shoulder part of the burden 

by allowing IHS to charge the very people to whom it owes the 

trust duty. Recognizing this, Congress prohibited the IHS from 

charging beneficiaries through the ISDEAA. Congress also recognized the flip-side of this coin, however: Tribes are sovereign governments that have the right to decide how best to carry out the 

health care programs for their people and to supplement any inadequate Federal funding by any and all reasonable means. While the 

decision whether to charge tribal members and other beneficiaries 

is not appealing, it is a choice Congress has left to tribes in the exercise of their right of self-governance. 

I can assure you that my tribe would prefer not to charge eligible 

beneficiaries for any portion of the costs of providing health care 

to them. However, I firmly believe in the right of all tribes to make 

38 

1 U.S. Comm’n on Civil Rights, A Quiet Crisis: Federal Funding and Unmet Needs in Indian 

Country at 49 (July 2003) (concluding that ‘‘the anorexic budget of the IHS can only lead one 

to deduce that less value is placed on Indian health than that of other populations’’). 

that decision themselves, rather than it being made for them by 

the IHS. 

Ironically, we would not be having these disagreements with IHS 

if Congress fulfilled its trust responsibility to Indian people and address the larger crisis of chronic IHS program under-funding. If 

IHS and other IHS programs were adequately funded, tribe would 

not be forced to consider charging beneficiaries in the first place. 

I urge the Committee to work on making sure that CHS and 

other Indian health programs are fully funded. Thank you for the 

opportunity to testify on these important issues vital to the well 

being of my tribe and of Indian Country. 

Thank you. 

[The prepared statement of Mr. Dixon follows:] 

PREPARED STATEMENT OF HON. STACY DIXON, CHAIR, SUSANVILLE INDIAN

RANCHERIA

Good morning. Thank you for the opportunity to be here today. My name is Stacy 

Dixon. I am the Chairman Susanville Indian Rancheria, a Federally-recognized Indian tribe whose reservation is located in Susanville, California, a small community 

located about 85 miles from Reno, Nevada. I am pleased to testify about a topic of 

great importance to my Tribe: the severe underfunding of Contract Health Services 

in Indian country. 

Let me begin by providing a little background on my Tribe’s health care delivery 

system. Health care to eligible beneficiaries who reside in our geographic area is 

provided out of the Lassen Indian Health Center (LIHC), a small rural health care 

facility located on the Susanville Indian Rancheria. The Tribe has been providing 

health services through the LIHC to tribal members and other eligible beneficiaries 

under an Indian Self-Determination and Education Assistance Act (ISDEAA) agreement since 1986. In 2007 the Tribe and the Indian Health Service (IHS) entered 

into a self-governance agreement under Title V of the ISDEAA. Like most other 

tribes, we have struggled to achieve and maintain a high level of health care services despite chronic underfunding, especially of Contract Health Services (CHS) 

funds. 

As you are aware, CHS funds are used to supplement and complement other 

health care resources available at IHS or tribally operated direct health care facilities. Under the CHS program, primary and specialty health care services that are 

not available at IHS or tribal health facilities are purchased from private and public 

health care providers. For example, CHS funds are used when a service is highly 

specialized and not provided at the IHS or tribal facility, or cannot otherwise be provided due to staffing or funding issues, such as hospital care, physician services, 

outpatient care, laboratory, dental, radiology, pharmacy, and transportation services. 

CHS, like the rest of IHS funded programs, is extremely under-funded. 1 Based 

on FY 2007 data, the Northwest Portland Area Indian Health Board (NPAIHB) conservatively estimates that Congress would need to appropriate an additional $333 

million per year to meet unmet CHS needs nationally. When added to the current 

IHS budget line item ($588,161,000 million is requested for FY09) for CHS, the CHS 

budget should be no less than $900 million. The CHS program is also greatly affected by medical inflation, as the costs are not controlled by the IHS or by tribal 

health care providers, but are determined by the private sector health care environment. 

The lack of adequate CHS funding has led to health care rationing and barriers 

to access to care because there are simply not enough appropriated funds to meet 

all needs. In expending limited CHS resources, the IHS and tribal health care providers use a strict medical priority system. Most IHS Areas lack enough CHS funds 

to even pay for medical priority one—emergent and acutely urgent care services. 

These services are ones necessary to prevent the immediate death or serious impairment of health—so called ‘‘life or limb emergencies.’’ Any medically-necessary health 

care services that are needed but do not reach that priority status, such as priority 

39 

2 Rincon Band of Mission Indians v. Harris, 613 F.2d 569 (9th Cir. 1980). 

two preventive care, priority three chronic primary and secondary care or priority 

four chronic tertiary care, are put on a deferred list and are not approved for payment unless funding becomes available. If no funding becomes available, payment 

is denied and the patient’s condition goes untreated unless he/she has an alternate 

resource such as Medicare or Medicaid, or can afford to pay for the care him/herself. 

According to the IHS in its FY 2007 CHS Deferred and Denied Services report, 

IHS programs denied care to 35,155 eligible cases because they were not within 

medical priority one, representing a 9% increase in denials over the previous year. 

Many tribally operated health programs no longer track deferred or denied CHS 

services because of the expense of doing so, meaning that figure is understated, particularly in California where there are no direct care programs operated by IHS, and 

would be higher if all CHS data from tribal programs were available. 

Patients eligible for CHS but who do not get approved for funding are left with 

an unconscionable choice between having to pay for the service themselves (many 

cannot afford to even consider that option) or not getting the services they need. In 

the Susanville Indian Rancheria’s experience, many tribal beneficiaries do not even 

visit health facilities when they expect CHS to be denied, which adversely impacts 

their overall health status. 

The impact of CHS underfunding on access to health care has had a particularly 

devastating impact in California. To fully grasp the extent of CHS under-funding 

in our state, it is helpful to first understand the history of health services in California and tribes’ efforts to bring about equity in funding. This history is unique 

within the U.S. Indian Health Service system. 

In the 1950’s, as part of the termination of tribes’ special status across the United 

States, the Bureau of Indian Affairs (which was responsible for health care until 

that responsibility was transferred to the U.S. Public Health Service in 1954) withdrew all federal health services from Indians in California. Studies of the health status of California Indians in the late 1960s revealed that their health was the worst 

of any population group in the State. The routine health services available to Indians through the IHS in other states were not accessible or available to Indians in 

California. At the urging of the tribes in California through the work of the California Rural Indian Health Board and the State of California, at the direction of 

Congress the IHS began to restore federally provided health care services for Indians living in California in 1968—but through tribally owned and managed health 

programs rather than direct services from the Federal Government. Funding was 

insufficient and the programs grew slowly. 

Indians in California were left out of the IHS’s growth that occurred between 

1955—when the U.S. Public Health Service began discharging its responsibility for 

Indian health care—and 1969—when the IHS again assumed responsibility for Indian health care services in California. To address that shortfall and force the issue 

of equitable care, Tribes filed a class action against the IHS. In Rincon Band of Mission Indians v. Harris, 2 the Ninth Circuit Court of Appeals ordered the IHS to provide California Indians with the same level and scope of services that it provides 

to Indians elsewhere in the United States. Despite winning this victory, California 

tribes continued to be short-changed: the IHS distributed only $13.7 million to California tribes out of the $37 million in additional funding Congress originally appropriated to address IHS funding inequities following the Rincon decision. The IHS 

never fundamentally altered its funding allocation method, and California tribal 

health programs have remained chronically under-funded. 

According to the Advisory Council on California Indian Policy (ACCIP), in a report 

and recommendations made to Congress in September 1997, IHS service population 

figures for 1990 to 1995 show that California was the fifth largest Area out of the 

twelve IHS Areas, but ranked third lowest in per capita IHS funding levels. 

Today, many tribes in California have taken on the responsibility for developing 

and operating health care facilities pursuant to the ISDEAA. None of the tribal facilities and programs in California originated as facilities and programs previously 

operated by the IHS, as is the situation in most of the other IHS Areas. California 

tribal health programs were never built or staffed under the IHS system, there are 

no IHS inpatient facilities in California and the IHS provides no direct care services 

in California. Without having had such infrastructure and services in place, IHS 

was unable to base the amount of funds for tribally-operated health care in California on the amount IHS itself had spent. This is the funding calculation methodology used in many other Areas and is required by the ISDEAA. 

There are no IHS hospitals in California. Thus, tribal providers rely heavily on 

the CHS program to fund specialty and inpatient care. When CHS resources are exhausted, Indian beneficiaries in California have no recourse. IHS facilities can rely 

40 

on their specific Area Offices to assist them with a major crisis that requires additional CHS, where in a true emergency the Area Offices can shift funds or ask IHS 

Headquarters for assistance. The California Area Office, however, does not have reserves or other ability to shift funds between and among already inadequately funded tribal programs. 

In its September 1997 report, ACCIP determined that the California CHS budget as of that time was the lowest in the entire IHS system at $114 per user, compared 

to $388 per user in the Portland Area, which also lacks IHS hospitals. California 

received $7,085,200 in CHS funds for FY 1995 compared to $16 million and $28 million provided to the Bemidji Area and the Billings Area, respectively, which have 

similar user populations to that of California. ACCIP determined that the CHS 

funding shortfall for California was $8 million in 1997. Now more than ten years 

later, that figure is no doubt considerably higher. Recently, research done by the 

California Rural Indian Health Board which matched data for the IHS Active User 

population in California with data from the California Hospital Discharge Data set 

identified $19,355,000 in unfunded hospital care for the year 2007. That number 

does not address other needs such as diagnostic services, specialty care and pharmacy services. 

With respect to California beneficiaries, the IHS’s FY 2005 CHS Deferred and Denied Services report shows that IHS programs deferred payment for services for 

2,611 eligible cases and denied care to 519 eligible cases that were not within the 

medical priority. The report for 2006 indicates that the number of eligible cases denied care in 2006 in the California Area rose to 841. As mentioned above, these figures understate the problem given that there are no IHS direct care providers in 

California and tribal programs do not all track this type of data. 

In 1995, the Susanville Indian Rancheria undertook a comparison analysis to look 

at three IHS Indian Health Centers—one each in Arizona, Utah and Oregon—to review similarities and differences between them and the tribally operated LIHC in 

California, with respect to CHS and other IHS funding. The comparison facilities 

were all IHS-operated and had similar staffing, workloads and service populations 

(one facility had a service population slightly lower than the LIHC’s). By doing that 

comparison, we discovered that the IHS health facilities had considerably more resources. For example, the LIHC had a CHS budget in FY 1994 of $93,000, compared 

to the much higher budgets for the comparison facilities in the same period: 

$770,125, $629,224 and $1,371,156. Even taking into account differences in the service population, the funding levels should have been somewhat similar for similar 

workload and number of active users. Our comparison showed what we already 

knew, which is that the IHS resource allocation methodology has consistently demonstrated a bias toward larger facilities and toward IHS facilities rather than tribally operated facilities. 

In 1986, when the Tribe took over the responsibility to deliver health care services, our goal was simple: provide the best possible health care to our people. One 

important aspect of that goal was to provide a continuum of care, including as many 

possible health services in one location so that care provided by physicians and 

other providers could be integrated and coordinated. We firmly believe that the continuum of care approach provides the highest quality health care for the patients 

served. 

Key to our continuum of care approach is the provision of on-site pharmacy services. This allows our patents to obtain direct counseling on the use of prescription 

drugs being dispensed and to obtain necessary drugs at a low cost as part of an integrated health program. The challenges that we have faced with our pharmacy program provide a vivid illustration of the impact that CHS under-funding—and the 

IHS’s under-funding in general—on tribal health programs and barriers to access 

to care problems. 

Historically the IHS has never provided the Tribe with any funds specifically to 

operate its pharmacy program or, for that matter, to purchase pharmacy supplies. 

In fact, the Tribe receives today only about one-half the funds from the IHS that 

are needed to carry out the Tribe’s health programs. To compensate for this chronic 

lack of funding the Tribe has made decisions to reallocate available funds, redesign 

programs, and seek additional resources (thought third party reimbursements, 

Medicare and Medi-Cal reimbursements, and even through tribal contributions from 

its own funds) to fund the health care needs of its beneficiary population. 

For many years, the Tribe attempted to operate its pharmacy program using a 

substantial amount of funds diverted from other health purposes at a significant 

cost to the Tribe. The Tribe had to close the pharmacy between January 2004 and 

June 2005 because it concluded that it could not afford to operate the pharmacy any 

longer. During this time, prescription drugs had to be obtained from a local pharmacy, where the Tribe’s patients experienced long waiting lines to receive their 

41 

medications, errors in prescribing the correct drug, and prescriptions being given to 

the wrong patients. The Tribe also experienced a drop in patient visits, which was 

directly related to the Tribe having no on-site pharmacy and the disruption of services through its continuum of care. 

To pay for these retail pharmacy services while the LIHC on-site pharmacy was 

closed, the Tribe used its already limited CHS funds. Obtaining prescription medications outside of the Tribe’s facility was not only more inconvenient for the Tribe’s 

patients and interfered with the continuum of care, but the cost for billing and administration in working with retail pharmacies was significant. The Tribe did not 

(and still does not) have enough CHS resources to pay for pharmaceuticals through 

retail pharmacies. 

Each dollar of CHS funds used for pharmacy services is a dollar that cannot be 

used for other critically needed CHS-funded services. When using CHS for pharmacy services, the cost of the pharmaceuticals is higher than it would be in a direct 

care environment, because outside retail pharmacies do not want to provide federal 

discount pharmaceutical pricing to the Tribe. Moreover, given the dramatic rise in 

the cost of pharmaceuticals over the past several years, and the continuing trend 

of substantial increases in price, we concluded that in a short time all of the CHS 

dollars available to the Tribe would have been spent on pharmaceuticals, meaning 

no CHS dollars would have been available for other critical CHS services. 

While the Tribe was providing pharmacy services through CHS, it had to make 

significant cuts in other CHS services that it had been providing. For example, the 

Tribe could only cover CHS priority level one for medical and CHS priority levels 

one through four for dental. In 2005 the tribe decided that the problems associated 

with not having a pharmacy on-site could only be corrected by re-opening the onsite pharmacy. When the Tribe resumed pharmacy operations in July 2005, the 

Tribe was able to once again use CHS funds to meet the growing backlog of needed 

CHS services for medical and dental care. 

In CY 2006, the Tribe supplemented approximately $908,458 of tribal third-party 

funds to operate its IHS programs. The Tribe operated its pharmacy that year at 

a net loss of $18,007.08. In many of the previous years, the losses were greater than 

$100,000. Because the IHS provides the Tribe with no funds specifically for its pharmacy program and the Tribe’s other health programs are severely under-funded by 

the IHS, every dollar the Tribe receives through its ISDEAA agreements and 

through third-party resources such as Medicare and Medi-Cal, are very carefully 

managed. There are no excess revenues or available funds the Tribe can reallocate 

to provide pharmacy services without hurting other health programs. 

After much study and analysis, the Tribe determined that the only way to run 

a viable in-house pharmacy program without jeopardizing the CHS needed for other 

critical services was to charge a small co-payment ($5.00) along with the acquisition 

cost of the medicine to those patients who could afford it. Indigent members and 

elders are exempt from this charge. The Tribe implemented this policy in July 2006. 

The Tribe’s Pharmacy Policy, made necessary by chronic CHS underfunding, became the focus of a lawsuit between the IHS and the Tribe and remains a lightning 

rod today in a legal and policy debate about the means available to tribes to supplement their health care funding. The decision in Susanville Indian Rancheria v. 

Leavitt upheld our Pharmacy Policy and affirmed a tribe’s right to determine for 

itself whether to charge beneficiaries for services at a tribally-operated program. 

Disturbingly, this decision in favor of tribal self-governance has led the IHS in recent weeks to threaten to revoke the ISDEAA funding of other tribes that decide 

to charge beneficiaries. 

Despite the fact that the IHS had never provided the Susanville Tribe with funds 

specifically for pharmacy services, for many years the Tribe had included a pharmacy services program in its ISDEAA agreement. In 2006, after the Tribe was admitted into the Title V self-governance program, it began negotiating with the IHS 

for a self-governance compact and funding agreement for Calendar Year 2007. 

The Tribe’s proposed agreement included pharmacy services, but said nothing 

about its co-pay policy. IHS negotiators, however, learned of the Pharmacy Policy, 

and informed the Tribe of the IHS’s position that the Tribe could not charge eligible 

beneficiaries for pharmacy services. The IHS gave the Tribe two choices: (1) delete 

pharmacy services from the agreements entirely, or (2) include language in the contract stating the Tribe would not charge eligible beneficiaries for pharmacy services. 

The Tribe refused to accept either of these options and presented IHS with a final 

offer that included pharmacy services. 

The IHS rejected the Tribe’s proposal on two primary grounds. First, the IHS argued that the Secretary lacks authority to enter an agreement to do something that 

the Secretary cannot do—namely, charge beneficiaries for services. Second, the IHS 

42 

3Pub. L. 93–638, Title V, § 515(c), as added Pub. L. 106–260, § 4, Aug. 18, 2000, 114 Stat. 

711, codified at 25 U.S.C. § 458aaa–14(c) (emphasis added). 4 Rob Capriccioso, IHS Considers Stopping Funds for Tribe Requesting Patient Copays, INDIAN COUNTRY TODAY (June 20, 2008). 

argued that the Tribe’s co-pay policy would result in a ‘‘significant danger or risk 

to public health’’. 

The Tribe appealed the IHS rejection decision to federal district court in the Eastern District of California. The court found that the IHS’s public health argument 

failed because the agency cited only speculative risks that did not meet the agency’s 

burden of proof under the ISDEAA. The court then addressed the IHS’s argument 

that the Tribe could not charge because the IHS cannot charge. This issue turned 

on the interpretation of Section 515(c) of Title V of the ISDEAA, which provides as 

follows: 

The Indian Health Service under this subchapter shall neither bill nor charge 

those Indians who may have the economic means to pay for services, nor require 

any Indian tribe to do so. 3

The Court decided that this provision prohibits the IHS from charging—for good 

reason, as it would directly violate the federal trust responsibility—but that it does 

not prohibit tribes from doing so. 

The court also rejected the IHS argument that the agency cannot approve an 

ISDEAA agreement under which a tribe will conduct activities (such as billing) that 

the IHS itself has no legal authority to carry out. The court pointed out that, ‘‘[a]s 

Title V makes clear, the Tribe is not required to operate a [program] in the same 

manner as the IHS.’’ Tribes are not federal agencies, which can only do what Congress authorizes them to do. Tribes retain inherent authority beyond that delegated 

by Congress. 

Events subsequent to the Susanville decision are troubling and bring into question the IHS’s understanding of tribal rights to self-governance. Despite the 

Susanville decision—and the plain language of the ISDEAA on which the decision 

was based—the IHS has sought to prohibit tribes (other than our Tribe) from charging eligible beneficiaries. The IHS did not appeal the Susanville decision, yet the 

agency insists the court was wrong and has not heeded its ruling. In a series of recent ‘‘consultation’’ sessions with tribes in various regions, the IHS has stated that 

the Susanville decision is limited to one tribe, and does not constitute binding precedent. The agency made clear that ‘‘the existing IHS policy, which prohibits Tribes 

from charging eligible beneficiaries, remains unchanged.’’ 

In fact, the IHS has threatened to cut the funding of any tribe that charges beneficiaries (again, except for Susanville). As quoted in an article last week in Indian 

Country Today, an IHS official called tribal billing ‘‘inappropriate’’ and said the IHS 

is ‘‘contemplating terminating relationships with tribes that have been discovered 

to be doing so.’’ 4

But the IHS and tribes agree on at least one thing: When the federal government 

fails to meet its trust responsibility, as it has by chronically underfunding CHS (and 

other areas of the IHS budget), it is inappropriate to force Indian beneficiaries to 

shoulder part of the burden by allowing the IHS to charge the very people to whom 

it owes the trust duty. Recognizing that this is so, Congress has flatly prohibited 

the IHS from billing or charging in the Title V provision at issue in the Susanville 

case and quoted above. Congress also recognized the flip side of this coin, however: 

Tribes are sovereign governments that have the right to decide how best to carry 

out health care programs for their people and to supplement inadequate federal 

funding by any and all reasonable means. While the decision whether to charge tribal members and other beneficiaries is not appealing, it is a choice Congress has left 

to Tribes in the exercise of their right of self-governance. 

The Susanville Indian Rancheria—just like many other tribes—would prefer not 

to charge eligible beneficiaries for any portion of the cost of providing health care 

to them. Doing so forces hard choices for individuals and tribes alike, and should 

be unnecessary given the Federal Government’s trust responsibility to provide the 

highest possible level of health care services to Native peoples, or provide sufficient 

resources for tribes to do so. 

Many, perhaps most, tribes have no plans to charge beneficiaries for health care 

services under any circumstances. Nonetheless, the tribal leaders I have heard from 

strongly support the right of Tribes and tribal organizations to make that decision 

themselves rather than have it made for them by the IHS. We believe that the IHS 

should abandon its contrary position, which comports neither with the law nor the 

policy of self-governance, and instead work with Tribes to find ways to ensure that 

sufficient funds are provided to tribal programs so that they do not need to consider 

43 

billing beneficiaries. Even more important, we urge Congress to address the larger 

crisis of chronic CHS underfunding so that tribes do not even have to consider 

charging beneficiaries in the first place. 

Thank you for the opportunity to testify on these important issues vital to the 

well-being of Indian country. 

The CHAIRMAN. Chairman Dixon, thank you very much for being 

here and sharing your experience. 

Next, we will hear from the Lieutenant Governor of the Chickasaw Nation in Oklahoma, Jefferson Keel. Mr. Keel will discuss the 

challenges his tribe faces. 

Thank you for being here. 

STATEMENT OF HON. JEFFERSON KEEL, LIEUTENANT 

GOVERNOR, CHICKASAW NATION; FIRST VICE PRESIDENT, 

NATIONAL CONGRESS OF AMERICAN INDIANS 

Mr. KEEL. Thank you, Mr. Chairman, members of the Committee. Senator Johnson, it is good to see you back. 

On behalf of the Chickasaw Nation and the National Congress of 

American Indians, which I serve as the First Vice President, I am 

honored to be asked to provide testimony on this important issue, 

particularly around the complex issue of contract health services. 

You have our testimony for the record, and I will provide a brief 

summary. 

As you know, the Chickasaw Nation is a self-governing tribe. 

However, on behalf of the National Congress of American Indians, 

and as Sally Smith has said, I must express our concern that our 

Direct Service Tribe, our member of the Direct Service Tribes, has 

not been asked to provide testimony. Considering the enormity of 

this issue, it would be helpful that the Committee would seek out 

additional testimony to address their concerns. 

Today, I would like to talk about some of the emergency issues 

tribes must face due to the rationing of health care created by the 

under-funding of Contract Health Services. I will conclude with six 

recommendations to the Committee that I would ask that they consider. 

In 1995, the Chickasaw Nation assumed control of the Indian 

Health Service Program at the Ada, Oklahoma service unit under 

a self-governance compact. At that time, the Indian Health Service 

owed millions of dollars for contract care due to their lack of payment and because they would not refuse authorization of services 

due to lack of funds. This built up to the point where there were 

several million dollars that were still owed, and it took some time 

to get those paid off. 

Faced with growing medical inflation rates, the increased expense of providing services in a rural area, a rapidly increasing Indian population, and limited competitive pricing, our tribe’s only 

option is to require strict adherence to a medical priority system. 

You have seen what that system is. 

These covered services are generally used for emergency care or 

the treatment of life-threatening conditions only. Medical needs 

falling outside of the priority system are not funded. Our situation 

is difficult and challenging. Do we cover one catastrophic hospitalization, resulting after a car wreck in another city? Or do we 

44 

use those same funds to provide treatment for heart disease or cancer or other life-threatening illnesses? 

For example, cataract removal is one of the most common operations performed in the United States. It is also one of the safest 

and most effective types of surgery. In about 90 percent of the 

cases, people who have cataract surgery have better vision afterwards. We are unable to provide cataract surgery as a covered 

service, leaving untold numbers of elders in our tribe, just our tribe 

alone, in an unnecessary dependent state. 

Another example, just last week, a Tribal citizen, who is a heart 

patient, came to our facility with an emergency-type situation. 

Under ordinary circumstances, we have an arrangement with the 

Oklahoma Heart Hospital in Oklahoma City where we are able to 

refer that patient and they receive treatment and we provide payment under the Medicare rates. However, if that hospital is full or 

at capacity, as it was last week, then they would not accept that 

patient for the Medicare rates. Consequently, he was not able to receive adequate treatment. We had to make other arrangements. 

The bottom line is that because of a lack of adequate funding for 

Contract Health Services, our people often must accept second-class 

health care treatment. 

In light of the crisis situation we are facing, we propose the following recommendations. 

Number one, extend Medicare-like rates to the ambulatory setting. Extension of Medicare-like rates to the out-patient setting will 

be cost-neutral and allow tribes to extend Contract Health Services 

funding even further. We would request that when this program is 

implemented that it is created in a manner that it does not cut off 

or limit the current supply of medical providers. 

Two, reduction of administrative overhead within the Indian 

Health Service. The reduction in administrative costs should include departmental-imposed administrative paperwork, systems 

and programs, as well as limit the dollar amount of resources that 

may be utilized for administrative costs versus cost to directly fund 

health care. 

Number three, work with tribes to fund proactive procedures currently denied under Contract Health Services. For example, funding bariatric surgery would directly impact the patient’s quality of 

life and life span. Obesity is an important risk factor for cardiovascular disease and diabetes, which are chronic diseases that affect a disproportionate number of American Indians today. New 

studies demonstrate a direct correlation between the bariatric surgery and a cure for the patient’s type II diabetes. These patients 

are routinely off diabetic medication by the time they are discharged from the hospital. Additionally, many patients are able to 

discontinue medication for high blood pressure and cholesterol. 

Number four, adequately fund Indian Health Service and the 

services provided by Contract Health Service. Tribes should not be 

forced to make decisions regarding the health and oftentimes lives 

of their members due to inadequate funding of Contract Health 

Service programs. The National Congress of American Indians 

passed a resolution at our May, 2008 mid-year conference in Reno, 

Nevada in support of an additional appropriation of $1 billion for 

45 

the Indian Health Service, to be used in part to address underfunding of services provided by Contract Health Service programs. 

Number five, remove the new CMS documentation requirements. 

The historic practice of accepting tribal membership or Certificate 

of Degree of Indian Blood as proof of citizenship should be accepted 

for the indigenous people of our country. 

Number six, benefits of Contract Health Services Delivery Area. 

At a minimum, the American Indians who reside in our geographic 

service unit area and are Contract Health Service-eligible should 

qualify for emergency and life-threatening treatments. 

Thank you for your dedication to Indian Country, Senator, and 

for taking the first steps to examining this difficult issue. We are 

aware that there are hurdles we must face when confronting Contract Health Service programs, as well as other health care issues 

in this Country, for instance reauthorization of the Indian Health 

Care Improvement Act, as you have mentioned. 

We thank you in advance, and we look forward to working with 

you, and I will be happy to answer any questions at a later date. 

Thank you. 

[The prepared statement of Mr. Keel follows:] 

PREPARED STATEMENT OF HON. JEFFERSON KEEL, LIEUTENANT GOVERNOR, 

CHICKASAW NATION; FIRST VICE PRESIDENT, NATIONAL CONGRESS OF AMERICAN

INDIANS

On behalf of the Chickasaw Nation and the National Congress of American Indians (NCAI), I am honored to present testimony to the Senate Committee on Indian 

Affairs for the hearing on Contract Health Services. 

NCAI is the oldest and largest American Indian organization in the United 

States. NCAI was founded in 1944 in response to termination and assimilation policies that the United States forced upon the tribal governments in contradiction of 

their treaty rights and status as sovereign governments. Today NCAI remains dedicated to protecting the rights of tribal governments to achieve self-determination 

and self-sufficiency. 

Contract Health Services 

Under the Contract Health Service (CHS) program, primary and specialty health 

care services that are not available at Indian Health Service (IHS) or tribal health 

facilities may be purchased from private sector health care providers. This includes 

hospital care, physician services, outpatient care, laboratory, dental, radiology, pharmacy, and transportation services. 

The Indian Health Service (IHS) is the Payor of Last Resort. This means that patients are required to exhaust all health care resources available to them from private insurance, state health programs, and other federal programs before IHS will 

pay through the CHS program. The results of this policy have been devastating in 

Indian Country. 

Considering the astronomical medical inflation rates experienced while providing 

services in a rural area along with an increasing Indian population and limited competitive pricing, the Tribe’s only option is to require strict adherence to a medical 

priority system. These covered services are generally used for emergency care or the 

treatment of life threatening conditions. Medical needs falling outside the priority 

system are not funded. 

The resulting rationing of health care creates numerous emergency issues for the 

Tribes. Principal among them: 

The creation of a priority system, in which patients who are not facing life or 

limb threatening conditions are denied referral to a private provider for medical 

attention from the IHS; 

Patient billing issues arising from eligible tribal members being denied payment 

for medical services provided by non-IHS providers. Tribal members are left 

coping with credit problems, a lack of ability to get future medical services, and 

often times an unwillingness to seek preventive medical services; 

46 

The ‘‘don’t get sick after June’’ phenomenon in Indian Country—or in some 

cases earlier—due to the underfunding of CHS programs; and 

An ongoing dilemma in the maintenance of adequate record keeping for referrals and denials and medical services. 

Inadequate CHS Funding Forces Tough Choices 

At the present, less than one-half the CHS need is being met and the President’s FY 2009 CHS budget request of $588 million. This discrepancy in funding means 

that some of the most basic and needed services that have the potential to dramatically improve quality of life for patients are routinely denied under existing CHS 

funding. 

In 1995 when the Chickasaw Nation took over the IHS program in the Ada Service Unit under a Self Governance compact, the IHS owed millions of dollars for contract care provided by local physicians and hospitals. This problem was caused when 

the IHS failed to pay its bills and would not refuse authorization of services due 

to lack of funds. 

Today Chickasaw Nation providers see in excess of $7 million dollars in unmet 

healthcare needs annually, forcing us to make the strategic decision to deny all 

emergency services that are not initiated by our health system. Our situation is difficult and challenging: Do we cover one catastrophic hospitalization resulting after 

a car wreck in another city, or do we use those same funds to provide treatment for 

heart disease or cancer? 

If a facility has a high number of vacancies in primary care areas, this will result 

in an increase in contract health resources. On the other hand, the more direct services that are provided by a facility translates into a decrease in contract health resources. The Chickasaw Nation has developed a method of using third party reimbursements to fund additional providers in our clinics. This allows us to see more 

patients and handle more medical needs. Unfortunately due to limited funds, we 

also do not have the benefit of providing the state-of-the-art procedure and treatment for our patients: 

Upon diagnosis of breast cancer, the standard treatment for most American patients is a lumpectomy followed by chemotherapy and radiation. However, a total 

mastectomy without chemotherapy or radiation will have the same success rate and 

can be accomplished as a direct healthcare service. For this reason, this is the typical form of treatment within our clinics. Since CHS does not provide for reconstructive surgery, our mothers and daughters are forced to not only face this horrific disease, thus must go through with a curative surgery that will leave them disfigured 

for life. 

An Indian male with a diagnosis of prostate cancer typically has two treatment 

‘‘choices’’. A radical prostatectomy reports good success but the surgery can result 

in erectile dysfunction and incontinence. A modified prostatectomy, TURP, followed 

by radioactive seed implants is a less invasive but a more expensive treatment 

choice. Due to the restrictions our clinics face with CHS, the first choice is most 

typically the treatment option. 

Cataract removal is one of the most common operations performed in the United 

States. It also is one of the safest and most effective types of surgery. In about 90 

percent of cases, people who have cataract surgery have better vision afterward. We 

are unable to provide cataract surgery as a covered service, leaving untold numbers 

of elders in an unnecessary, dependent state. 

American Indians face some of the highest level of diabetes in the world; however, 

due to funding level restrictions, organ transplantation surgery is not covered. This 

means that corneal transplant is out of reach for our patients with diabetic retinopathy—resulting in blindness. Patients with diabetic kidney disease are faced with 

a lifetime of hemodialysis with no hope of kidney transplant. 

Recent changes in federal laws have placed other burdens on an already burdensome and exhaustive citizenship documentation process. These new rules require 

applicants to provide certain documents to verify that they comply with rules governing citizenship and identity. States were notified of the new requirement on June 

9, 2006, and the interim rule was published in the Federal Register on July 12, 

2006. Oklahoma began implementation planning in January and operationalized the 

plan on July 1, 2007. 

• Citizenship: Medicaid eligibility has long been restricted to U.S. citizens and 

certain legal immigrants such as refugees. 

• Identity: Identity is not an eligibility requirement, per se, but individuals and 

parents are required to apply on behalf of themselves and their children. In addition, applicants already must provide Social Security numbers and information regarding family income. 

47 

The new laws require applicants, include those renewing their eligibility to document citizenship and identity through one of the following criteria: 

• A primary document that verifies both citizenship and identity, such as a passport or birth certificate or naturalization; or 

• Separate secondary documents, one verifying citizenship, such as a birth certificate and another verifying identity such as a driver’s license or school picture 

ID. 

According to I.H.S. per capita funding formula, Oklahoma is one of the lowest 

funded of the 12 Indian Health Service areas. The new CMS documentation requirements have resulted in a 13 percent decline in the American Indian population enrolled in the Oklahoma State Medicaid program, of which 60 percent were American 

Indian children. Because of this decline, contract health expenditures have increased for all IHS/Tribal/Urban programs. It would be safe to assume that most 

contract health service programs in Oklahoma are seeing a 13 percent increase in 

all contract health services expenditures. 

The Contract Health Services Delivery Area (CHSDA) is designed to allow for 

those American Indians who reside in a geographically service unit area to receive 

treatments. At a minimum, the American Indians who reside in our service unit 

area and who are CHS eligible will qualify for most emergency and life threatening 

treatment. However, there are hundreds of American Indians who reside outside the 

geographic service unit area which is normally sixty (60) miles, who routinely come 

to our clinics for treatment. Many of these patients live in Texas, and travel many 

miles to receive treatment. They do not qualify for CHS funding. 

Recommendations 

1. Extend Medicare like rates (MLR) to the ambulatory setting. The application of 

MLR to inpatient CHS services had a direct impact for Tribes. The Chickasaw Nation saw an immediate 40 percent savings for some inpatient claims. Extension of 

MLR to the outpatient setting will be cost neutral and allow Tribes to extend CHS 

funding even further. We would request however that when a mechanism for applying MLR to outpatient services is devised, that it is created in a manner that does 

not cut off or limit the current supply of medical providers. 

2. Reduction of administrative overhead within the Indian Health Service. This reduction in administrative costs should include the departmental-imposed administrative paperwork, systems, programs, etc., as well as limit the dollar amount of resources that may be utilized for administrative costs versus cost to directly fund 

healthcare. 

3. Work with Tribes to fund certain proactive procedures currently denied under 

Contract Health Service funding. For example, funding bariatric surgery would directly impact the patient’s quality of life and life span. Obesity is an important risk 

factor for cardiovascular disease and diabetes which are chronic diseases that affect 

a disproportionate number of American Indians today. New studies demonstrate a 

direct correlation between the bariatric surgery and a cure for the patient’s type II 

diabetes. These patients are routinely off diabetic medication by the time they are 

discharged from the hospital. Additionally many patients are able to discontinue 

medication for high blood pressure and cholesterol. 

4. Adequately fund Indian Health Service and the services provided by Contract 

Health Service. Tribes should not be forced to make decisions regarding the health— 

and often times lives—of their members due to inadequate funding of CHS programs. NCAI passed a resolution at their May 2008 Mid Year conference in Reno, 

NV in support of an additional appropriations of $1 billion for the IHS to be used, 

in part, to address underfunding of services provided by the CHS program. 

5. Remove the new CMS documentation requirements. And the historic practice of 

accepting tribal membership or Certificate of Degree of Indian Blood (CDIB) as 

proof of citizenship be accepted for the indigenous people of our country. 

6. Benefits of CHSDA. As stated above, at a minimum, the American Indians who 

reside in our geographically service unit and are CHS eligible will qualify for most 

emergency and life threatening treatment. 

Conclusion 

The Chickasaw Nation and NCAI commend the committee’s dedication to Indian 

Country and for taking the first steps into examining this difficult issue. We are 

aware that there are hurdles we must face when confronting CHS programs—such 

as reauthorizing the long overdue Indian Health Care Improvement Act. We must 

however continue to stress that anything less than full and recurring funding of contract health services compromises the health and lives of those in our communities. 

48 

By supporting us in these efforts, you will be ensuring that Tribes have the ability 

to deliver the highest quality services to their tribal members. 

The CHAIRMAN. Lieutenant Governor Keel, thank you very much 

for being with us. 

Next, we will hear from Linda Holt, the Chair of the Northwest 

Portland Indian Health Board, and a Suquamish Tribal Council 

Member in Washington State. 

Ms. Holt, thank you very much for being here. You may proceed. 

STATEMENT OF HON. LINDA HOLT, CHAIR, NORTHWEST 

PORTLAND INDIAN HEALTH BOARD 

Ms. HOLT. Thank you. Good morning, Chairman Dorgan and 

Vice Chairman Murkowski, and Senator Johnson. It is my honor 

to be here today to testify before your Committee. 

My name is Linda Holt. I am a Suquamish Tribal Council Member with the Suquamish Tribe in Washington State. I also serve as 

Chair of the Northwest Portland Area Indian Health Board. Our 

organization represents 43 tribes in the States of Washington, Oregon an Idaho. We serve a combination of Direct Service Tribes and 

self-governance tribes. 

I would just like to echo the concern of Ms. Smith and Mr. Keel 

that the Direct Service Tribes have not been invited to give input. 

The CHAIRMAN. Let me address that. We did try to get a Direct 

Service Tribe to this hearing. In fact, we were unsuccessful in 

doing that. We will have other hearings. In fact, Marlene Krein is 

testifying about her experience with the Direct Service Tribes, and 

Sally Smith represents an organization that also includes them. 

But we will have Direct Service Tribes at the next hearing. We 

tried at this hearing and it just didn’t work out. 

Ms. HOLT. Thank you. 

The CHAIRMAN. So it is not a matter of will. We will certainly 

get that done. 

Ms. HOLT. Okay. Just for the record also, there is a Direct Service Tribes meeting in Spokane, Washington on August 5, 6, and 7, 

which I would like to invite the Committee to hold a field hearing 

with the Direct Service Tribes. 

The Portland area is commonly referred to as a CHS-dependent 

area. CHS-dependent areas do not have access to IHS or tribally 

operated hospitals and must purchase all in-patient and specialty 

care services through the CHS program. This dependence is clearly 

demonstrated in the Portland area budget. Nationally, the CHS 

program is 19 percent of the IHS health service budget. However 

in the Portland area, CHS makes up 31 percent of our overall 

health service budget. This dependence poses unique challenges for 

our tribes. 

One of the most critical issues affecting tribes has been the persistent under-funding of the CHS program. This simply does not 

make sense, given the significant health disparities that Indian 

people face and it is time Congress fully funded the IHS budget. 

My written remarks document these disparities and I know you are 

aware of these concerns. 

The Northwest Portland Area Indian Health Board takes a leadership role in conducting analysis and advocating for the IHS budget. Our estimates indicate that the CHS program has lost $778 milVerDate Aug 31 2005 12:58 Oct 14, 2008 Jkt 044489 PO 00000 Frm 00052 Fmt 6633 Sfmt 6601 S:\DOCS\44489.TXT JACK PsN: JACKF
49 

lion in unfunded inflation and population growth since 1992. The 

table on page eight of my written remarks documents this chronic 

under-funding. This is attributed to the fact that the Administration and IHS have not requested adequate funding and the failure 

of Congress to provide appropriations sufficient to meet the needs 

of medical inflation and population growth. 

This failure has resulted in a health care crisis in the CHS program. As a tribal leader, it is infuriating to know that other public 

health service programs like Medicaid and Medicare receive adequate increases to fund medical inflation, yet the CHS program 

provides similar services and purchases care from the private sector as Medicaid does, however does not get the same respect. 

The graph on page nine of my testimony compares growth in the 

Medicaid and CHS programs and illustrates the funding disparity 

between the two. This has resulted in a CHS system that rations 

care with a backlog of over 300,000 denied or deferred services. 

Our board has analyzed the denied and deferred services report 

and estimates that it would take at least $333 million to address 

the backlog of services. We performed the same analysis two years 

ago which yielded similar results for fiscal year 2006. 

Our analysis consistently indicates that an increase of at least $300 million is needed in the CHS program. Ideally, to restore the 

CHS program to the same level of services provided in fiscal year 

1991, Congress would have to restore $778 million to the CHS program. Our estimates indicate that the CHS budget today should be 

$1.3 billion per year. 

If there is one thing that Congress could do to address the health 

care crisis, it would be to direct the IHS to use real medical inflation and provide adequate funding to cover this mandatory cost. 

The OMB medical inflation rate used by IHS to develop its budget 

is completely inadequate. This rate has averaged four percent over 

the last 10 years, despite the fact that medical inflation in many 

of these years has exceeded 10 percent. The CHS program is most 

vulnerable to the effects of inflation more than any other IHS 

budget line item. 

Within the Indian health system, there is a wide range of dependence on the CHS program. However, a fundamental distinction 

in the IHS system is the dichotomy between those areas that have 

hospitals and those that are CHS-dependent. This difference is the 

result of a decades-old facility construction process that prioritizes 

large user populations in remote areas over small populations in 

mixed population areas. The priority facility construction may have 

been logical at one time. However, over time it has created two 

types of systems: those that are hospital-based with expanded 

health services, and those that are CHS-dependent with limited 

ability to provide like services. 

In many instances, areas with hospitals can provide many types 

of services, but must be purchased from the private sector in CHSdependent areas. The consequences is that CHS-dependent areas 

do not receive a fair share of health service resources. This is demonstrated in many aspects of IHS programs, with the disparities in 

facilities construction funding and staffing packages. This is very 

true when the effect of staffing new facilities is factored on IHS 

budget increases. Portland tribes question why they receive less 

50 

than 1 percent increases, when Congress provided a 5 percent increase of the IHS budget. The answer is the phasing-in staff at new 

facilities takes between 50 percent to 60 percent of the budget increase. 

Another concern with the formula is the manner in which inflation is calculated. The formula requires that inflation be funded 

prior to allocating any remaining funds under the new formula requirements. If an inadequate inflation rate is used, it can result in 

a surplus of CHS funds to be allocated under the new formula. The 

new formula uses the OMB medical inflation rate, which I explained earlier, and is much less than true medical inflation. It 

does not account for increased health service costs purchased from 

the private sector. 

We have all heard the quote, ‘‘don’t get sick after June.’’ In the 

Portland area, almost all of our tribes begin the new fiscal year 

clearing the backlog of deferred services from the previous fiscal 

year. This immediately places our health programs in priority-one 

status. This means that patients will not receive care under the 

CHS program unless life or limb tests apply. This process has repeated itself annually. 

For Portland-area tribes, as it is for other CHS-dependent areas, 

it is don’t get sick at all or you will not receive care in the CHS 

program. 

The CHAIRMAN. Ms. Holt, I want you to summarize the remainder of your testimony if you would. 

Ms. HOLT. Thank you. 

Finally, more needs to be done in the Indian Health Service toward identifying best practices for delivering care in the CHS program. For example, my Suquamish Tribe health program was established as an alternative delivery demonstration project. We do 

not have a clinic. We use our CHS money to purchase a health benefits program for our tribal members. We contract with Kitsap Physicians Health Plan in Kitsap County to administer the health benefits program for our tribal members. 

We have approximately 475 Suquamish tribal members enrolled 

and 45 members of other federally recognized tribes enrolled in this 

health plan. Benefits of the demonstration project include services 

parallel to those purchased in the CHS program. There is no prior 

authorization required for receiving services, and there have been 

beneficial changes to out-patient utilization for tribal members. 

Prior, they had to go to emergency rooms to receive care, which 

drove up the cost. That has come down with this health benefits 

package. We would like to see this health alternative project looked 

at by IHS and find better ways to utilize the CHS program. 

I would like to thank you for your time today. 

[The prepared statement of Ms. Holt follows:] 

51 

PREPARED STATEMENT OF HON. LINDA HOLT, CHAIR, NORTHWEST PORTLAND INDIAN

HEALTH BOARD


626c1.eps
52 


626c2.eps
53 


626c3.eps
54 


626c4.eps
55 


626c5.eps
56 


626c6.eps
57 


626c7.eps
58 


626c8.eps
59 


626c9.eps
60 


626c10.eps
61 


626c11.eps
62 


626c12.eps
63 


626c13.eps
64 


626c14.eps
65 


626c15.eps
66 


626c16.eps
67 


626c17.eps
68 


626c18.eps
69 


626c19.eps
70 


626c20.eps
71 


626c21.eps
72 


626c22.eps
73 


626c23.eps
74 


626c24.eps
75 


626c25.eps
76 


626c26.eps
77 


626c27.eps
78 


626c28.eps
79 


626c29.eps
80 


626c30.eps
81 


626c31.eps
82 


626c32.eps
83 


626c33.eps
84 


626c34.eps
85 


626c35.eps
86 


626c36.eps
87 


626c37.eps
88 


626c38.eps
89 


626c39.eps
90 


626c40.eps
91 


626c41.eps
92 


626c42.eps
93 


626c43.eps
94 

The CHAIRMAN. Thank you very much, Ms. Holt. 

Finally, we will hear from Ms. Brenda Shore, the Tribal Health 

Program Director at the United South and Eastern Tribes in Nashville, Tennessee. You may proceed. 


626c44.eps
95 

STATEMENT OF BRENDA E. SHORE, DIRECTOR OF TRIBAL 

HEALTH PROGRAM SUPPORT, UNITED SOUTH AND EASTERN 

TRIBES, INC. (USET) 

Ms. SHORE. Thank you and good morning, Mr. Chairman, members of the Committee, and tribal leaders. My name is Brenda 

Shore. I am an enrolled member of the Seminole Tribe of Florida 

and I am also one-half Cheyenne River Sioux from South Dakota. 

It is a pleasure to have you here, Mr. Johnson. 

My career as an advocate for the rights, health and welfare of 

Indian people spans 13 years, the last 11 of which have been spent 

as the Director of Tribal Health Program Support for the United 

South and Eastern Tribes. USET is a coalition of 25 federally recognized tribes located in States from Maine, south to Florida, and 

west to Texas, that are served by the Nashville Area Office of the 

Indian Health Service. 

I would like to acknowledge the USET tribal leaders in the audience, including our President directly behind me, Mr. Brian Patterson, Principal Chief of the Eastern Band of Cherokee Indians, Mr. 

Michell Hicks, to my left, as well as Mr. Buford Rolin, Chairman 

of the Poarch Band of Creek Indians, again to my left. 

I commend the Chairman and the Committee for embarking on 

an in-depth scrutiny of the Contract Health Service Program. We 

all share the goal of raising the health status of Indian people ‘‘to 

the highest possible level.’’ You and I both know that we have a 

long, long way to go to get to that goal. 

The fundamental question is what can we do to improve the 

health status of American Indian people and finally achieve the 

goal as articulated in the Indian Health Care Improvement Act 32 

years ago. Unfortunately, there is no easy answer, but looking at 

the Contract Health Services Program is a very good start. 

To prepare this testimony, I consulted with my own panel of experts, the USET member tribes’ health directors. One of them is 

sitting directly behind me, Casey Cooper, from the Eastern Band 

of Cherokee Indians. What I found was that all USET member 

tribes are heavily dependent on CHS to purchase in-patient care. 

There are only two facilities in the Nashville Area that offer in-patient care, and even they are very limited in what they can provide 

to their own population, let alone somebody presenting from another area or another tribe. 

The highest portion of CHS funding is used to purchase out-patient care, including specialty care. Most tribes confirmed the widely known fact that CHS funds run out before the 12-month period 

that they are expected to cover. We had nine tribes report that 

their funding is gone before nine months, and three of those even 

before seven months. 

There are dramatic differences between the per capita funding 

for CHS among our tribes. Some tribes are forced—and this is a 

quote from one of our tribes—to ‘‘cannibalize’’ their direct-care programs in order to purchase the outside care that their members 

need. 

Only a small percentage of the tribes’ CHS funds can be devoted 

to rehabilitative services such as physical therapy. Tribal leaders 

subsidize their health care programs when health care funding is 

96 

insufficient where they can. However, many tribes are not able to 

do this. 

I urge this Committee to be a strong and persistent advocate for 

a substantial increase to the CHS funding appropriation. There are 

three fundamental reasons for doing so. First, this segment of the 

Indian health budget is essential to fulfilling the United States’ 

trust responsibility to provide the quantity and quality of health 

services needed to raise the health status of Indian people to the 

highest possible level. 

Second, this is the humane thing to do. Every American deserves 

access to decent and comprehensive health care. As an Indian and 

an American, it is very painful for me to see Indian people forced 

to live with untreated ailments. An example of this exists within 

my family. I have an uncle on the Cheyenne River Reservation who 

is 55 years old, but nearly immobile because of a knee injury suffered as a youth, a sports-related injury. This man lives with 

chronic pain day to day, but does not meet the priority-one level 

to receive a proper diagnosis or treatment. Our family thinks he 

needs a knee replacement, but we don’t know that because he can’t 

even get an MRI to tell us if that is what the case is. 

With that situation, I implore you to think of the CHS review 

committees, which every day are forced with making these kinds 

of decisions about which tribal members will be forced to live with 

pain and who will get relief. I doubt that any of you would want 

to have to make those choices, especially when they affect your 

family, friends and community members. You have the power to 

eliminate the need for these hard choices. 

Third, supplying funds for CHS is a good investment that benefits local economies. Mr. Chairman, I challenge you and anybody 

else in this room to dispute that fact. CHS dollars purchase medical services from non-Indian providers in near-reservation communities. This spending makes valuable contributions to the economic 

health of these communities. 

In an April, 2008 Trend Watch report, the American Hospital Association pointed out that nationally, each hospital job supports almost two additional jobs and every dollar spent by a hospital supports more than $2 of additional business activity. You have a report attached to my testimony to that effect. They refer to this as 

the ‘‘ripple effect.’’ Each additional dollar appropriated for CHS 

produces benefits at several levels. It improves the physical and 

mental health of Indian beneficiaries. It creates local health care 

provider jobs, and through the ripple effect, it contributes to enhanced business activity in the community and, of course, to its tax 

base. 

By the same token, the local community is vulnerable to adverse 

consequences when an Indian health program is not funded sufficiently. An Indian beneficiary who cannot get CHS-funded care and 

has no additional resources is likely to present to a local hospital 

seeking treatment as an indigent patient. But no hospital, especially a small community hospital, can absorb an unlimited number 

of uncompensated cases without damaging its economic viability. 

The entire community, Indian and non-Indian alike, suffers when 

a hospital fails for economic reasons. Ms. Krein’s testimony supports this theory. 

97 

Although IHS seeks an $8.8 million increase for CHS in fiscal 

year 2009, the resulting budget would actually enable us to purchase less care in every category. In my view, the overwhelming 

deficiency of the CHS program is that it is woefully under-funded. 

I promise I am almost done. 

I am not going to cover anything regarding the fact that the estimate 50 percent level of need is probably optimistic. Chairwoman 

Smith and Councilwoman Holt did an excellent job of that. The one 

thing I would like to mention, though, is Medicare-like rates and 

the way that tribes have been using those. As we approach the first 

anniversary of the implementation of that legislation, we will be in 

a better position to evaluate the extent to which CHS buying power 

has been increased, or if it has been increased. 

Continued vigilance regarding improving the CHS program and 

extending its reach must be continued, while assuring that IHS 

budget requests for CHS do not attempt to offset any of the savings 

we have realized from Medicare-like rates by a reduction in or 

smaller than needed requested increases to the CHS appropriation. 

We hope that this Committee will share this oversight responsibility with us. 

I am very grateful to have had the honor to address this Committee and to discuss the vital CHS program that Indian people depend on, but cannot count on. I thank you for the opportunity in 

my Native languages: [phrase in Native tongue]. 

I hope that I am invited to testify on behalf of my people again 

in the future. I am happy to take any questions that you have. 

Thank you. 

[The prepared statement of Ms. Shore follows:] 

98 

PREPARED STATEMENT OF BRENDA E. SHORE, DIRECTOR OF TRIBAL HEALTH PROGRAM

SUPPORT, UNITED SOUTH AND EASTERN TRIBES, INC. (USET) 


626d1.eps
99 


626d2.eps
100 


626d3.eps
101 


626d4.eps
102 


626d5.eps
103 


626d6.eps
104 


626d7.eps
105 


626d8.eps
106 


626d9.eps
107 


626d10.eps
108 

The CHAIRMAN. Ms. Shore, thank you very much. 

All of you have provided testimony from different directions and 

different perspectives about exactly the same problem, and that is 

the lack of funding and the issue of priority-one requirements excluding people who live in pain. 

Ms. Shore, you described I think a relative with a knee problem. 

We have had testimony before this Committee by a doctor who saw 

a patient who had a knee problem, the kind of problem that represents excruciating pain—bone-on-bone, every day, debilitating— 

and went to a doctor at Indian Health Service and was told to wrap 


626d11.eps
109 

the knee in cabbage leaves for four days. Well, that is not health 

care. 

I don’t think this represents what the Indian Health Service does 

routinely, but I say that there are a lot of people who live in constant pain, who are not priority one, and who in many cases if they 

show up, they don’t get the kind of health care they need. A knee, 

in many cases, would be just completely out of reach for someone 

who is trying to confront this Indian health care system. So you 

have all given us a lot to think about. 

I have a couple of questions, but let me turn to my colleague, 

Vice Chairman Murkowski, if you have questions, and then my colleague, Senator Johnson. 

Senator MURKOWSKI. I do. Thank you, Mr. Chairman. 

Thank you all for your testimony, your comments. 

I want to ask a question to the entire panel about the Medicarelike rates. But before I do that, I want to ask you, Sally, a question 

about just kind of the sustainability. I will use the Bristol Bay 

Area Health Corporation as an example. In my opening, I mentioned the fact of the transportation costs exceeding $2 million, and 

that isn’t even recognizing the expenses that are involved there. 

Bristol Bay is looking at a situation where well over $1 million 

with third-party reimbursements, including Medicare and Medicaid 

last year. How long can you sustain? How long can Bristol Bay sustain a situation like this, where they are faced with a requirement 

to supplement, and supplement at an enormous rate and amount? 

First of all, how long can they do this? And I know that that is a 

vague question and you are just guessing, but what other factors 

can potentially affect the ability to collect third-party reimbursements that we know are so critical here? 

So kind of a general question about the sustainability aspect and 

what other factors may be in play there. 

Ms. SMITH. Thank you, Senator Murkowski. At every board 

meeting, the board sits down and wrestles with this particular 

issue. What we do is we look back into our budget and we know 

that the costs are going to be coming out of program dollars. How 

long can we take from program dollars to sustain a system that is 

so—as one board member said, Sally, this is terrible; you must fly 

to D.C. and tell them how terrible this is. 

Earlier today, we were talking about costs. You mentioned costs 

from various points in Alaska. On June 18, I received an e-mail, 

a copy of an e-mail. The e-mail says, I called PenAir to get some 

prices for our budget and was blown away. The one-way from 

Dillingham where Kanakanak Hospital is, to the Chigniks and to 

Port Heiden, which is even shorter than any of the lines you demonstrated this morning, Senator, is by Cherokee, which is a singleengine, low-wing aircraft, to the Chigniks is $2,150. 

Senator MURKOWSKI. From Dillingham? 

Ms. SMITH. From Dillingham, by Caravan, which is a high-wing 

cargo passenger plane, one-way, and you can only charter, is 

$4,953.60. Using that as the fulcrum for how long can we sustain, 

three days ago the barge landed in Aniak, Alaska. The price of fuel, 

for gas, went to $7.92 a gallon. 

Senator, you asked me, how long can we sustain this? I beg of 

the panel here that what is going to happen in Dillingham, what 

110 

is going to happen in Indian Country across our Nation, is that we 

are going to not only be scrambling, but we are going to start lining 

up our beneficiaries, and it is going to be a random toss as to whom 

we are going to offer the services to, because monies are going to 

get so tight that every day in every meeting the big question on 

the table is: How much longer can we sustain the ever-increasing 

costs to be able to provide limited health care to our beneficiary 

population? 

It is very scary. What is also happening is we are trying to help 

ourselves, too. Earlier, we talked about the Medicare-like rates. I 

know you know that the tribes are really seeking savings for their 

Contract Health Service dollars as a result of the implementation. 

So let me give you a few examples. At the Alaska Native Medical Center, we have roughly a $17 million CHS budget, and the Medicare-like rates are expected to save 

ANMC approximately 20 percent to 30 percent of CHS dollars. So 

we are not being inactive. We are trying to make the dollars 

stretch. In Knik, which is down on the Kenai Peninsula, the emergency room costs that were $1,500 are now $500, using the Medicare-like regulations. 

At the Southeast Alaska Regional Health Consortium, there are huge savings. For example, a hospital bill of $55,000 was dropped 

to $5,000 on average. To date, SEARHC has saved $400,000. And 

one more: At the Tanana Chief’s Conference in the interior, 

medevac costs of $10,000 dropped to $5,000 under the rates. 

Senator MURKOWSKI. So that really is making a difference 

around the State, the Medicare-like rates? 

Ms. SMITH. Yes, Senator, it is. 

Senator MURKOWSKI. Let me ask the others on the panel if you 

are seeing the same savings? Or what problems, if any, have you 

noticed with the Medicare-like rates? Does anybody like to speak? 

Ms. Shore? 

Ms. SHORE. Thank you. One of the things that we are seeing are 

very wide fluctuations already between the kind of savings our 

tribes are receiving. We realize we have tribes in 12 different 

States, so they are dealing with 12 different hospital systems. We 

see anywhere from 40 percent savings down to 20 percent savings. 

What we can see so far is that there seems to be a lot of difference 

if you refer a patient to a teaching hospital versus just a general 

public hospital. That is something that we would like to look at further once we can have more data from the Medicare-like rates implementation. 

Mr. KEEL. Senator, the savings that are realized from being able 

to pay at the Medicare-like rates allows tribes to extend some of 

those services to other providers. We would ask that those Medicare-like rates be extended to other providers to pay for fees and 

other things that are not necessarily covered under the normal 

rates. 

But yes, they have been very beneficial in allowing tribes to negotiate for more services. Some of the tribes in the Oklahoma City 

area, are revising some of their software in order to do more thirdparty collections. Because of the resulting savings, we are able to 

offer more services, which amounts to a savings in other ways. The 

information on tele-medicine, those types of services that we have 

111 

not been able to provide in past, we are able to provide because we 

have more resources. 

You know, it is a matter of looking at the resources that we have 

and making them go as far as we can, extending those to other providers, to getting other types of services that have not traditionally 

been available. The providers that are being negotiated with now, 

see that we are paying our bills, that we do pay them in a timely 

manner, so it is not as hard to negotiate a rate with them to provide services. So it has been very beneficial. 

Senator MURKOWSKI. Ms. Krein? 

Ms. KREIN. I can speak from the other side of the Medicare-like 

rates. Coming from North Dakota, our payment is the lowest in the 

Nation, number one. So from my perspective, it is less payment, 

which adds to the unpaid bills in the emergency department. 

Senator MURKOWSKI. Again, just so that I am understanding. 

Ms. Shore, you mentioned that there is a differential there, basically dependent on where you go for the services. 

Ms. SHORE. Yes. 

Senator MURKOWSKI. But that is different than what you are 

talking about, Ms. Krein. 

Ms. KREIN. I am talking about the payment for us. 

Senator MURKOWSKI. Right. 

Ms. KREIN. Yes. 

Senator MURKOWSKI. You mentioned, Ms. Shore, the ripple effect 

and the positive benefit that the CHS dollars generate throughout 

the communities. I think that that is an important factor as we 

talked about how we get the most bang for the buck, if you will, 

in health care dollars. When we talk about funding, it is not just 

funding to, whether it is Bristol Bay, but how that translates out 

into the communities as well, so it is a good point to raise. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Murkowski, thank you very much. 

I promised that I would have the Director of the Indian Health 

Service on, and I will do that in just a couple of minutes. 

Ms. Krein, how much un-reimbursed cost has your hospital experienced as a result of serving the Native American population? 

Ms. KREIN. Over the years, in the last few years, it has been several million dollars. That doesn’t count the charity that we do not 

count. 

The CHAIRMAN. And you are not turning patients away, are you? 

Ms. KREIN. We never turn anybody away, but I can tell you how 

I have changed what we have done is before when Native Americans have come to our emergency department, I would know that 

they needed medication and we would give them maybe four or five 

days of antibiotics. What I have done now is give them enough 

medication until the pharmacy at Fort Totten opens, so that is how 

I have kind of reduced some of the things that we have done for 

them. 

I think the other thing that I would like to say is that meeting 

with the people from the Spirit Lake Nation, one lady said to me, 

she said, ‘‘I do know that we use your emergency room in an inappropriate way, but I have to tell you that when I have someone 

who is ill and I put them in a car, the closer to Mercy I get, the 

safer I feel.’’ 

112 

The CHAIRMAN. My understanding is you don’t bill the individuals that show up for uncompensated services. 

Ms. KREIN. No, we do not. 

The CHAIRMAN. Many other providers do. 

We have a system that is broken. We need to fix it. But in the 

meantime, the providing of care that you do is exemplary. 

Let me ask the witnesses, we have heard this issue, ‘‘don’t get 

sick after June’’; I assume many of you see that on the ground, at 

a time when Contract Health funds have expired. I have spoken on 

the floor about a woman who was taken by ambulance to a hospital, suspected of having a heart attack, with a piece of paper 

taped to her thigh. As she entered the hospital, the hospital professional saw the paper, which was an admonition that if this woman 

was admitted, the hospital would likely not be able to bill and get 

Contract Health funds because they were out of funds. 

So here is a sick woman suspected of a heart attack being 

wheeled into a hospital with a piece of paper on the leg that says, 

‘‘take this patient at your own risk, Contract Health funds are out.’’ 

Have you all experienced that? Tell me, does anybody here go 

through the full year with sufficient Contract Health funds? Ms. 

Holt? 

Ms. HOLT. No, we don’t. As I testified earlier, Senator Dorgan, 

in CHS-dependent areas such as Portland, California, Nashville, 

Bemidji, we face that at the beginning of the year. 

The CHAIRMAN. At the beginning of the year, do you allow priority twos? 

Ms. HOLT. A lot of our tribes are on priority one at the beginning 

of the year. Because they are working the deferred and denied 

services, they start the year working those cases and push themselves into priority one right away. 

The CHAIRMAN. Are there circumstances where cancer is not a 

priority one? 

Ms. HOLT. Yes. And I think that seriously needs to be looked at. 

The CHAIRMAN. That is unbelievable to me. How can cancer, almost any kind of cancer, with perhaps the exception of the more 

common basal cell skin cancers, not be considered ‘‘life or limb’’ ? 

Ms. HOLT. We also run into the issue of misdiagnosis in IHS clinics. I just lost my sister-in-law a year ago to bladder cancer that 

was diagnosed for two years as a bladder infection and treated as 

a bladder infection until it was too late. 

The CHAIRMAN. It is always a fine line when we have hearings 

and talk about these issues, a fine line to walk because Senator 

Murkowski and myself go to places and we see some unbelievably 

dedicated men and women working in the health area on reservations, some people that I deeply admire. 

It is also the case that we go places where we think that the 

health care is inadequate, and so we never want to have some sort 

of blanket tarnishment of the wonderful work a lot of people are 

doing out there in understaffed locations, trying everything they 

can to get by with far too little funding. 

Ms. Smith, did you want to comment on that? 

Ms. SMITH. I just wanted to add two things. First, that using 

Bristol Bay as an example again, the amount that Senator Murkowski mentioned that we receive, 100 percent of that is used in 

113 

transportation. The cost of medevac is so high and the cost of 

transportation is so high, all of our Contract Health Service dollars 

actually go to there. 

What happens, then, is the patient is referred to Alaska Native 

Medical Center, and the cost shift goes to Alaska Native Medical 

Center, so it goes. This is a huge issue. I am so thankful that we 

are having these hearings. I want to thank you very much for inviting the Direct Service Tribes. I know that you will hear from them 

as well. I urge again that we have these similar-type hearings 

across Indian Country because you need to hear the stories. 

Senator Murkowski, again, I have a half-dozen stories here. I 

will send those on to you. They are stories that are universal across 

Indian Country. 

The CHAIRMAN. Ms. Smith, I will be on the Turtle Mountain Indian Reservation next Monday or Tuesday. I guess it is probably 

next Tuesday, at a hospital there that is having very significant 

problems. I have asked the regional director, from Aberdeen, South 

Dakota, to meet us. I am going to be hearing from the clinic professionals directly as well. 

I have run out of time, because I promised Director McSwain to 

have him up, and he has other things as well to be attending to. 

I want to thank all of you. You have come from far distances to 

provide us information. It has been very good information. Your 

testimony is really very helpful to this Committee. So thank you 

very much for your testimony today. 

We will dismiss you and ask Mr. McSwain, then, to come to the 

witness table. 

Thank you very much. 

[Applause.] 

The CHAIRMAN. Director McSwain, you may come to the witness 

table. I again commend you. It is generous of you to be willing— 

and we will not do this at the next hearing—but it is generous of 

you today to be willing to listen to six witnesses from different 

parts of our Country. You are thoughtful to be willing to do that. 

We are interested in having your testimony today on the Contract Health Service issue and the things that you have heard. If 

you would like to introduce those who have accompanied you from 

the Indian Health Service, we would appreciate it. 

Again, your entire statement will be made a part of the record. 

You may summarize as you wish. 

STATEMENT OF HON. ROBERT G. MCSWAIN, DIRECTOR, 

INDIAN HEALTH SERVICE, U.S. DEPARTMENT OF HEALTH 

AND HUMAN SERVICES; ACCOMPANIED BY DR. RICHARD 

OLSON, DIRECTOR, OFFICE OF CLINICAL AND PREVENTIVE 

SERVICES, AND CARL HARPER, DIRECTOR, OFFICE OF 

RESEARCH ACCESS AND PARTNERSHIPS 

Mr. MCSWAIN. Thank you, Mr. Chairman and Vice Chairman 

Murkowski. I want to thank you both for supporting certainly my 

nomination, successful as it was, and in fact supporting it all the 

way to the floor. I was surprised at the speed at which it went 

through. So with that, thank you so much for that. 

And I also thank you for shining a light on this program. I certainly have been around Indian Country enough to also hear the 

114 

same kinds of stories that you are. But let me just summarize my 

statement. 

I am Robert McSwain, the Director of Indian Health Service. 

Today, I am accompanied by Dr. Richard Olson, Director of the Office of Clinical and Preventive Services, and Mr. Carl Harper, the 

Director of the Office of Research Access and Partnerships. 

I say that because I think that these two gentlemen will need, 

as we walk away from this table, Dr. Olson actually was a clinician 

in the field, and has had to be the ordering physician for ordering 

care for Contract Health Services. So now he is in headquarters 

providing oversight on the clinical side of the house. And of course, 

Mr. Harper literally runs and oversees not only collections, but also 

the Contract Health Service Program for the agency. 

As you know, the Indian Health Service provides services to 

nearly 1.9 million American Indians and Alaska Natives. In carrying out this responsibility, we certainly have a relationship with 

all the tribal folks that you heard from today, plus about 555 other 

tribal leaders out there. I think that they have talked about the 

challenges, in a word, in the rural areas. We are isolated. We are 

remote. And certainly Alaska is a classic example of remoteness 

and access. So these are challenges that we have in dealing with 

available health care services that are out in the areas. 

And then we have a couple of facilities that are in heavy metropolitan areas, Anchorage being one, ANMC, and of course the medical center in Phoenix. 

I would just like to be able to share with you very quickly, I 

know that the time is late, and I will run through this rather 

quickly. But the fact is, our health system in total is direct in what 

we can provide. I think it is important to know as much as we can 

provide care means we don’t have to buy the care. So it is a capacity. I think Senator Murkowski talked about vacancy rates and the 

fact that that is a big challenge for us to fill the positions so that 

we can in fact provide the care through our existing direct service 

system, both tribal and indirect. But I think it is important to point 

out that all of the services we provide are within our total control. 

We staff the facilities. We staff the programs, and we provide all 

that care. 

Now, when we have to buy care, now the control is lost. We have 

to deal with the private sector. We have to deal, and in order to 

make the $579 million go as far as we can, not only calendar-wise, 

but just in terms of services, we have structured a series of policies 

and requirements that result in a very highly structured program. 

Even though we talk about CHS and direct service programs being 

complementary, they really are complementary because it is the 

physician who needs to have the care provided, as when they are 

seeing a patient, do they need to order some diagnostic care. 

And I think it is important to point out that in a word, we provide care at nearly 700 locations, tribal and IHS. Emergency room 

and in-patient care is provided in 46 locations. A limited number 

of our largest medical facilities provide secondary medical care. 

So on the medical side, on the direct side, it is important to know 

that the capacity varies across the Country. You heard from Chairwoman Holt talking about they don’t have any in-patient care, so 

they are having to buy all of their in- patient and a great number 

115 

of certainly their primary care. But I think that of all the hospitals 

we have, only 20 of the hospitals have operating rooms. I pause 

there, because we are going to have to go out and buy much of that 

care as well. And 20 of the hospitals have operating rooms, but I 

think that we should point out also that our average daily patient 

load in some of the hospitals, we only have two facilities that have 

more than 45 patients per day. So in a word, all of our facilities 

are in fact CHS-dependent, some more than others. 

What is CHS? I think that, as I mentioned, we have a number 

of very careful strictures around how we manage the Contract 

Health Service Program. It starts with regulatory eligibility, a 

wholly different narrow eligibility for CHS. We are the payer of 

last resort. It means that we exhaust all other possible benefits the 

Indian patient has before we pay for care. We have something referred to as medical priorities. We have five priorities, and you 

have noted those in a chart. 

The important thing is what CHS isn’t. CHS isn’t an insurance 

program. Therefore, we have to manage it. We have to gate-keep 

it, and we have to make referrals in order to ensure that the care 

that is being provided is in fact authorized and that we have the 

appropriations to back up the authorization. 

The efforts that we have been going on for the last few years certainly, and I won’t go through all of them, but we are maximizing 

resources. We are talking about the CHEF fund. That is the one 

that used to end by May and June. But with the additional appropriations and a combination of Medicare- like rights, we are seeing 

the actual CHEF fund go into August now, and we are hopeful— 

this is our first year—and perhaps it will even go further. 

With that, and the fact that we have just introduced this year 

a unified financial management system, and I am sure you have 

been hearing around Indian Country that the Indian Health Service is not paying its bills. We are working through that, and I think 

with the department, we will see not only good data—I think there 

was a question about data—but also financial management reports 

and our ability to pay timely. 

With that, I will conclude my summary and thank you for this 

opportunity, Mr. Chairman, and answer any questions that you 

might have. 

[The prepared statement of Mr. McSwain follows:] 

PREPARED STATEMENT OF HON. ROBERT G. MCSWAIN, DIRECTOR, INDIAN HEALTH

SERVICE, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Mr. Chairman and Members of the Committee: 

Good Morning. I am Robert McSwain, Director of the Indian Health Service. 

Today I am accompanied by Dr. Richard Olson, Director of the Office of Clinical and 

Preventive Services, and Mr. Carl Harper, Director of the Office of Resource, Access 

and Partnerships. We are pleased to have the opportunity to testify on the Indian 

Health Service’s Contract Health Services program. 

Overview of Indian Health Service Program: 

The Indian Health Service provides health services to nearly 1.9 million American 

Indians and Alaska Natives (AI/ANs). In carrying out this responsibility, the IHS 

maintains a unique relationship with more than 560 sovereign Tribal governments 

located in the most remote and harsh environments within the United States as 

well as in modern metropolitan locations such as Anchorage and Phoenix. This geographic diversity and major health disparities offer extraordinary opportunities and 

challenges to managing and delivering health services. 

116 

The IHS and Tribal programs provide a wide array of individual and public health 

services, including clinical, preventive, and environmental health services. In addition, medical care services are purchased from outside the IHS system through the 

Contract Health Services (CHS) program when the care is otherwise not available 

at IHS and Tribal facilities. 

The IHS is committed to its mission to raise the physical, mental, social, and spiritual health of all AI/ANs to the highest level. 

In FY 2008, the CHS program is funded at $579 million, and over 50% is administered by Tribes under Indian Self Determination contracts or compacts. Of the total 

funding the Tribal programs manage $302.9 million and the federal programs manage $276.4 million. CHS programs are administered locally through 163 IHS and 

Tribal Operating Units (OU). The funds are provided to the Area Offices which in 

turn provide resource distribution, program monitoring and evaluation activities, 

and technical support to Federal and Tribal OUs (local level) and health care facilities providing care. 

CHS payments are made to community healthcare providers in situations where: 

• There is a designated service area where no IHS or Tribal direct care facility 

exists; 

• The direct care facility does not provide the required health care services; 

• The direct care facility has more demand for services than it has capacity to 

provide; and/or 

• The patient must be taken to the nearest Emergency Services facility 

Many of our patients have no health care coverage outside of that received from 

the IHS or tribal health programs. These patients often access needed care through 

local community hospital emergency rooms. The CHS program covers emergency 

services if they meet eligibility criteria. If the services do not meet eligibility criteria 

or CHS funds are not available, the patient is responsible for the cost of care. Some 

patients are unable to pay for these services. Although these patients are eligible 

for direct IHS care, they may not meet the CHS eligibility regulations and many 

do not have an alternate resource to pay for their services. 

The CHS and direct care programs are complementary; some locations with larger 

IHS eligible populations have facilities, equipment, and staff to provide more sophisticated medical care. IHS and Tribes provide medical care at nearly 700 different 

locations. Emergency room and inpatient care is provided in 46 locations, and a limited number of our largest medical facilities do provide secondary medical services. 

With the exception of a hospital in Alaska, IHS and Tribal hospitals have an average daily patient census of fewer than 45 patients. Twenty of the hospitals have operating rooms. In locations where there is no access to inpatient, emergency or specialty care in IHS or tribal healthcare facilities, patients are dependent on CHS for 

most of their health care needs. Those direct care programs with the most sophisticated capabilities have, per capita, the smallest CHS programs and visa versa. However, all of our facilities and programs are dependent on CHS for the medical services that they are unable to provide. The CHS program covers medical services on 

a priority system with the highest priority medical needs funded first. 

It is important to understand that the CHS program does not function as an insurance program with a guaranteed benefit package. When CHS funding is depleted, CHS payments are not authorized. The CHS program only covers those services provided to patients who meet CHS eligibility and regulatory requirements, and 

only when funds are available. Many facilities only have CHS funds available for 

more urgent and high priority cases and utilize a strict priority system to fund the 

most urgent cases first. 

In some instances AI/AN patients go directly to community healthcare providers 

for care rather than through the CHS referral system for required prior authorization. Because community healthcare providers assume that IHS provides coverage 

and/or payment for AI/ANs, it is not uncommon for community healthcare providers 

to expect payment from the IHS or tribal CHS program regardless of eligibility, regulatory requirements, and/or CHS medical priorities. Patients who access non-emergency care without prior authorization/referral are responsible for payment for those 

services, regardless of CHS eligibility status. 

Eligibility 

In general, to be eligible for CHS, an individual must be of Indian descent from 

a federally recognized Tribe and belong to the Indian community served by a Contract Health Services Delivery Area (CHSDA). If the person moves away from their 

CHSDA, usually to a county contiguous to their home reservation, they are eligible 

for all direct care services available but are generally not eligible for CHS. 

117 

When the individual is not eligible for CHS, the IHS cannot pay for the referred 

medical care, even when it is medically necessary, and the patient and provider 

must be informed that CHS funds are not available. The CHS program educates patients on the eligibility requirements for CHS, by interviewing them, posting the eligibility criteria in the patient waiting rooms, and in the local newspapers. The CHS 

program assists these patients by trying to find the needed healthcare services within the community at no cost or minimal cost to them. Patients who are not CHS 

eligible are responsible for their health care expenses. Some non-IHS providers have 

expectations that IHS will be the primary payer for all AI/AN patients, which has 

led to strained relationships with local community healthcare providers when patients are denied CHS which often leaves them without compensation. 

Payor of Last Resort Rule 

By regulation, the Indian Health Service is the payor of last resort (42 C.F.R. 

136.61), and therefore the CHS program must ensure that all alternate resources 

that are available and accessible such as Medicare, Medicaid, SCHIP, private insurance, etc. are used before CHS funds can be expended. IHS and Tribal facilities are 

also considered an alternate resource; therefore, CHS funds may not be expended 

for services reasonably accessible and available at IHS or tribal facilities. 

Maximizing Alternate Resources 

The CHS program maximizes the use of alternate resources, such as Medicare 

and Medicaid which increases the program’s purchasing power of existing dollars. 

The IHS works closely with CMS to provide outreach and education to the populations we serve to ensure that eligible patients are signed up for Medicare, Medicaid, and SCHIP. Recently, the IHS launched a nationwide awareness initiative entitled ‘‘Resource Smart.’’ This is an outreach program that trains staff and patients 

to maximize the enrollment of eligible AI/ANs in CMS and private insurance programs. By enrolling in these programs, this frees up existing funds to be used for 

CHS referrals/payments. An important component of this initiative is to increase the 

placement of State Medicaid eligibility workers at IHS health care facilities instead 

of our patients having to travel great distances to apply for Medicaid. 

Medical Priorities 

CHS regulations permit the establishment of medical priorities to rank which referrals or requests for payment will be funded. Area-wide priorities and routine 

management of funds are used to try to maintain an equivalent level of services 

throughout the year and take into consideration the availability of services and accessibility to a facility within the Indian healthcare system. There are five categories of care within the medical priority system: ranging from Emergency (threat 

to life, limb and senses) to chronic care services. 

I. Emergency—threat to life, limb, senses e.g., auto accidents, cardiac episodes 

II. Preventive Care Services e.g., diagnostic tests, lab, x-rays 

III. Primary and Secondary Care Services e.g., family practice medicine, chronic 

disease management 

IV. Chronic Tertiary and Extended Care Services e.g., skilled nursing care 

V. Excluded Services—unless determined to be a Medicare covered service the 

program would pay for the services 

Services not Covered by CHS: 

Payment for contract health care services may be denied for the following reasons: 

1) Patient does not meet CHS Eligibility requirements; 

2) Patient eligible for Alternate Resources; 

3) No Prior Approval for non-emergency services; 

4) No notification within 72 hours of emergency services or 30 days in some 

cases; 

5) Services could have been provided at an IHS or Tribal facility 

6) Not within medical priority. When the services are not within the medical 

priority levels for which funding is available they must be denied. 

If the medical condition does not meet medical priorities the care is captured as 

a CHS deferred service. In the event funds become available the care may be provided at a later date. The IHS cannot incur costs which would exceed the amount 

of available resources. 

118 

Distribution of CHS Funding Increases 

The IHS works hard to ensure fairness in distributing CHS funding increases. In 

FY 2001 the IHS Director formed a CHS Allocation Workgroup that included IHS 

and Tribal representatives to develop a distribution methodology for increases in appropriations of CHS funds. The workgroup’s focus was on distributing any potential 

CHS funding increases in an equitable manner. 

The CHS allocation methodology emphasizes four main elements: 

• Inflation funding based on each Area’s base at the prevailing OMB inflation 

rate 

• User Population 

• Relative regional cost of purchasing services 

• Access to care—those Areas with or without I/T/U facilities 

Catastrophic Health Emergency Fund (CHEF)—Purpose and Intent 

The CHS program also includes a Catastrophic Health Emergency Fund which 

pays for high cost cases over $25,000, which is capped by Statute. Prior to FY 2008, 

the CHEF was funded at $18 million and typically was depleted before the end of 

the fiscal year. The CHEF is funded at $27 million in FY 2008. The CHEF cases 

are funded on a ‘‘first-come-first served’’ basis. In FY 2007, the CHEF program provided funds for 738 high cost cases in amounts ranging from $26,000 to $1,000,000. 

When CHEF cannot cover a particular high cost case, the responsibility for payment reverts back to the referral facility for payment purposes. 

Unified Financial Management System 

The IHS is successfully implementing a new accounting system (UFMS) in accordance with Departmental policy. In the past, the CHS program has experienced some 

challenges in paying providers but we expect the implementation of UFMS will mitigate these issues. Making timely payments to community healthcare providers is a 

priority for us, and we continue to look for ways to improve the process. We provided training on this new system prior to implementation and continue to train our 

staff in not only this system but the overall management of the CHS program. 

Medicare-Like Rates (MLR) 

The passage of Section 506 of the Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003 established a requirement that Medicare participating 

hospitals accept IHS, Tribal and Urban Indian Health programs’ reimbursement at 

the ‘‘Medicare-like Rates.’’ These rates are about 60–70% of full billed charges. The 

individual physicians and other practitioners paid under Medicare Part B are not 

included in this provision. The savings derived from the Medicare-like rates allow 

Indian healthcare programs to purchase additional health care services for AI/ANs, 

than would otherwise be the case. Since the regulation became effective in July of 

2007, I have heard from several Tribes experiencing increased purchasing power 

due to payment savings, and expect the Medicare-like Rate payment savings to continue. However, the Federal programs have experienced less savings as most already had negotiated provider contracts with payment rates at, or near, the level 

of the Medicare rates, but benefit from the guarantee of reasonable rates that the 

regulation provides. Area Office CHS staffs continue their efforts to negotiate contracts with providers with the most cost-effective payment rates possible. 

Mr. Chairman, this concludes my statement. Thank you for this opportunity to 

report on Contract Health Services programs serving American Indians and Alaska 

Natives. We will be happy to answer any questions that you may have. 

The CHAIRMAN. Dr. McSwain, thank you very much. 

I will first call on the Vice Chairman. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

And thank you, Mr. McSwain. We, too, are glad that the process 

went quickly for your confirmation. 

So how do you respond to Sally Smith and the present-day reality of medivac flights not even 100 miles away costing $4,000 a 

flight? With $7.95 gas up in a village that isn’t even that remote, 

really, our costs are accelerating at an unprecedented rate. What 

do we do in the short term? Do we do, as Mrs. Smith suggested, 

where you line them up and you see who gets care? 

119 

Mr. MCSWAIN. Senator, that is one of the most difficult questions 

when we talk about the fact that we may have to make choices. 

Those choices are who gets served and who does not get served. As 

I said during my confirmation, I think the question about why 

aren’t we asking for more resources, we haven’t made the best case 

possible. I think that out—— 

Senator MURKOWSKI. How can we make the best case? What 

more do we need? 

Mr. MCSWAIN. We need to bring those particular stories, particularly the ones in Alaska and other parts of the Country. I am hearing more and more that it is not that the CHS budget is not going 

as far, but they are having to pay a great deal of transportation. 

It is not just in Alaska. We are transporting patients in the Lower 

48 long distances for that priority-one care. 

So how do we capture that? We need to capture it and tell the 

story much better than we have. I think we have been doing some 

things such as worrying about are we staying up with inflation, are 

we doing comparisons. We should be telling a story that really 

talks about the needs in the program and quite frankly the growing 

needs that we have in purchasing care. 

What we are doing is buying a lot more care, and I think the line 

in the graphs that we showed earlier is indicative of the fact that 

we are buying much more care today than we did 10 years ago. 

Senator MURKOWSKI. Well, we want to help you be able to 

present that best case. 

I guess, Mr. Chairman, I would ask those that were present at 

the hearing, gave testimony, or those that are listening, let’s get 

these stories out there because the stories are compelling, and the 

stories are very immediate. If that is what you need to present the 

case, I think you would have a roomful of people that are happy 

to provide you with the requisite story to give the data that you 

need. 

Let me ask, when I presented the question to the panel about 

how the Medicare-like rate regulations are working and what benefits they are seeing or what problems they are seeing, of course the 

suggestion is that it would be beneficial to expand these Medicarelike rates to cover other things like the ambulatory facilities and 

professional fees. What is your comment on that? 

Mr. MCSWAIN. I think right now we have just elapsed a year, but 

the results are rather mixed. I think for Indian Health Service direct, the direct side of the house, we have been under scrutiny for 

developing good contracts, very cost-effective contracts with providers and hospitals and other provider groups, for a number of 

years. 

So when the Medicare-like rates came out, our biggest concern 

now is whether or not the Medicare-like rates is a cap. On our direct side, we are experiencing whether or not if we go to renew 

those contracts, that the hospital will say, well then, you negotiated this rate; we would like to go at Medicare-like rates because 

it is higher. That is how well we have done on the direct side. 

The tribal sites obviously are experiencing some different results. 

Obviously, the Alaska results, and I have heard many of these stories as I have traveled around, asking the question of how are you 

doing with Medicare-like rates. Without exception, tribes are expeVerDate Aug 31 2005 12:58 Oct 14, 2008 Jkt 044489 PO 00000 Frm 00123 Fmt 6633 Sfmt 6601 S:\DOCS\44489.TXT JACK PsN: JACKF
120 

riencing some good reductions relative to being able to spend more 

of their Contract Health Services on more people, as opposed to 

just straight rates. 

Now, about the expansion. I don’t think we are in a position to 

talk about the expansion of the current one. We would like to see 

how it is working right now. Now, Ms. Krein indicated, and I have 

also heard a lot of stories on that side of it. The small hospitals 

out in the rural areas are seeing the rates, causing them some 

budget difficulties as well. So that is the other part of the story. 

So I think we will wait and see how this is working all the way 

through, and perhaps report at a future date as to how we are 

doing. 

Senator MURKOWSKI. And then one last question for you. In 

terms of outreach, what is IHS doing in reaching out to ensure that 

Indian patients are enrolled in the alternative resources, whether 

it is Medicare or Medicaid? 

Mr. MCSWAIN. Yes, we have actually started a program this year 

on that very issue. I want to refer to it as—in fact, let me ask— 

the Resource Smart program, it is actually in his shop. What we 

are doing is we are running a campaign that literally tells not only 

the patient, but the providers as well, that particularly for Indian 

people, that enrolling in Medicaid-Medicare and private insurance 

is such that that brings more resources into the system, and increased collections means more services. 

So we have actually had an internal campaign going on and expanding that Resource Smart campaign. It is low cost, but I think 

actually having some results, but that is our internal campaign. 

We have shared the same campaign brochures and the like with 

our tribal programs as well. 

Senator MURKOWSKI. Thank you. 

Thank you, Mr. Chairman. 

Thank you, Mr. McSwain. 

The CHAIRMAN. Director McSwain, you saw the chart I used at 

the start of the hearing. Obviously, we are short of the funds necessary for Contract Health. My first question would be, as you survey the landscape here, you will be making recommendations this 

year for the construction of a new budget. What kind of recommendations will you be making, generally speaking, for Contract 

Health Service? Do you think substantial additional funds are 

needed to fill the gap that I describe? 

Mr. MCSWAIN. It will all certainly depend on the rules that come 

back to us as to how we actually prepare the budget. But I can assure you that, as we talked about, building the capacity on the direct side for providing direct care for both tribal and IHS, but the 

next-highest priority is Contract Health Service because that is the 

bundle of services we provide. We provide it or we buy it. So CHS 

will continue to be at least—and I have been pushing for much 

higher requests and will continue to do so. 

The CHAIRMAN. You are pushing for a higher request? I understand you have to follow the rules. 

Mr. MCSWAIN. Right. 

The CHAIRMAN. You are appointed and you work in a circumstance where when the rules come to you from OMB and the 

White House, you are bound to follow those rules. But it seems 

121 

pretty self-evident to me that we are desperately short of funds 

here. So your position is that you believe more funds are needed 

and you will push for more funds? 

Mr. MCSWAIN. That is correct. 

The CHAIRMAN. Let me ask you, the tribes and others who described to us that because we are so short of funds, we are limited 

in many cases to priority-one cases. And yet there are people with 

cancer who are not priority one. Describe that to me. Do you know 

the circumstances of that? It seems to me that in most cases, someone with cancer who needs diagnosis, treatment, chemotherapy, 

surgery, would be priority one. 

I described at the opening the situation with a young woman 

who went in for a certain kind of treatment, ended up having surgery, ends up with $200,000 in debt because it wasn’t approved. 

They end up taking out a cancerous tumor, but it wasn’t pre-approved. 

Describe that to me. Are there circumstances where cancer is not 

‘‘life and limb’’ ? 

Mr. MCSWAIN. Let me ask our good doctor here. My first thought 

is that if it is cancer, and for example I know that we do screenings 

that are priority one. I find it interesting that we have not declared 

that priority one. 

Dr. Olson? 

Dr. Olson. I don’t know any of the circumstances of this case, but 

I agree with you. I don’t understand why it wouldn’t be priority 

one. I was the Medical Director of one of our small rural hospitals 

for 11 years, and I managed our CHS program directly. At our location, we did run out of funds every year. 

The CHAIRMAN. And when do you run out of funds normally? 

Dr. Olson. Usually in August. 

The CHAIRMAN. In August. 

Dr. Olson. But after that time, we could pay for absolutely nothing. It didn’t matter whether there was priority one or not. 

So I don’t know the circumstances of this case at all, but in general I agree with you, that certainly sounds like a priority-one case. 

The CHAIRMAN. Tell me, because you mention this, you are running a health facility, there is a health delivery that is necessary 

from a responsibility we have; and all of a sudden you have no 

money, and somebody shows up in a desperate situation. 

Dr. Olson. Well, if we can’t handle the case directly, as Mr. 

McSwain was talking about, CHS and direct services are complementary to each other. Some of our locations are very small and 

have very few direct services, and some have a moderate amount 

of direct services. But at every location we have, we are CHS-dependent. As Ms. Smith talked, Alaska Native Medical Center has 

a CHS budget because there are many things that they can’t handle there either. 

But what we do from a medical perspective is that we will refer 

the patient. We just cannot pay for it if we are out of funds. 

The CHAIRMAN. And then what happens is the patient shows up, 

sometimes at the medical facility. They accept the patient, and 

sometimes they may not. If they accept the patient and perform the 

medical service that was necessary, and bill the patient, the patient ends up having a destroyed credit rating. Isn’t that the case? 

122 

Dr. Olson. Yes, sir. 

The CHAIRMAN. That is devastating. The fact is, we have 500- 

plus Indian tribes around this Country, and in many cases they 

are, as you said Director McSwain, in remote areas. So they have 

various forms of clinics or very small hospitals, and in most cases, 

you don’t have the full range of medical services that can be delivered. Someone has a devastating ailment with a knee, excruciating 

pain, can’t walk. Well, that orthopedic care is not going to come 

from that area. In most cases, that person, to the extent that they 

are viewed as priority one, will be referred. 

But I know of cases where it is not priority one that someone 

would be unable to walk, unfortunately. And that describes the absurdity of what we are doing here, with only about half the money 

needed being available for people who in many cases are very, very 

sick and have very serious health problems. 

I offered an amendment to the budget process of $1 billion additional funds for IHS. We are spending a lot of money on health 

care in Iraq and elsewhere. We need to fund IHS. If we are going 

to make promises, we have to keep the promises with the funding. 

So, Director McSwain, I hope as you put the budget together this 

year you review what is going on around the Country because you 

have a doctor here who was running a place that ran out of money 

every year. I hope you will be very vocal and very insistent. 

We need two things to happen: One, we need budgets to come 

from the White House that have much more aggressive funding for 

Contract Health. Number two, we need a Congress that is much 

more willing to provide funding as well. Both are necessary. 

There are a lot of other priorities. There are a lot of reasons for 

people to say, well, this or that or this is a priority. But I ask them 

to look in the eyes of people who are desperately sick and say to 

them, ‘‘I know we made a promise, but we can’t afford it.’’ 

And then look at all the other things we are spending money on. 

So your tenure here is going to be very important in the coming 

six or seven months as you put together your recommendations. I 

hope you will take some professional risks. By that, I mean that 

we had a person on the third floor, directly below us, show up at 

a Committee hearing one day and said, you know, the fact is my 

account is desperately under-funded; we need more money. The 

next morning, he was fired because he was not following the President’s budget recommendations. 

But I am asking you to take some risks as you go through this 

because we need, you need, I need, Senator Murkowski needs, all 

of us, to recognize we have a responsibility here. 

When Ms. Shore was describing circumstances in her family and 

circumstances in her tribe, I understand the emotion that chokes 

you up when you describe it because people out there are suffering 

and need to get this help. 

I have a whole series of questions that I want to send to you, 

about six or seven, dealing with SCHIP outreach and Medicare reimbursement rates on services. I think what I will do is send those 

to you, Director McSwain, and tell you that Senator Murkowski 

and I are waiting very anxiously for the House to work on the Indian Health Care Improvement Act. The House needs to get that 

123 

done so we can get to conference with them and get that bill finished this year. 

We also will be continuing to put a magnifying glass over this 

issue of Contract Health because no matter what else we do, if we 

don’t find a way to fix and fund contract health, this system doesn’t 

work the way it is expected and promised to work. So we intend 

to do that as well. 

Do you have any final statements, Director McSwain? 

Mr. MCSWAIN. Just that I will work. We have done this in the 

past and done it very well, and that is work with our tribal partners to put together the story. I really believe that if we tell the 

story clearly, my bosses and my superiors would agree and would 

support that. I think that the Administration would like a clear 

compelling story in particular on CHS. 

The other comment is I know it is floating around, sort of an elephant in the room, is this whole business of billing and charging 

Indian people. In fact, there is a piece of press out there on me 

right now that says that I said that I would terminate contracts 

with programs who were in fact billing. 

No. In fact, what we are doing is we are having a dialogue with 

them to see the extent and why are they doing it, so we can have 

a discussion about where we go next. There is no decision made at 

this point, excepting the fact by law the Indian Health Service cannot bill, and our position is as tribes take over the programs, they 

should do likewise, which is not to bill. And that is our position 

until the law changes. We will see the outcome. 

But I just wanted to clarify. I noticed that came up, and I fully 

appreciate tribes trying to make it work, trying to look at co-pays 

as an answer to addressing the health needs that they are trying 

to deal with. We will continue to work with them on those issues. 

The CHAIRMAN. Dr. McSwain, would you have your staff describe 

for us, if you could, and submit to our Committee the issue of what 

is determined specifically as you can to be priority one? Especially 

relating to what I just asked about with respect to cancer and other 

issues. Clearly, there is confusion and there ought not be. 

We ought not be confused about two things: One, how do you define the priorities; and number two, is there adequate funding? The 

answer to that is no, we are not confused. 

Director McSwain, thank you for being here. 

This Committee hearing is adjourned. 

[Whereupon, at 11:55 a.m., the Committee was adjourned.] 

(125) 

A P P E N D I X 


626e1.eps
126 


626e2.eps
127 


626e3.eps
128 


626e4.eps
129 

PREPARED STATEMENT OF HON. MICHAEL E. MARCHAND, CHAIRMAN, CONFEDERATED

TRIBES OF THE COLVILLE RESERVATION

On behalf of the Confederated Tribes of the Colville Reservation (‘‘Colville Tribe’’ 

or the ‘‘Tribe’’), I appreciate the opportunity to provide to the Senate Committee on 

Indian Affairs this statement on access to Contract Health Services (CHS) in Indian 

country, a topic of great interest to the Tribe and our citizens. The Colville Tribe 

applauds the Committee’s attention to this issue and hopes that this hearing will 

illuminate some of the issues and concerns with the CHS program that the Tribe 

and other tribes face on a daily basis. 

The Tribe knows that the Committee is well aware that many Indian Health 

Service (IHS) units, including our Colville Service Unit, are in ‘‘priority one’’ status 

for much of any given year. We truly appreciate the Chairman’s and the Committee 

members’ efforts to address these issues in the budget and appropriations process. 

Today, I would like to share the Colville Tribe’s experiences on how shortfalls in 

direct care services, specifically, facilities and staffing, have strained tribes’ already 

insufficient CHS dollars even more. I would also like to share some of the steps that 

the Colville Tribe has taken to address the chronic CHS funding shortfalls and to 

identify other CHS related issues our members have encountered. 

Background on the Colville Tribe and IHS Services on the Colville Reservation 

Although now considered a single Indian tribe, the Confederated Tribes of the 

Colville Reservation is, as the name states, a confederation of 12 smaller aboriginal 

tribes and bands from eastern Washington State. The Colville Reservation encompasses nearly 2,300 square miles (1.4 million acres) and is in north-central Washington State. The Colville Tribe has more than 9,300 enrolled members, making it 

one of the largest Indian tribes in the Pacific Northwest. About half of our members 

live on or near the Colville Reservation. 


626e5.eps
130 

The Tribe’s CHS program is operated by IHS from the Tribe’s main IHS clinic 

in Nespelem, Washington. The Tribe’s CHS delivery area includes Okanogan, Grant, 

Ferry, Chelan, Douglas, Lincoln, and Stevens Counties, some of which are among 

the largest counties in Washington State. Because the Tribe’s Nespelem clinic is the 

primary source of IHS health care delivery, many tribal members, particularly those 

living in the Omak area, must travel long distances to receive any direct service 

health care. 

Facility and Staffing Shortcomings Strain CHS Dollars 

Like many Indian tribes with large service delivery areas that are heavily dependent on CHS, the Colville Tribe faces a health delivery crisis. As the Committee is 

aware, a significant issue for tribal communities is the lack of funding for adequate 

health facilities in Indian country, both for construction and for on going staffing 

needs. The Colville Tribe is an unfortunate and all-too-familiar example of how 

funding limitations for facilities have a corresponding impact on CHS funding. 

The Tribe’s original IHS clinic in Nespelem, Washington, was constructed in 1934. 

In the 1980s, the Tribe hoped to have constructed a new facility utilizing the IHS 

priority list system. The Tribe understands that at one point, its request would have 

been ranked highly on the IHS priority list but was not considered because of concerns that the existing facility was a historical site. That priority list has been 

closed since 1991 and some IHS Area Offices, including the Portland Area Office, 

have never had any facility constructed under the priority list system. 

Because the Tribe’s need for a new facility was so great and the priority list was 

no longer an option, the Tribe ultimately was forced to utilize a variation of IHS’s 

small ambulatory program to replace its aging facility in Nespelem. Of a total contract amount of nearly $4.7 million for the Nespelem facility, the Tribe funded $3.3 

million and IHS funded $1.3 million in equipment costs, with no additional staffing 

package. Although the new clinic is larger than the 1934 building it replaced and 

can accommodate additional patient visits, the lack of additional staff makes full 

utilization of this new facility impossible. 

This lack of staff and the resulting long, often futile waits by patients to receive 

treatment at the Tribe’s Nespelem facility have created a disproportionate strain on 

the Colville Tribe’s already insufficient CHS dollars by discouraging preventive care. 

If a patient cannot receive care because of facility or staffing shortages, problems 

that could have easily been addressed become emergencies and may ultimately lead 

to emergency care. Ironically, given the ‘‘priority one’’ rationing of CHS resources, 

it is only when a problem becomes an emergency that a patient becomes eligible for 

CHS services. 

Adding to this strain is the lack of inpatient IHS facilities, such as hospitals. Neither the Colville Tribe nor any other Indian tribe in the Portland Area has an inpatient hospital. This is significant because inpatient hospitals are able to provide 

services that outpatient clinics cannot. This gap in services is otherwise borne by 

a tribe’s CHS funds. 

The Colville Tribe’s Efforts to Secure Supplemental Resources 

The Colville Tribe strongly believes that the United States’ trust responsibility requires nothing less than adequate funding for Indian health care, including CHS. 

The strains on CHS funding, however, have required Indian tribes to do whatever 

they can to secure alternative funding or to establish other programs in their attempts to preserve precious CHS resources. 

IHS has adopted ‘‘a payer of last resort rule’’ that requires patients to exhaust 

all health care resources available to them before IHS will pay for services from the 

CHS program. Medicare and Medicaid are among the most critical alternative resources to CHS funds. The more CHS eligible beneficiaries that can utilize those 

programs, the farther CHS funds can be stretched. Using tribal and other funds 

contracted from IHS under P.L. 93–638, the Colville Tribe dedicates staff in ongoing 

outreach and educational efforts to ensure that eligible tribal members are enrolled 

in those programs. 

Preventive care is another area in which the Colville Tribe provides supplemental 

resources, specifically for cancer patients, an issue of great concern to our Tribe. Approximately 800 Colville tribal members are currently being treated by IHS for cancer. The Tribe has been fortunate to have obtained a grant during the past year 

from the State of Washington for cancer awareness and other preventive services. 

Our cancer patients include young women being treated for breast cancer, and the 

Tribe has been able to secure a grant through a private foundation that allows one 

part-time staff member to provide outreach and preventive care, specifically for 

breast cancer. These services are provided to supplement the shortfall in CHS funding for what would otherwise be preventive health care. 

131 

1 United States Government Accountability Office, Report to Committee on Indian Affairs, 

U.S. Senate, Indian Health Services: Health care services are not always available to Native 

Americans, August 2005. 2Sally Smith 2007 Testimony, http://www.nihb.org/article.php?story=20070216120829197 (1 

of 5) [7/31/2007 5:02:10 PM]. 3 U.S. Commission on Civil Rights, A Quiet Crisis: Federal funding and unmet needs in Indian 

country, July 2003. 4 U.S. Commission on Civil Rights, Broken Promises: Evaluating the Native American health 

care system, September 2004. 5 I.H.S. Appropriations Per Capita Compared to other Federal Health Expenditure Benchmarks, March 2003. 6 HHS, Indian Health Service ‘‘Justification and Estimates’’ 2005. 

Other Issues Relating to Access to CHS 

In our Tribe’s efforts to ensure that our tribal members have at least some access 

to health care, other issues have arisen relating to access to CHS. One example is 

the complexities in partnering with IHS on initiatives to relieve the burden on the 

CHS system. In Omak, Washington, which is 30 miles from the Tribe’s IHS clinic 

in Nespelem and where there is no IHS facility, the Tribe went to extraordinary 

lengths to lease a tribally owned building to IHS to allow IHS to station a doctor 

from the Nespelem clinic there on a satellite basis. More flexibility would have made 

this process much easier. 

Another issue that has arisen locally is the need for more tribal input on the use 

of CHS funds. We have noted that breast cancer awareness has been a priority for 

our Tribe. CHS used to fund a mammogram coach that came to Colville Reservation 

from Spokane to perform on-site mammograms. Now, CHS will not pay for this 

service, but it will pay for mammogram referrals. Although some explanation may 

exist, the referrals would appear to cost much more than onsite mammograms. 

Thank you for the opportunity to provide this testimony and for your consideration of these issues. The Colville Tribe looks forward to continuing to work with 

the Committee and the respective appropriations committees to ensure that the 

CHS program serves the needs of Indian country and is adequately funded. 

PREPARED STATEMENT OF CASEY COOPER, CHIEF EXECUTIVE OFFICER, CHEROKEE

INDIAN HOSPITAL

The Effects of Inadequate Funding for Contract Health Services in Indian 

Health Care on the Eastern Band of Cherokee Indians and North 

Carolina 

The U.S. Congress, the General Accounting Office, and the U.S. Commission on 

Civil Rights have all concluded that American Indian and Alaska Native communities suffer from significant health disparities and inadequate federal funding of Indian health care. 1–4 Current federal funding levels for Indian health represents approximately 60 percent of the level of need in Indian country and is significantly 

less, per capita, than other federally funded populations, including federal employees, immigrants, and prisoners. 5

Contract Health Service Funding 

Funding for Contract Health Services (CHS), a line item in the Indian Health 

Service budget that allows Indian health providers to purchase health care services 

when they cannot directly do so, is grossly insufficient. The annual need for CHS 

has been estimated to be in excess of $1 billion per year, and is currently funded 

at approximately half that amount. 6 As a result, most tribes, including the Eastern 

Band, are forced to ration health care to Indians, funding only those services for 

conditions that pose an immediate threat to life or life function. 1

As medical inflation continues to outpace routine inflation and chronic disease 

rates continue to increase, insufficient funding will accelerate the disparities in the 

health of American Indians and Alaska Natives. For example, without adequate 

funds it is certain that there will be missed opportunity to diagnose, treat, and in 

some cases cure pre-malignant or early malignant lesions of the skin and colon. Malignancies of the prostate, or ovaries, uterus, or breast will go undiscovered in numerous patients without specialty consultation in urology and gynecology respectively. Blindness will result from unidentified retinal disease hidden behind cataracts that are not removed in a timely manner. Early cardiac or other vascular 

intervention will not be possible without indicated cardiac stress testing and other 

vascular testing. Without proper intervention, critical vascular lesions will almost 

certainly continue their inevitable progression to infarction of the heart (heart-atVerDate Aug 31 2005 12:58 Oct 14, 2008 Jkt 044489 PO 00000 Frm 00135 Fmt 6601 Sfmt 6621 S:\DOCS\44489.TXT JACK PsN: JACKF
132 

7See 2008 I.H.S budget. 

8 American Hospital Association, ‘‘Trendwatch’’ April 2008. 

tack) or brain (stroke). Unfortunately, these needs have already outpaced even these 

supplemental funds provided by tribes. 

Rationing of health care has immediate and secondary consequences. Untreated 

conditions result in progressive deterioration of health, and delayed intervention 

leads to a worsening prognosis for recovery and more expensive treatment. Patients 

will be subjected to avoidable pain and suffering, and delays in treatment will likely 

increase rates of depression and stress resulting in higher rates of chronic disease 

and suicide. 

Regional Economic Impact 

To the extent that resources are available, tribal Contract Health Service programs are a significant referral channel for non-tribal health systems. In 2008, the 

Indian Health Service and tribal health programs will refer $579 million of federal 

Contract Health Services dollars into the public and private sectors. 7 This does not 

include referrals from Indians with alternate funding sources, such as private 

health insurance, Medicare, and Medicaid. The Eastern Band alone will refer over 

$15 million of care to North Carolina health care providers, with $3.5 million of 

these referrals from Contract Health Service dollars. The American Hospital Association has estimated the economic ripple effect of health care to be approximately 

two dollars for every dollar spent and every hospital job represents approximately 

two additional jobs. 8 Tribal health systems also provide a safety net for beneficiaries who have no health insurance coverage. The failure of tribal CHS programs 

will compromise this safety net, exacerbating the economic challenges of uncompensated care for non-tribal health systems in neighboring health care markets. 

In North Carolina, the Eastern Band is forced to cannibalize direct care services 

and other programs like economic development, housing, and infrastructure, to mitigate the adverse health and economic effects of inadequate CHS funding. CHS funding represents approximately 1⁄4 of the annual emergent and urgent needs. Thus, 

continuing to fund this unmet need will erode access to primary care, and undermine economic and community development. 

Innovative Solutions 

The appropriation of more federal dollars for Contract Health Services is the only 

real solution to the serious health disparities in Indian country. Until Congress fulfills its treaty and trust obligations to Indians and tribes, the Eastern Band and 

other tribes have sought to innovate through aggressive tribal programs to get Indians better health care opportunities. 

For example, the Eastern Band aggressively encourages its tribal members to enroll in alternate health services they are eligible for and assists with the costs of 

those alternate programs. After visiting the Mille Lacs Band of Ojibwe Reservation, 

the Eastern Band established a Supplemental Health Insurance Program (SHIP) 

that funds Medicare Part B premiums. So if a tribal member is eligible for Part B, 

which covers physician and other non-hospital services, the Tribe reimburses the Indian beneficiary for the cost of enrolling in the program. While the cost of the tribal 

program to reach Indian beneficiaries costs approximately $1 million per year, the 

savings to the Tribe and the Indian Health Service is significant. The Tribe can 

then bill Medicare for service provided at the Cherokee Indian Hospital and only 

pays for co-payments rather than the full cost of specialty care. 

To ensure that the Tribe reaches the maximum number of tribal members that 

it can, it has combined several sources of tribal data—enrollment, per capita distribution, and hospital information—to create a database for outreach to community 

members. When an Eastern Band member is about to become eligible for Part B, 

the database alerts the Tribe so it can specifically reach out to the individual. This 

also allows decreases the cost of enrolling in Part B, which increases as the age of 

the eligible recipient increases. 

As a part of the targeted outreach, Eastern Band hospital staff communicate with 

tribal members by letter, visits to the Senior Center (called Tsali Manor), and various community meetings to assist tribal members with enrollment in Part B. 

Conclusion 

The Congress should adequately fund Contract Health Services in accordance 

with the treaty and trust responsibilities of the United States to Indians and tribes. 

Not doing so compromises Indians’ quality of life, results in avoidable suffering, promotes inefficiency, and perpetuates the economic challenges of both tribal and nontribal communities. 

133 

PREPARED STATEMENT OF TRACIE REVIS, SECOND YEAR LAW STUDENT, UNIVERSITY

OF KANSAS

Mr. Chairman and distinguished members of the committee, my name is Tracie 

Revis. I am Yuchi and Muscogee Creek from Tulsa, Oklahoma. I am a second year 

law student at the University of Kansas and recent cancer survivor. My entire life, 

starting from my birth I have received services from Indian Health Services (IHS). 

I am all too familiar with the process of IHS, and contract health services (CHS) 

and how long it takes to get services, if you are fortunate to receive them at all. 

I am excited to submit testimony on this matter of IHS-Contract Health Services. 

I am excited because I believe that stories like mine need to go on record so that 

perhaps something in the future will change. IHS has been a double edged sword 

for me. It has been the system that hurt me the most, but yet saved me at other 

times. 

Diagnosis 

In 2005, I graduated with my Masters degree from the University of Oklahoma 

and began law school at the University of Kansas. During my first semester of law 

school I became very fatigued and my lymph nodes became painful. I was losing 

weight, became very pale, and was experiencing night sweats. I went to the Haskell 

Indian Nations Indian Health Services clinic in Lawrence, Kansas where the doctor 

ordered a chest x-ray and diagnosed me with walking pneumonia. He prescribed 

antibiotics but my symptoms persisted. For three weeks the doctor repeated x-rays 

and treated my illness as walking pneumonia. There was some discussion about ordering a CT scan, however, because Oklahoma was my home area and I was in Kansas, we had difficulty getting authorization for a referral to the local Lawrence facility. 

Finally, in November, a year after I started going to the doctor for my symptoms, 

I had become too ill and the doctor at Haskell ordered the CT Scan at Claremore 

Indian Hospital in Oklahoma. The doctor at Claremore did a full workup and CT 

Scan. He immediately reviewed the CT films and informed me that I had a large 

mass above my heart area and that I would need to have a biopsy immediately. His 

inclination was that I either had a form of cancer or a thymoma. He wanted me 

to meet with a thoracic surgeon to discuss the possibilities and have him review my 

films. 

The Referral 

My referral ‘‘for evaluation’’ with the thoracic surgeon ‘‘and a biopsy if necessary 

and any additional treatment if necessary’’ were sent to my tribal contract health 

department. However, I ran into several complications and was deferred, denied and 

then mysteriously approved. The process was unclear and confusing, and I was not 

contacted by CHS if there was missing documentation. I had to constantly call my 

tribe’s area clinic and the main tribal complex contract health services office to get 

information on my referral status. Upon receiving the approval for the biopsy I had 

to call and schedule the appointments myself and then coordinate with the local 

clinic’s caseworker. The surgeon’s office informed me that until I could confirm payment that they could not discuss the possible dates for surgery with me. In December, a month after the mass was discovered, I went in for the biopsy. 

The thoracic surgeon decided to biopsy a tissue sample from the mass instead of 

biopsying the lymph nodes. I was informed that that there would be a small incision 

below my collar bone to take the tissue sample but, if the thoracic surgeon could 

determine with certainty that the mass was a thymoma then he would perform a 

sternotomy and remove the mass. After the biopsy began the thoracic surgeon could 

not get a good tissue sample and consequently performed the sternotomy which ultimately removed 75% of the tumor. I was in the hospital for six days following the 

procedure. I became completely dependent on others to assist me. 

On Christmas day, I was given the official diagnosis of Hodgkins Lymphoma. At 

that time there was one tumor and it was at an early stage 2 (since it was only 

in the chest area and not below the diaphragm). 

Getting Treatment 

In January 2006, I was told that there were some concerns about my referral originating from Haskell Health (because it was in Kansas) and concern because I did 

not have a utility bill in my name within my tribal boundaries. Because of these 

concerns, my tribal CHS requested a verification of my residence. Again, I explained 

that I was a student when I was diagnosed and that upon moving back to Oklahoma 

I had to move back to my grandmother’s residence and therefore all of the bills were 

in her name. During the address verification period in February, I developed a bad 

cough and went to Claremore IHS to see the doctor that had performed the CT scan. 

134 

He ordered another chest x-ray which showed that the mass appeared to have doubled in size since pre-surgery. He inquired about my progress with getting an oncology appointment and I explained to him what I had been told by my tribal CHS 

that my referral was approved pending residence verification. 

My doctor was very concerned and decided to call the main tribal CHS to find 

out when I would be able to schedule an appointment. He spoke with my caseworker 

at the tribe, who informed him that my referral had been denied. He inquired about 

the appeal process and asked if I had been notified of the denial. The caseworker 

responded that I had not been informed and that I would not be informed for at 

least 4 weeks, then I would receive a letter in the mail telling me that I had been 

denied. Also, that if he (as my referring physician) wanted to send another referral 

he would have to wait 4 weeks and then we could appeal with a new referral. He 

asked about why I had been told that it was ‘‘approved pending verification’’ and 

had the CHS office received Haskell’s letter stating that my address on file was listed as Oklahoma. She said that it was denied because they did not have any money 

and then she read him the policy of denying a referral and policy about waiting 4 

weeks before notifying the patient. I was in the room for the entire call which was 

on speakerphone. 

Advocating for the urgency of treatment, my doctor inquired whether the CHS 

caseworker understood how important it was that I see an oncologist right away. 

She said she could not do anything and that I needed to speak with the local caseworker at my tribal clinic. My doctor was very upset and decided to call the tribal 

CHS director, unfortunately she was unreachable that day. My doctor advised me 

that my health could not wait, and that I needed immediate treatment. He decided 

to call other caner facilities within the state to see if they were willing to take me 

as an uninsured patient. Every hospital that he called said they were at their fill 

of uninsured patients and that they could not take me on financially. At that point 

my doctor suggested possibly seeking treatment out of state. 

After the denial from IHS, I called the State Department of Health Services inquiring about state assistance and was told that I had the ‘‘wrong type of cancer’’. 

I did not qualify for any assistance because I did not have children and was not 

disabled. It did not matter that I did not have an income. Frustrated by the system, 

I called state representatives, tribal officials, and anyone who knew someone that 

might be able to offer suggestions. I followed up with the CHS Director and was 

informed that I was ‘‘approved pending verification of my residency’’. 

Three months after my biopsy, I finally had approval for treatment and had an 

appointment with an oncologist. My new oncologist reviewed all of the previous 

medical records and ordered more tests to determine the final staging of my tumor 

size before I began treatment. Upon initial review he presumed my staging was 

stage 2 because of the location of the tumor above the diaphragm. However, because 

of the time it took for me to get approval to begin treatment, the tumor had grown 

and I now had 3 tumors in my chest and neck. Also, I had enlarged lymph nodes 

in the groin and in areas surrounding the aorta and an enlarged spleen and liver. 

My final staging was a 3(B)(E). 

I tolerated the treatment well. However, because of my anemia and weight loss 

my oncologist recommended red and white blood cell boosters. Unfortunately, the 

cost of the injections was $4,000 for one and $6,000 for the other. My oncologist 

knew that CHS would not and could not afford that amount so he put me in a clinical trial. Earlier this year, the FDA released a report on one of the drugs that noted 

that it should not be given to young patients with chest, neck, or breast cancer; it 

should not be given to patients that have a high chance of recovery, or to young 

patients. I met all three criteria. 

Remission 

Through it all, I overcame the obstacles and struggles and finished treatment in 

July 2006. In September, I accepted a full time job working in cancer research at 

a University Health Center Institutional Review Board away from my tribal community but within an IHS urban service area. While filling out my insurance forms, 

I inquired about pre-existing conditions. The insurance provider said that if I could 

verify continued coverage with no lapses in service then they would cover the preexisting condition. I explained that I was always eligible for direct service through 

IHS. They accepted it and I had insurance coverage. 

Relapse 

In November 2006, I began to show symptoms that my cancer had returned. Because of the problems that I experienced at the former cancer center I decided to 

change oncologists. I spoke with the IHS service area office’s CHS and they agreed 

to be the secondary provider to what my insurance company did not cover even 

135 

though my new doctor was not a doctor they contracted with. The plan of treatment 

was for extensive salvage chemotherapy and an autologous stem cell transplant. My 

transplant would consist of 30 days in the hospital and more high-dose chemotherapy. 

I began salvage chemotherapy in January 2007. The treatments were much more 

intense and longer. It took two different types of salvage chemotherapy treatments 

which was four total rounds to get my tumor to respond. By May, my tumor had 

decreased enough to begin transplant procedures. 

Transplant 

I had been speaking with CHS and my insurance company to try to coordinate 

what services would be covered. CHS advised me that they would try to cover the 

costs that the insurance provider would not. The dilemma came when the insurance 

provider said that my hospital, where I was working and where I was planning to 

have the transplant procedure, was not in the insurance provider’s network and 

that I would have to go out of state. CHS said that in order for me to have a chance 

of their office covering the remaining costs then I would need to stay in-state (even 

though it was a higher cost). The CHS worker informed me that I had a high chance 

of having my costs covered because I was a good candidate. She [CHS caseworker] 

said that it is not common to cover most transplants because of the follow-up costs 

that are associated with them and that often patients do not adhere to the followup treatment. Ultimately, after I had already scheduled the transplant and began 

the transplant procedures (stem cell harvesting, heart and lung tests) my referral 

was denied and my health could not afford the wait to reschedule at another facility 

out of state. 

I was released from the hospital in June 2007 and had plans to return to Lawrence to restart law school. In July, my doctor called to say that the transplant did 

not remove all of the cancer cells, and I was still showing active uptake in my cells. 

I was immediately sent to a radiation oncologist. 

Radiation 

I had plans to return to law school in the Fall of 2007 and because of my current 

obstacles with IHS and CHS I decided to not let ‘‘the wait’’ for referrals and approvals be the deciding factor. This ‘‘wait’’ for referrals may or may not produce services, 

and I felt that my health could not afford that gamble of getting an approval. I 

started school and radiation at the same time. As a result of my previous struggles, 

I chose to not go through IHS. The debt is 100% on me. However, I maintained contact with my area office regarding my decision to go back to school and my doctor 

is in Oklahoma. 

Currently, I am in remission for a second time. I have outstanding medical debt 

as well as my credit rating has been greatly impacted. I receive CT and PET scans 

every six weeks to monitor any growth in the tumor, and full blood panel tests. CHS 

has covered two of my five scans since radiation. My biopsy bill has been paid, even 

though after the procedure, CHS claimed that they had not authorized the hospital 

stay. It took over a year to get it paid, but it has now been paid. While, IHS covered 

my chemotherapy, I still incurred several other costs associated with cancer. My 

total cancer debt is around 200,000. 

Other problems 

Getting the referrals and approvals was not the only problem that I encountered 

with IHS and the CHS system. When I was deferred and then denied the first time, 

I asked what the process was so that I may appeal it. I was told that I was not 

allowed to see the policy for approvals or denials. There was not one person who 

could tell me how the process worked, or how often the committee met, or explain 

the criteria for approvals. 

At the cancer center where I was referred the financial manager informed me of 

her issues of dealing with me because I was from ‘‘the Indian Clinic’’. I corrected 

her and told her that I was not referred from a clinic but from a Hospital and it 

was actually my tribe, not the hospital that was the payor. She proceeded to tell 

me how ‘‘the Indian clinic likes for us to treat their patients, but they don’t want 

to pay us.’’ I was frustrated by her attitude, dislike for IHS, and blatant racism; 

however, it was not my issue to deal with. I was a patient like every other patient, 

battling cancer and fighting for my life. I was very concerned that perhaps I would 

be treated differently and would not receive the highest standard of care because 

I was an ‘‘Indian patient’’. Each time that I went in for treatment the front desk 

would ask me for my ‘‘Indian authorization’’ or my ‘‘Indian papers’’ before they could 

treat me. They did this very loudly, and I often felt embarrassed by the scene that 

they caused. 

136 

During treatment I often needed to get CT scans to monitor the size of my tumors. I would go to Claremore IHS to get the scans and often during the scans the 

CT machine would overheat and would have to be shut down for a while to let it 

cool it off. It has been suggested by other doctors that I may not have had adequate 

scans because the machine at Claremore IHS was older and probably did not show 

the true picture of my cancer. Therefore, it is likely that I may have never truly 

been in remission. 

Purpose of my Testimony 

Through all of the struggles, I understood that I was fortunate to have access to 

what health care I did receive. Having worked on IHS contracts in prior jobs, I understood the budget process and that there is never going to be enough money to 

meet the entire medical need of the community. But, I truly believe that had someone been more willing to walk me through the process in the beginning I may have 

had a different experience. I, like so many others was very disillusioned by the true 

nature of the system. Never throughout my entire experience did I feel empowered 

or in control of my own health. If I would have had a choice on what my options 

were in the beginning I may not have had to suffer so much. Since then, I have 

been told by several doctors, oncologists, and surgeons that I should have never had 

my chest cracked open in the first place. I did not have a choice and since then my 

struggles with the system lead to longer treatment time for a tumor that was even 

larger than was originally noticed. I will forever bear the scar and at 30 years old 

I have already been through menopause as a result of my treatment. I am happy 

to be alive and have the opportunity to share my story, but, I cannot help but to 

wonder what would be different if I had only known. 

Thank you 

137 


626f1.eps
138 


626f2.eps
139 


626f3.eps
140 


626f4.eps
141 


626g1.eps
142 


626g2.eps
143 


626g3.eps
144 


626g4.eps
145 


626g5.eps
146 


626g6.eps
147 


626g7.eps
148 


626g8.eps
149 


626g9.eps
150 


626g10.eps
151 


626g11.eps
152 


626g12.eps
153 


626g13.eps
154 


626g14.eps
155 


626g15.eps
156 


626g16.eps
157 


626g17.eps
158 


626g18.eps
159 


626g19.eps
160 


626g20.eps
161 


626g21.eps
162 


626g22.eps
163 


626g23.eps 626g24.eps
164 


626g25.eps
165 


626g26.eps
166 


626g27.eps
167 


626g28.eps
168 


626g29.eps
169 


626g30.eps
170 


626h1.eps
171 


626h2.eps
172 


626h3.eps
173 


626h4.eps
174 


626h5.eps
175 


626h6.eps
176 


626h7.eps
177 


626h8.eps
178 


626h9.eps
179 


626h10.eps
180 


626h11.eps
181 


626h12.eps
182 


626h13.eps
183 


626h14.eps
184 


626h15.eps
185 


626h16.eps
186 


626h17.eps
187 


626h18.eps
188 


626h19.eps
189 


626h20.eps
190 


626h21.eps 626h22.eps
191 


626h23.eps
192 


626h24.eps
193 


626h25.eps
194 


626h26.eps
195 


626h27.eps
196 


626h28.eps
197 


626h29.eps
198 


626h30.eps
199 


626h31.eps
200 


626h32.eps
201 


626h33.eps
202 


626h34.eps
203 


626i1.eps
204 


626i2.eps
205 


626i3.eps
206 


626i4.eps
207 


626i5.eps
208 


626i6.eps
209 


626i7.eps
210 


626i8.eps
211 


626i9.eps
212 


626i10.eps
213 


626i11.eps
214 


626i12.eps
215 


626i13.eps
216 


626i14.eps
217 


626i15.eps
218 


626i16.eps
219 


626i17.eps
220 


626i18.eps
221 


626i19.eps
222 


626i20.eps
223 


626i21.eps
224 


626i22.eps
225 


626i23.eps
226 


626i24.eps
227 


626i25.eps
228 


626i26.eps
229 


626i27.eps
230 


626i28.eps
231 


626i29.eps
232 


626i30.eps
233 


626j1.eps
234 


626j2.eps
235 


626j3.eps
236 


626j4.eps
237 


626j5.eps
238 


626j6.eps
239 


626j7.eps
240 


626j8.eps
241 


626j9.eps
242 


626j10.eps
243 


626j11.eps
244 


626j12.eps
245 


626j13.eps
246 


626j14.eps
247 


626j15.eps
248 


626j16.eps
249 


626j17.eps
250 


626j18.eps
251 


626j19.eps
252 


626j20.eps
253 


626j21.eps
254 


626j22.eps
255 


626j23.eps
256 


626j24.eps
257 


626j25.eps
258 


626j26.eps
259 


626j27.eps
260 


626j28.eps
261 


626j29.eps
262 


626j30.eps
263 


626k1.eps
264 


626k2.eps
265 


626k3.eps
266 


626k4.eps
267 


626k5.eps
268 


626k6.eps
269 


626k7.eps
270 


626k8.eps
271 


626k9.eps
272 


626k10.eps
273 


626k11.eps
274 


626k12.eps
275 


626k13.eps
276 


626k14.eps
277 


626k15.eps
278 


626k16.eps
279 


626k17.eps
280 


626k18.eps
281 


626k19.eps
282 


626k20.eps
283 


626k21.eps
284 


626k22.eps
285 


626k23.eps
286 


626k24.eps
287 


626k25.eps
288 


626k26.eps
289 


626k27.eps
290 


626k28.eps
291 


626k29.eps
292 


626l15.eps
293 


626l1.eps
294 


626l2.eps
295 


626l3.eps
296 


626l4.eps
297 


626l5.eps
298 


626l6.eps
299 


626l7.eps
300 


626l8.eps
301 


626l9.eps
302 


626l10.eps
303 


626l11.eps
304 


626l12.eps
305 


626l13.eps
306 

Æ 


626l14.eps