INDIAN HEALTH 

SERVICE

Opportunities May 

Exist to Improve the 

Contract Health 

Services Program

Report to Congressional Addressees

December 2013

GAO-14-57

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14- , a report to 

congressional addressees

57

December 2013

INDIAN HEALTH SERVICE

Opportunities May Exist to Improve the Contract 

Health Services Program

Why GAO Did This Study

IHS provides health care to American 

Indians and Alaska Natives. When 

services are unavailable from IHS, 

IHS’s CHS program may pay for care 

from external providers. GAO 

previously reported on challenges 

regarding the timeliness of CHS 

payments and the number of American 

Indians and Alaska Natives who may 

gain new health care coverage as a 

result of PPACA. PPACA mandated 

GAO to review the CHS program. This 

report examines (1) the length of time it 

takes external providers to receive 

payment from IHS after delivering CHS 

services; (2) the performance 

measures IHS has established for 

processing CHS provider payments; 

(3) the factors that affect the length of 

time it takes IHS to pay CHS providers; 

and (4) how new PPACA health care 

coverage options could affect the 

program. To conduct this work, GAO 

analyzed fiscal year 2011 CHS claims 

data, interviewed IHS officials, 

including officials in four IHS areas, 

and reviewed agency documents and 

statutes.

What GAO Recommends

GAO recommends that IHS revise an 

agency measure of the timeliness with 

which purchase orders are issued, use 

available funds as appropriate to 

improve the alignment between CHS 

staffing levels and workloads, and 

proactively develop potential options to 

streamline CHS eligibility 

requirements. The agency concurred 

with two recommendations, but did not 

concur with the recommendation to 

use available funds to improve CHS 

staffing levels. GAO believes the 

recommendation is valid as discussed

in the report. 

What GAO Found

For Indian Health Service (IHS) contract health services (CHS) delivered in fiscal 

year 2011, a majority of claims were paid within 6 months of the service delivery 

date, but some took much longer. Specifically, about 73 percent of claims were 

paid within 6 months of service delivery, while about 8 percent took more than 

1 year. The CHS payment process consists of three main steps: (1) the local 

CHS program issues a purchase order to the provider authorizing payment 

(either before service delivery, or after, such as in emergency situations), (2) the 

provider submits a claim for payment, and (3) IHS pays the provider. GAO found 

that the first step took the longest—often taking more than 2 months.

IHS uses three measures to assess the time it takes to approve and then 

process payments to CHS providers. Two of the measures concern the first step 

in the payment process (purchase order issuance) and the third concerns the 

final step (making the payment). One of the measures IHS uses to assess the 

timeliness of the first step is the average time it takes to issue a purchase order 

after a service has been delivered; IHS’s current target for this measure is 

74 days. However, the measure does not provide a clear picture of timeliness for 

this activity as it combines data for two different types of CHS services—those for 

which payment eligibility was determined prior to service delivery and those for 

which eligibility was determined after service delivery. IHS officials told GAO that 

when eligibility is determined prior to service delivery, it may take only one day 

from the date of service to issue the purchase order. Including this type of service 

in the calculation, therefore, lowers the overall average.

The complexity of the CHS program affects the timeliness of provider payments. 

IHS program officials make decisions on what care will be funded on a case-bycase basis, evaluating each case against a number of eligibility requirements 

involving multiple steps. This process can lead to payment delays. Officials noted 

that delays also can occur when processing payments and that staffing 

shortages can affect the timeliness of payments. Some program officials noted 

that their staffing levels were below standards established by IHS.

New coverage options in the Patient Protection and Affordable Care Act 

(PPACA) may provide an opportunity to simplify CHS eligibility requirements. 

PPACA made significant changes to the Medicaid program and included new 

health care coverage options that may benefit many American Indians and 

Alaska Natives beginning in 2014. IHS officials reported the agency developed 

the current CHS program eligibility requirements to manage CHS program 

funding constraints. In particular, some of the complexities of the program were 

designed to allow the program to operate within the constrained levels of 

program funding. With the availability of new coverage options under PPACA, 

some constraints on CHS program funds could be alleviated, providing IHS an 

opportunity to streamline service eligibility requirements and expand the range of 

services it pays for with CHS funds.

View GAO-14- . For more information, 

contact Kathleen M. King at (202) 512-7114 or 

kingk@gao.gov.

57
Page i GAO-14-57 IHS Contract Health Claims Administration

Letter 1 

Background 4

More than Two-Thirds of CHS Claims Were Paid within 6 Months 

but Some Took Much Longer to Pay 12

IHS Has Three Timeliness Measures for Processing Provider 

Payments, but the Two Involving Purchase Order Issuance Do 

Not Provide a Clear Picture of Timeliness 16

Complexity of the CHS Program, CHS Staffing and Funding 

Availability, and Variations in Program Practices Can Affect the 

Timeliness of Payments to Providers 19

New Coverage Options in PPACA May Provide IHS an 

Opportunity to Simplify CHS Eligibility Rules 26

Conclusions 27

Recommendations for Executive Action 28

Agency Comments and Our Evaluation 28

Appendix I Comments from the Department of Health and Human Services 32

Appendix II GAO Contact and Staff Acknowledgments 34

Related GAO Products 35

Table

Table 1: IHS Medical Priority Levels for Contract Health Services 7

Figures

Figure 1: Two Paths for Patient Care to Be Funded by Contract 

Health Services (CHS) Program 9

Figure 2: Percentage of Contract Health Services (CHS) Claims 

Paid within Certain Time Intervals, for Services Delivered 

in Fiscal Year 2011 12

Figure 3: Percentage of Contract Health Services (CHS) Claims 

Paid within 3 Months, 6 Months, and 1 Year of Service 

Delivery, for Services Delivered in Fiscal Year 2011, by 

IHS Area 13

Contents
Page ii GAO-14-57 IHS Contract Health Claims Administration

Figure 4: Percentage of Claims Processed within Certain Time 

Intervals in Each Step of the Contract Health Services 

(CHS) Payment Process, for Services Delivered in Fiscal 

Year 2011 15

Abbreviations

CHS contract health services

CHSDA contract health service delivery area

FI fiscal intermediary

GPRA Government Performance Results Act

HHS Department of Health and Human Services

IHS Indian Health Service

PPACA Patient Protection and Affordable Care Act of 2010

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Page 1 GAO-14-57 IHS Contract Health Claims Administration

441 G St. N.W.

Washington, DC 20548

December 11, 2013

Congressional Addressees

The Indian Health Service (IHS), an agency within the Department of 

Health and Human Services (HHS), is charged with providing health care 

services to the approximately 2.1 million American Indians and Alaska 

Natives who are members or descendants of federally recognized tribes.1

These services are provided at federally or tribally operated health care 

facilities,2 which receive IHS funding and are located in 12 federally 

designated geographic areas overseen by IHS area offices.3

At the local level, the CHS program is administered by individual CHS 

programs generally affiliated with IHS-funded facilities. IHS has oversight 

authority over local CHS programs that are affiliated with IHS-operated 

These 

facilities vary in the services they are able to provide; for example, some 

facilities offer comprehensive hospital services, while others offer only 

primary care services. When services are not available at these facilities, 

the facilities may use IHS’s contract health services (CHS) program funds 

to obtain care for eligible patients from external health care providers, 

including hospitals and office-based physicians.

 

1

IHS defines an Indian tribe as any Indian tribe, band, nation, group, Pueblo, or 

community, including any Alaska Native village or Native group, which is federally 

recognized as eligible for the programs and services provided by the United States to 

Indians because of their status as Indians. 42 C.F.R. § 136.21(g)(2012).

2

Under the Indian Self-Determination and Education Assistance Act, as amended, 

federally recognized Indian tribes can enter into self-determination contracts or selfgovernance compacts with the Secretary of Health and Human Services to take over the 

administration of IHS programs for Indians previously administered by IHS on their behalf. 

Self-governance compacts allow tribes to consolidate and assume administration of all 

programs, services, activities, and competitive grants administered throughout IHS, or 

portions thereof, that are carried out for the benefit of Indians because of their status as 

Indians. In contrast, self-determination contracts allow tribes to assume administration of a 

program, programs, or portions thereof. See 25 U.S.C. §§ 450f(a) (self-determination 

contracts) and 458aaa-4(b)(1) (self-governance compacts).

3

IHS’s 12 areas are: Aberdeen, Alaska, Albuquerque, Bemidji, Billings, California, 

Nashville, Navajo, Oklahoma City, Phoenix, Portland, and Tucson. All areas but Alaska 

and California include IHS-operated facilities.
 

Page 2 GAO-14-57 IHS Contract Health Claims Administration

facilities.4

This report is one in a series of reports we have conducted in the last 

3 years that have examined the CHS program.

The local CHS programs determine whether to pay for services 

from external providers based on requirements that are unique to CHS.

5 In our previous reports, 

we identified challenges cited by providers with the CHS program 

payment process.6 We found, for example, that according to providers, 

sometimes it took months or years to receive payment after providing a 

service, which added to the burden of both patients and providers.7 In 

addition, we reported on the number of American Indians and Alaska 

Natives who may gain new health care coverage beginning in 20148 as a 

result of provisions in the Patient Protection and Affordable Care Act 

(PPACA) of 2010.9

PPACA mandated GAO to examine the administration of the CHS 

program.10

 

4

Of the 243 local CHS programs, 66 are affiliated with IHS-operated facilities. The 

remaining 177 CHS programs are affiliated with tribally operated facilities.

This report focuses on the timeliness of CHS payments to 

providers and how changes in PPACA could affect the CHS program. 

Specifically, this report examines:

5

GAO, Indian Health Service: Most American Indians and Alaska Natives Potentially 

Eligible for Expanded Health Coverage, but Action Needed to Increase Enrollment, 

GAO-13-553 (Washington, D.C.: Sept. 5, 2013); Indian Health Service: Capping Payment 

Rates for Nonhospital Services Could Save Millions of Dollars for Contract Health 

Services, GAO-13-272 (Washington, D.C.: Apr. 11, 2013); Indian Health Service: Action 

Needed to Ensure Equitable Allocation of Resources for the Contract Health Service 

Program, GAO-12-446 (Washington, D.C.: Jun. 15, 2012); and Indian Health Service:

Increased Oversight Needed to Ensure Accuracy of Data Used for Estimating Contract 

Health Service Need, GAO-11-767 (Washington, D.C.: Sept. 23, 2011).

6

GAO-11-767 and GAO-13-272. 

7

GAO-11-767. 

8

GAO-13-553. 

9

Pub. L. No. 111-148, 124 Stat. 119, as amended by the Health Care and Education 

Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029. For the purposes of this 

report, references to PPACA include the amendments made by the Health Care and 

Education Reconciliation Act of 2010.

10See Pub. L. No. 111-148, § 10221, 124 Stat. 119, 935 (2010) (enacting S. 1790, as 

reported by the Committee on Indian Affairs in the Senate in December 2009, into law with 

amendments); S. 1790, 111th Cong. §§ 137, 199 (2009).
 

Page 3 GAO-14-57 IHS Contract Health Claims Administration

1. the length of time it takes external providers to receive payment from 

IHS after delivering CHS services;

2. the performance measures that IHS has established for the amount of 

time it takes to process CHS provider payments;

3. the factors that affect the length of time it takes IHS to pay CHS 

providers; and

4. how new health care coverage options included in PPACA could 

affect the CHS program.

To determine the length of time after service delivery that payments are 

made, we obtained IHS data on paid CHS claims for health care services 

delivered in fiscal year 2011 that were authorized by IHS-operated CHS 

programs in 10 areas and that were paid as of February 2013; a total of 

approximately 398,000 claims.11

To examine IHS’s performance measures for the amount of time it takes 

IHS-operated CHS programs to process provider payments, we reviewed 

relevant statutes, agency documentation, and interviewed officials from 

IHS headquarters, areas, and CHS programs.

Claims data from fiscal year 2011 were 

the most recent sufficiently complete data available for our analysis. We

assessed the reliability of IHS’s federal CHS program claims data by 

reviewing documentation and discussing the data with knowledgeable 

officials. We also performed data reliability checks, such as examining the 

data for missing values and obvious errors, to test the internal 

consistency and reliability of the data. We determined that the data were 

sufficiently reliable for our purposes.

To determine the factors that affect the length of time to pay providers, we 

interviewed IHS officials in selected areas and CHS programs. We 

conducted interviews in four areas: Albuquerque, Billings, Navajo, and 

Oklahoma; and within each of these areas, at three local IHS-operated 

CHS programs. We selected these 4 areas and 12 programs to reflect a 

range in the length of time for paying CHS claims based on previous 

claims data. In our interviews, we asked officials about their procedures 

for processing CHS referrals and the factors they believed affected the 

 

11We did not obtain data on CHS claims that were authorized by tribally operated facilities, 

which account for approximately 54 percent of total CHS program payments. This review 

focused entirely on data and activities of CHS programs affiliated with IHS-operated 

facilities. These programs are located in 10 of the 12 IHS areas.
 

Page 4 GAO-14-57 IHS Contract Health Claims Administration

length of time to pay providers. In addition, we interviewed IHS’s fiscal 

intermediary, who is responsible for the final processing of payments to 

providers. We also reviewed relevant statutes and agency regulations 

and documentation.

To determine the effect that new coverage options available in PPACA 

might have on the CHS program, we reviewed relevant statutes and our 

recent report on eligibility among American Indian and Alaska Natives for 

new coverage options available in PPACA.12

We conducted this performance audit from November 2012 to November 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

IHS facilities and their associated CHS programs are located in 12 

geographic areas, each overseen by an IHS area office led by an Area 

Director. Ten of the 12 areas include at least some IHS-operated 

facilities; these 10 areas oversee local CHS programs in 33 states. IHS 

headquarters sets CHS program policies and oversees the areas. Each 

IHS area contains multiple local CHS programs. The areas distribute 

funds to the local CHS programs in their areas, monitor the programs, 

and establish procedures and provide guidance and technical assistance 

to the programs.

The CHS program is funded through annual appropriations and must 

operate within the limits of available appropriated funds.13

 

12

Based on the 

regulations that IHS has established for the CHS program, a number of 

requirements must be met in order for a service to be eligible for CHS 

GAO-13-553.

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

Background

CHS Program 

Organization

CHS Program Funding 

and Service Eligibility 

Requirements
 

Page 5 GAO-14-57 IHS Contract Health Claims Administration

payment.14

• Is the patient a member or descendent of a federally recognized 

tribe or someone with close ties to the tribe? To be eligible for 

CHS payment, the service must be for a patient who is a member or 

descendent of a federally recognized tribe or someone who maintains 

close economic and social ties with the tribe.

Based on the requirements, before approving a service for 

payment, local CHS programs must consider the following:

• Does the patient reside within the Tribal Contract Health Service 

Delivery Area (CHSDA)? For a service to be paid for with CHS 

funds, it must be for a patient who resides in the Tribal CHSDA. 

Unless otherwise established, the CHSDA encompasses the 

reservation, the counties that border the reservation, and other 

specified lands.15

• Are alternate health care resources available to the patient?

Many users of IHS services are also eligible for other sources of 

payment for care, including Medicaid, Medicare, and private 

insurance.

Exceptions exist for students who are temporarily 

absent from their CHSDA during full-time study and individuals who 

are temporarily absent from the CHSDA for less than 180 days due to 

travel or employment.

16 The CHS program is typically the payer of last resort.17

 

14Eligibility requirements for CHS are in addition to meeting the requirements for direct 

care services.

Therefore, before a service is approved for CHS payment, the patient 

must apply for and use all alternate resources that are available and 

accessible. Services from an IHS facility are also considered a 

15Tribal groups or IHS may submit requests to re-designate a CHSDA. These requests 

are reviewed by IHS and are subject to public comment.

16Medicaid is a jointly funded federal-state health care program that covers certain lowincome individuals and families. Medicare is the federal government’s health care 

insurance program for individuals aged 65 and older and for individuals with certain 

disabilities or end-stage renal disease.

17See 25 U.S.C. §§ 1621e, 1623; 42 C.F.R. § 136.61 (2012). There are certain 

exemptions to the CHS program’s designation as a payer of last resort. For example, 

certain tribally funded health insurance plans are not considered alternate resources and 

the CHS program must pay for care before billing the tribally funded insurance plan. The 

CHS program must also pay for care provided to eligible American Indians and Alaska 

Natives before the crime victim compensation program, a federal program that provides 

compensation to victims of criminal violence.
 

Page 6 GAO-14-57 IHS Contract Health Claims Administration

resource, so CHS funds cannot be used for services reasonably 

accessible and available at IHS facilities.

• Did the CHS program receive timely notification of services 

provided from a non-IHS facility? In non-emergency cases, the 

local CHS program should be notified and the service approved for 

payment prior to the patient receiving care. In cases where the patient 

was not referred for care by an IHS provider, such as with emergency 

room services, the CHS program must be notified within 72 hours of 

when the service was delivered. Notification may be made by the 

individual, provider, hospital, or someone on behalf of the individual in 

order for the service to be eligible for CHS payment. The notification 

time is extended to 30 days for the elderly and disabled.

• Are the services considered medically necessary and listed as 

one of the established area medical or dental priorities? To be 

eligible for payment under the CHS program, the service must be 

considered medically necessary and listed as one of the established 

IHS area’s medical or dental priorities. A program committee that is 

part of the local CHS program evaluates the medical necessity of the 

service, for example, at a weekly meeting. IHS has established four 

broad medical priority levels of health care services eligible for 

payment and a fifth for excluded services that cannot be paid for with 

CHS program funds. Each area is required to establish priorities that 

are consistent with IHS’s medical priority levels and are adapted to 

the specific needs of the CHS programs in its area. CHS programs 

that are affiliated with IHS-operated facilities must assign a priority 

level to services based on the priority system established by their area 

offices. Funds permitting, these CHS programs first pay for the 

highest priority services and then for all or some of the lower priority 

services they fund.18 Our prior work has found that available CHS 

program funds have not been sufficient to pay for all eligible 

services.19

 

18Tribal CHS programs must use medical priorities when making funding decisions but, 

unlike CHS programs affiliated with IHS-operated facilities, tribal programs may develop 

systems that differ from the set of priorities established by IHS.

At some IHS facilities, the amount of CHS funding 

available was only sufficient to cover cases with the highest medical 

priority—Priority 1—emergent or acutely urgent care services that are 

necessary to prevent immediate death or serious impairment of 

19GAO, Indian Health Service: Health Care Services Are Not Always Available to Native 

Americans, GAO-05-789 (Washington, D.C.: Aug. 31, 2005); and GAO-11-767. 
 

Page 7 GAO-14-57 IHS Contract Health Claims Administration

health. (See table 1 for a description of the medical priority levels and 

related services.)

Table 1: IHS Medical Priority Levels for Contract Health Services

Medical priority 

level Services included in priority level

Level I Emergent/acutely urgent care services, such as trauma care, 

acute/chronic renal replacement therapy, obstetrical delivery and 

neonatal care.

Level II Preventive care services, such as preventive ambulatory care, 

routine prenatal care, and screening mammograms.

Level III Primary and secondary care services, such as scheduled ambulatory 

services for nonemergent conditions, elective surgeries, and 

specialty consultations.

Level IV Chronic tertiary and extended care services, such as rehabilitation 

care, skilled nursing facility care, and organ transplants. 

Level V Excluded services, such as cosmetic plastic surgery and 

experimental procedures that programs may not pay for with CHS 

program funds.

Source: GAO analysis of IHS documents.

After considering these questions, local CHS programs review each case 

based on the availability of funding and may defer or deny requests to 

pay for services when program funds are not available. If the CHS 

program determines that a service can be funded, it issues a purchase 

order for the service.

In general, three entities are involved in the CHS payment process: 

(1) the local CHS program, (2) the provider, and (3) IHS’s fiscal 

intermediary (FI). The timing of the CHS program’s and the provider’s 

involvement depends on whether the service was prompted by a referral 

from an IHS provider prior to the date of service—called IHS referrals, or 

prompted by the patient seeking care without first obtaining a referral from 

an IHS provider—these are typically emergency services and called selfreferrals.

IHS referrals are cases in which an IHS-funded provider refers a patient 

for care to an external provider. The local CHS program receives the 

referral and evaluates it against the eligibility requirements. Once the 

CHS program receives the needed information to make its determination, 

it will:

CHS Payment Process

IHS Referrals
 

Page 8 GAO-14-57 IHS Contract Health Claims Administration

• approve the service for payment and issue a purchase order to 

obligate the funds and send copies of the purchase order to the 

provider and to the FI;

• defer funding if it meets all the eligibility criteria, but funds are not 

available; or

• deny the service.

If the service is approved, the local CHS program typically works with an 

external provider to set up an appointment for the patient to receive the 

service and issues the purchase order to the provider—either before the 

service is provided or shortly after the service is provided. After 

performing the service, the external provider submits the purchase order 

along with the claim for payment to the FI. Once the FI receives the claim 

and purchase order from the external provider, it verifies the purchase 

order and patient data, evaluates whether alternate resources are 

available, and, if appropriate, makes the required payment. If there are 

any issues with the claim, such as missing information from the CHS 

program or provider, the FI will put the claim in a hold status until the 

issues are resolved.

Self-referrals are typically emergency situations where the patient 

receives services from external providers without first obtaining a referral 

from an IHS-funded provider. After the services are delivered, the 

provider seeks approval from the CHS program for payment for the 

services. With self-referrals, the steps taken by the CHS program to 

evaluate the referral against the program’s eligibility requirements to 

determine whether the service is eligible for CHS payment do not begin 

until after the service is provided. In these cases, the local CHS program 

may have to communicate with the external provider, for example, 

requesting information about the services provided. Similar to IHS 

referrals, once the CHS program receives the needed information to 

make an eligibility determination, it will approve the service for payment 

and issue a purchase order to obligate the funds; defer funding the 

service; or deny the service. For approved self-referral services, once the 

FI receives the claim and purchase order from the external provider, it 

follows the same procedures for processing the payment as for IHS 

referrals. (See fig. 1 for an overview of the approval and payment 

processes for IHS referrals and self-referrals.)

Self-referrals
 

Page 9 GAO-14-57 IHS Contract Health Claims Administration

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

For services that are ultimately paid for under the CHS program, whether 

they are IHS or self-referrals, the CHS payment process consists of three 

main steps that encompass the time from the date a service is delivered 

to the date the provider is paid.
 

Page 10 GAO-14-57 IHS Contract Health Claims Administration

1. Local CHS program issues the purchase order. The time for this 

step can be measured by the length of time between when a service 

is provided and when the local CHS program issues the purchase 

order. (Sometimes the purchase order is issued before the service is 

provided, such as for some IHS referrals; in these cases this step has 

no effect on the time it takes to pay the provider.)

2. External provider submits a claim to IHS’s FI. The time for this step 

can be measured by the length of time between when the CHS 

program issues the purchase order and when the FI receives the 

claim.

3. The FI pays the claim. The time for this step can be measured by the 

length of time between when the FI receives a claim from an external 

provider and when the payment is made.

PPACA made significant changes to the Medicaid program and included 

new health care coverage options that may benefit American Indians and 

Alaska Natives. In 2014, Medicaid eligibility will expand in states opting to 

participate, such that all individuals with incomes at or below 138 percent 

of the federal poverty level will be eligible for the program, including 

previously ineligible categories of individuals, such as childless adults.20

Also in 2014, health insurance exchanges will be available—health 

insurance marketplaces in which individuals and small businesses can 

compare, select, and purchase health coverage from participating 

carriers.21

 

20PPACA established 133 percent of the federal poverty level as the income limit for 

expanded Medicaid eligibility; however, it also specifies that an individual’s income be 

reduced by an amount equivalent to 5 percent of federal poverty level when determining 

Medicaid eligibility, which effectively raises the eligibility limit for newly eligible Medicaid 

recipients to 138 percent of the federal poverty level. See Pub. L. No. 111-148, 

§§ 2001(a)(1), 2002, 124 Stat., 271, 279; Pub. L. No. 111-152, § 1004(e), 124 Stat. 1036 

(codified at 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII) and 42 U.S.C. § 1396a(e)(14)(B)(I)). 

For individuals obtaining insurance through the exchanges, 

PPACA provides premium tax credits for those meeting certain income 

requirements and cost-sharing exemptions for qualifying American 

21PPACA directed states to establish state-based exchanges by January 1, 2014. In 

states electing not to establish and operate such an exchange, PPACA requires the 

federal government to establish and operate such an exchange in the state. Pub. L. 

No. 111-148 §§ 1311(b)(1), 1321(c), 124. Stat., 173, 186 (codified at 42 U.S.C. 

§§ 18031(b) and 18041(c).

Health Care Coverage 

Options in PPACA 

Affecting American Indians 

and Alaska Natives
 

Page 11 GAO-14-57 IHS Contract Health Claims Administration

Indians and Alaska Natives.22 Finally, in 2015, states may implement the 

new Basic Health Program option, under which the federal government 

will give states 95 percent of the premium tax credits and cost-sharing 

subsidies that would have been provided if the individuals had enrolled in 

the exchanges, to allow states to provide coverage for individuals with 

incomes between 138 and 200 percent of the federal poverty level.23

In previous work, we found that, after these changes are implemented 

many American Indians and Alaska Natives may gain new health care 

coverage options. For example, we estimated that more than half of 

American Indians and Alaska Natives may be eligible either for costsharing exemptions and premium tax credits for insurance obtained 

through the exchanges, or eligible for health care coverage through the 

new Basic Health Program or Medicaid, including those who are currently 

eligible for Medicaid but not enrolled, and those who will be newly eligible 

under 2014 eligibility rules. A significant proportion of American Indians 

and Alaska Natives reflected in this potential new enrollment live in IHS 

service areas.24

 

22PPACA provides for a federal premium tax credit for eligible individuals obtaining 

insurance through an exchange with incomes equal to or exceeding 100 and up to 

400 percent of the federal poverty level, and who do not have access to public insurance, 

such as Medicaid. See Pub. L. No. 111-148, §§ 1401, 10105(a) – (c), 10108(h), 124 Stat. 

213, 906, 914 ; Pub. L. No. 111-152, §§ 1001, 1004, 124 Stat. 1030, 1034(codified at 

26 U.S.C. § 36B); 26 C.F.R. § 1.36B-2(a)(2013). In addition, American Indians and Alaska 

Natives who obtain insurance through an exchange are eligible for exemptions from costsharing, such as deductibles and copays, if they are members of federally recognized 

tribes and have a household income of not more than 300 percent of the federal poverty 

level or if the services are provided by Indian Health providers, regardless of the enrollee’s 

income. See Pub. L. No. 111-148, § 1402(d), 124 Stat. 222 (codified at 42 U.S.C. 

§ 18071(d)).

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

§ 18051). 

24GAO-13-553. 
 

Page 12 GAO-14-57 IHS Contract Health Claims Administration

For CHS services delivered in fiscal year 2011, a majority of providers’ 

claims were paid within 6 months of the service delivery date, but some 

took much longer. More than one-third (38 percent) of claims processed 

by IHS-operated CHS programs were paid within 3 months after services 

were delivered. Another 35 percent were paid between 3 and 6 months of 

service delivery. The percentage of claims paid more than 6 months after 

service delivery was much smaller, with 19 percent of claims being paid 

between 6 months and 1 year after services were delivered, and about 

8 percent paid more than 1 year after services were delivered. (See 

fig. 2.) 

Figure 2: Percentage of Contract Health Services (CHS) Claims Paid within Certain 

Time Intervals, for Services Delivered in Fiscal Year 2011

Note: Analysis was limited to claims processed by IHS-operated CHS programs and included all 

claims for services delivered in fiscal year 2011 that were paid as of February 2013.

The amount of time it took to pay providers was not the same across all 

IHS areas. The areas varied in the amount of time between the date a 

service was provided and the date the claim was paid, particularly with 

More than Two-Thirds 

of CHS Claims Were 

Paid within 6 Months 

but Some Took Much 

Longer to Pay
 

Page 13 GAO-14-57 IHS Contract Health Claims Administration

respect to the percentage of claims that were paid within 3 months and 

within 6 months of service delivery. For example, although more than 

one-third of claims IHS-wide were paid within 3 months or less of service 

delivery, across IHS areas this percentage ranged from 18 percent in 

Albuquerque to 48 percent in Billings. Similarly, the percentage of claims 

paid within 6 months or less of service delivery ranged from 59 percent to 

80 percent, also in Albuquerque and Billings, respectively. There was less 

variation among IHS areas in the percentage of claims paid within 1 year 

or less of service delivery, ranging from 87 percent in Albuquerque to 

94 percent in Nashville. For 8 of the10 IHS areas we reviewed, 

90 percent or more of their claims were paid within 1 year of service 

delivery. (See fig. 3.)

Figure 3: Percentage of Contract Health Services (CHS) Claims Paid within 3 Months, 6 Months, and 1 Year of Service 

Delivery, for Services Delivered in Fiscal Year 2011, by IHS Area

Note: Analysis was limited to claims processed by IHS-operated CHS programs and included all 

claims for services delivered in fiscal year 2011 that were paid as of February 2013.
 

Page 14 GAO-14-57 IHS Contract Health Claims Administration

Among the three main steps in the payment process, the step that most 

often took the longest in the payment process was the first step—the time 

from date of service to the issuance of the purchase order. For services 

delivered in fiscal year 2011, purchase orders were issued in 1 month or 

less after services were delivered for 41 percent of claims. For another 

40 percent of claims, purchase orders were issued more than 2 months 

after services were delivered; and in about half of these cases, the 

purchase order was issued more than 4 months after the service was 

delivered. In comparison, the second step—the time from the date the 

purchase order was issued to the date the FI received the claim from the 

provider—took 1 month or less for 61 percent of the services, and the 

third step—the time from the date the FI received the claim to the date 

payment was made—took 1 month or less for 83 percent of the claims. 

(See fig. 4.) 
 

Page 15 GAO-14-57 IHS Contract Health Claims Administration

Figure 4: Percentage of Claims Processed within Certain Time Intervals in Each 

Step of the Contract Health Services (CHS) Payment Process, for Services 

Delivered in Fiscal Year 2011

Notes: Analysis was limited to claims processed by IHS-operated CHS programs and included all 

claims for services delivered in fiscal year 2011 that were paid as of February 2013. Claims 

associated with purchase orders issued before the date of service were included in the analysis. 

Percentages may not add to 100 due to rounding.

a

For claims associated with purchase orders issued before the date of service, the timeframe from 

service delivery to purchase order was considered to be 1 month or less.
 

Page 16 GAO-14-57 IHS Contract Health Claims Administration

IHS uses three measures to assess how long it takes to approve and then 

process payments to CHS providers. Two of these measures concern the 

first step in the payment process—the time it takes local CHS programs 

to approve payments to providers and issue purchase orders to them—

but neither of these measures provides a clear or complete picture of the 

timeliness of these activities, which constitute the most time-consuming 

period within the provider payment process, according to our analyses. 

IHS also has a timeliness measure for the final step in the provider 

payment process—the time it takes IHS’s FI to make payment to 

providers once it receives claims from them.25

Government Performance Results Act (GPRA) measure. The first of two 

measures that IHS uses to assess the timeliness of the first step in the 

provider payment process is the average time it takes for IHS to issue a 

purchase order after a service has been provided. IHS established this 

measure in fiscal year 2009 in response to GPRA, and has set annual 

targets for the measure since then. GPRA requires federal agencies to 

develop performance plans with annual goals and measures. (Hereafter, 

we refer to this as the GPRA measure.)

Descriptions of the three 

timeliness measures follow.

For fiscal years 2009 and 2010, IHS set the target for the GPRA measure 

at 82 days and 78 days, respectively. IHS missed the target by 28 days in 

2009 and by 4 days in 2010. IHS kept the target at 78 days in fiscal year 

2011, then lowered it to 74 days in 2012 and met these targets in both 

years. For fiscal year 2013, IHS kept the target at 74 days, and an IHS 

official said it would remain there for fiscal year 2014. According to IHS 

officials, the basis for the GPRA measure’s target was a health care 

industry consultant’s report showing average times that other health 

insurers, including private insurers and Medicaid, took to pay claims.

Although clear targets have been established for the GPRA measure, the 

way the measure is calculated does not result in a clear picture of 

whether the goal of the measure is being achieved. In our previous work, 

we found that successful performance metrics should demonstrate the 

 

25IHS does not have a performance measure for the second step of the payment 

process—the time between the date the purchase order is issued and the date IHS’s FI 

receives the claim from the provider seeking payment. IHS has little involvement in this 

step of the payment process. During this period, the provider submits the claim to the FI; 

IHS has not established a deadline for the provider to do this.

IHS Has Three 

Timeliness Measures 

for Processing 

Provider Payments, 

but the Two Involving 

Purchase Order 

Issuance Do Not 

Provide a Clear 

Picture of Timeliness
 

Page 17 GAO-14-57 IHS Contract Health Claims Administration

degree to which desired results are achieved.26

IHS officials expressed varying opinions about the utility and quality of the 

GPRA measure. Some officials noted that before the measure was 

established, there was no timeliness performance measure for the CHS 

According to IHS, the 

goal of the GPRA measure is to decrease the average number of days 

from the provision of services to purchase order issuance. However, the 

GPRA measure does not provide a clear picture of the timeliness of 

purchase order issuance because it combines self-referrals with some 

IHS referrals when calculating the average time it takes for IHS to issue a 

purchase order, even though the timing of when purchase orders are 

issued relative to service delivery can be very different for the two referral 

types. The GPRA measure calculates the average time it takes to issue 

purchase orders for services for which the purchase order was issued 

after the service was provided. This includes all self-referrals, where none 

of the work to determine whether the service is eligible for CHS payment 

can be started before the service is delivered because IHS does not know 

about it until after the service has been delivered. However, it also 

includes some IHS referrals—referrals for which all of the work to 

determine whether the service is eligible for CHS payment generally is 

completed before the service is delivered. Some local CHS programs said 

they wait to issue purchase orders for IHS referrals until shortly after they 

confirm that the services were actually delivered. Officials from one local 

CHS program told us that for these referrals, it may take only one day 

from the date of service to issue the purchase order. Including these IHS 

referrals in the calculation of the GPRA measure gives an unclear picture 

of performance because the inclusion of IHS referrals lowers the overall 

GPRA average. IHS officials agreed that the calculation of the GPRA 

measure mixes IHS referrals with self-referrals, and CHS officials at one 

area office said the measure would be more useful if IHS and selfreferrals were analyzed separately. However, IHS officials told us that 

because the agency’s claims data system does not include a data field 

that tracks referral type, it does not have a way to separate the two 

different types of referrals that would allow the agency to systematically 

determine the average time it takes to issue purchase orders by referral 

type.

 

26GAO, Executive Guide: Effectively Implementing the Government Performance and 

Results Act, GAO/GGD-96-118, (Washington D.C.: June 1996); and Agencies’ Strategic 

Plans Under GPRA: Key Questions to Facilitate Congressional Review, 

GAO/GGD-10.1.16 (Washington D.C.: May 1997).
 

Page 18 GAO-14-57 IHS Contract Health Claims Administration

program. These officials told us that the measure has helped to identify 

local CHS programs that have implemented practices that help improve 

timeliness of payments. But officials also criticized the GPRA measure, 

noting that many of the factors that help to determine whether an area or 

local CHS program meets the target are not within the area’s or the 

program’s control, such as how quickly a program receives information 

from providers.

The time it takes to make a decision about a claim. The other measure 

that IHS uses to assess the timeliness of the first step in the provider 

payment process is how long it takes from the time IHS is notified of a 

claim to when the agency makes a decision about it. Under a statutory 

provision, IHS must approve or deny the claim within 5 days of receiving 

“notification” of a provider’s claim for a service or accept the claim as 

valid.27

The time it takes the FI to pay the claim. The third measure that IHS uses 

to assess the timeliness of the payment process focuses on the last step 

in the process—the length of time that the FI should take to process 

payments to providers once it receives claims from them. IHS’s contract 

with its FI specifies that at least 97 percent of clean claims are to be paid 

within 30 days of receiving the claim from the provider. Similar to the 

5-day rule, the FI defines clean claims as those containing all required 

information, including the purchase order; passing all IHS and FI agreed-

(Hereafter, we refer to this provision as the 5-day rule.) According 

to IHS officials, the agency has interpreted the rule’s clock as beginning 

once a claim is “clean,” or “completed,” meaning that all information 

necessary to determine whether the claim should be approved, deferred, 

or denied has been obtained. IHS officials told us, however, that it is in 

obtaining this information—including medical records to determine 

medical priority and the availability of alternate resources—that delays 

most typically occur. Thus, the 5-day rule’s clock does not begin until after 

completion of the part of the process in which IHS officials believe delays 

most typically occur. Although IHS officials said the agency’s 

interpretation of the 5-day rule currently is not included in any official 

written guidance, they said the agency plans to include an explanation of 

its interpretation of the rule in revisions to the CHS chapter of the Indian 

Health Manual, which officials said is expected to be completed by early 

2014.

 

27See 25 U.S.C. § 1621s.
 

Page 19 GAO-14-57 IHS Contract Health Claims Administration

upon internal checks; and not requiring additional investigation by the FI. 

The FI issues monthly reports to IHS documenting its compliance with 

this provision. According to these reports, this target was met every 

month from January 2012 through July 2013.28

The complex processes for determining whether a service is eligible for 

CHS funding can affect the timeliness of provider payments and result in 

delays. Even after a local CHS program determines that a service is 

eligible for CHS funding, complexities in the payment process managed 

by IHS’s FI can result in delays. In addition, CHS officials reported that 

staffing shortages and limited funding contribute to delays in processing 

payments to providers. Local CHS programs also reported varying 

practices for assessing eligibility and approving CHS funding, which may 

contribute to variations in timeliness for provider payments.

IHS’s process for determining whether services are eligible for CHS 

program funds is complex and different from processes used by other 

payers, which can affect the timeliness of provider payments. Unlike other 

payers that offer a defined set of benefits—including Medicare, Medicaid, 

and private insurers—the CHS program makes decisions about what care 

will be funded on a case-by-case basis, so that each time a referral for 

care is received by a local CHS program, it is evaluated against a number 

of eligibility requirements as well as against available funding. Evaluating 

a service against each of the service eligibility requirements involves 

multiple steps, some of which depend on the CHS program receiving 

information from providers, patients, and others, and delays can occur 

during the evaluation of some of these eligibility requirements, according 

to CHS officials. In some cases, making these eligibility determinations 

can be fairly involved, and can ultimately affect the amount of time it takes 

for a provider to receive payment after the service is delivered. The 

 

28Our analysis showed that 83 percent of claims were paid by the FI within 1 month of 

receiving the provider’s claim. This difference between our analysis and the FI reports 

may be explained by the fact that our analysis included claims that were at one time not 

clean.

Complexity of the 

CHS Program, CHS 

Staffing and Funding 

Availability, and 

Variations in Program 

Practices Can Affect 

the Timeliness of 

Payments to 

Providers

Complex Processes for 

Determining Whether a 

Service Is Eligible for CHS 

Funding Can Affect the 

Timeliness of Provider 

Payments
 

Page 20 GAO-14-57 IHS Contract Health Claims Administration

effects of this process on payment times is greater for self-referrals—

situations in which the service was provided before it was approved for 

payment—because the entire process for determining whether the 

service was eligible for CHS payment does not begin until after the 

service was delivered. According to IHS officials, the agency developed 

the CHS program eligibility regulations in order to carefully manage and 

stretch limited CHS funding to provide the most critical services to the 

most patients.

Two aspects of the process for determining eligibility for CHS program 

funding were frequently reported as resulting in payment delays: 

(1) determining whether a service meets the area’s medical priorities and 

(2) identifying all available alternate resources. Officials from 8 of 12 local 

CHS programs we interviewed reported payment delays related to 

determining whether a service met the area’s medical priorities, and 

officials from 8 of 12 local CHS programs reported payment delays 

related to identifying all available alternate resources.

Determining medical priority can result in delays because local CHS 

programs must obtain from the provider medical records with sufficient 

detail to assess whether a service is medically necessary and falls within 

the established medical priorities. Officials reported that, while in some 

cases the necessary records have been provided relatively quickly 

(e.g., within a week) in other cases it has taken much longer. For 

example, some local CHS programs reported situations when it has taken 

weeks or months to obtain necessary medical documentation, and one 

program reported situations when it has taken as long as 1 to 2 years to 

receive this documentation. Program officials noted different reasons for 

these delays. For example, officials reported situations where providers 

have sent documentation to the wrong CHS program when the providers 

were unaware in which CHSDAs the patients resided. Another reason 

cited by local CHS program officials for delays in receipt of medical 

documentation included situations in which incomplete documentation 

was provided and the program needed to follow up with the provider.

Officials reported a number of situations in which determining whether the 

patient has alternate resources to pay for the service, has resulted in 

delays. For example, some local CHS program officials told us that when 

they believe a patient is eligible for alternate resources—such as 

Medicaid—they have the patient apply for those resources, and will hold 

off on approving a service for CHS funding until the determination is 

made on the application. Officials from one local CHS program said that 

Medicaid determinations in their state can sometimes take months. In 
 

Page 21 GAO-14-57 IHS Contract Health Claims Administration

another example, officials from one local CHS program stated that for 

situations involving car accidents or a fall on private property, determining 

liability can take a long time, and availability of alternate resources cannot 

be determined until decisions on liability have been determined. In 

another example, officials from one CHS program said delays can occur 

when patients do not inform the CHS program of the alternate resources 

available to them, necessitating the CHS program doing the research 

itself.

Program officials also reported some delays related to the other three 

aspects of the process for determining eligibility for CHS payment. For 

example, officials from one CHS program said determining whether a 

patient is a member of a federally recognized tribe can result in a delay if 

they have never seen the patient before, and must obtain documentation 

of that patient’s tribal affiliation. Similarly, officials from one CHS program 

said determining whether a patient resides in its CHSDA can result in a 

delay when the program needs to wait on documentation from patients 

confirming their addresses. Finally, one local CHS program reported that 

determining whether the program has been notified within required 

timeframes can result in a delay when an incorrect decision is made to 

deny the service, which is later overturned.

The complexity of determining whether services delivered to American 

Indians and Alaska Natives are eligible for CHS funding can also result in 

misunderstandings in which providers think payments have been delayed, 

when in fact the services provided were not eligible for payment. For 

example, IHS officials told us that sometimes patients do not understand 

CHS rules and seek emergency care from external providers, expecting 

the CHS program to cover it, when they are in fact not eligible for CHS. 

The officials also said that providers will send claims to the CHS program, 

assuming the patient and service are eligible, and expect to be paid. IHS 

does not issue eligibility cards to beneficiaries that would indicate to 

external providers their eligibility for CHS services or information about 

which local CHS program is responsible for payment. In a previous GAO 

review of the CHS program, several providers noted that, in the absence 

of a process they can use prior to providing service to determine patient 

eligibility for the CHS program, they submit claims for payment to the 

CHS program for all patients who self-identify as American Indian or 

Alaska Native or as eligible for the CHS program.29

 

29

IHS officials said that 

GAO-11-767.
 

Page 22 GAO-14-57 IHS Contract Health Claims Administration

they believe situations such as these—in which the provider will never be 

paid because the patient or service was not eligible, as opposed to 

situations in which the service is eligible but the payment process is 

prolonged—accounted for the majority of provider complaints about the 

timeliness of CHS payments.

Local CHS program officials noted that providers’ lack of understanding of 

the complex CHS approval process was due in part to provider staff 

turnover or was exacerbated when the provider’s billing functions were 

located out of state, which could result in delays in providing information 

needed to determine eligibility. These officials noted that education of 

provider staff was an ongoing necessity for CHS programs. Some IHS 

officials also noted that providing such training took staff time away from 

processing referrals. Officials from a number of CHS programs noted that 

they meet regularly with some of their high-volume providers to reconcile 

specific outstanding cases, and that over time these meetings have 

helped improve providers’ understanding of the unique rules and 

procedures of the CHS program. However, officials also mentioned that 

turnover among provider staff often necessitated starting the process of 

educating providers again.

Even after a service has been approved for CHS funding and a purchase 

order has been issued, delays can occur because of complexities in the 

last step in the payment process, which is managed by IHS’s FI. Officials 

said this can occur because the providers do not understand the CHS 

process used by the FI. For example, officials said some providers do not 

understand that after receiving a purchase order, they also need to 

submit the claim to the FI to be paid.

Officials from local CHS programs and from the FI also reported 

examples where delays occurred because claims submitted by providers 

to the FI could not be matched to a corresponding purchase order in the 

FI’s system. According to FI officials, it will issue only one payment for 

each purchase order. However, some purchase orders are intended to 

cover multiple services, such as for a series of physical therapy 

treatments. FI officials reported that providers sometimes submit claims 

for services that pertain to only a portion of the services authorized on the 

purchase order. In these cases, the FI pays for those services and closes 

out the purchase order. When providers submit subsequent claims 

related to other services that were authorized on the original purchase 

order, the FI is unable to pay the provider because the purchase order 

was closed. The provider then must go back to the CHS program to 

Complexities Associated 

with the CHS Processes 

for Paying Providers Also 

Can Affect Timeliness
 

Page 23 GAO-14-57 IHS Contract Health Claims Administration

request a new purchase order and payment to the provider is delayed 

until the new purchase order is issued and submitted to the FI.

In addition to delays in payments to providers from issues matching 

claims and purchase orders, claims may be put on hold by the FI for other 

payment processing issues. One of the most common causes for claims 

being put on hold by the FI is when alternate resources have been 

confirmed, but the FI is waiting for information from the provider showing 

the amount paid by the other resources and the remaining amount that 

the provider is claiming from IHS.

Local CHS program officials said insufficient CHS program staffing levels 

have affected their ability to issue timely purchase orders. IHS’s staffing 

standards model established a staffing ratio based on the annual number 

of purchase orders authorized for health care services by a facility.30

Officials from a few CHS programs also noted that funding issues could 

result in delays issuing a purchase order authorizing CHS funding, which 

would delay payments. In our prior work, some providers told us that 

delays in receiving payment from CHS of several months, or in some 

cases years, tended to occur when the CHS program’s funding for the 

Some CHS program officials noted that their number of staff was below 

these standards. Further, local CHS program officials in programs that 

had a very small number of CHS staff (e.g., two or three) said that a 

vacancy or extended leave for even one staff person could affect the 

timeliness of issuing purchase orders—and one of these programs 

reported that related delays could be significant. Furthermore, IHS 

officials noted that, pursuant to agency practice, CHS funding has been 

used only to pay for services and not to increase staffing levels. As a 

result, recent increases in CHS funds have resulted in increased 

workloads, but staffing levels to manage the workloads have not 

increased. Staffing levels can affect the timeliness of payment for 

services, particularly for self-referrals where the entire process for 

determining eligibility for CHS payment does not begin until after the 

service is provided.

 

30According to the model, each facility that issues 50 or more purchase orders should 

have a CHS Manager staff and one CHS staff position for every 700 purchase orders 

issued annually. Plus, the facility should have a data entry clerk if the CHS program uses 

the automated system for referrals.

CHS Staffing and Funding 

Availability Also Can Affect 

Timeliness of Payments to 

Providers
 

Page 24 GAO-14-57 IHS Contract Health Claims Administration

fiscal year had been depleted.31 Again, as with other issues we have 

noted, funding shortages affect the amount of time it takes to pay 

providers for self-referrals more than IHS referrals because the selfreferral service is already provided before the program determines if 

funds are available while for an IHS referral, the service can be 

postponed until funds become available.

We found variation in local CHS program practices for implementing CHS 

eligibility rules, which may contribute to the variation in timeliness of the 

provider payment process across IHS areas. IHS officials said they allow 

flexibility in local CHS program practices because each has a different set 

of circumstances to consider. These circumstances include challenges 

regarding CHS funding levels among areas, state Medicaid program 

procedures for verifying eligibility, providers’ familiarity with the CHS 

program, and the number of staff available to determine CHS eligibility for 

services. 

During our interviews, IHS area and local CHS program officials reported 

differences in practices that could contribute to variation in the amount of 

time overall it takes to pay providers. Examples of these differences 

include:

Consideration of alternate resources. Local CHS programs varied 

in the actions they took while they were determining the extent of 

patients’ alternate resources. One practice IHS area office officials 

said some local CHS program staff used, in certain 

circumstances, was to issue purchase orders to providers before 

patients’ alternate resources were confirmed. In these cases, if the 

FI paid the claim before alternate resources were confirmed, the 

FI would seek to recover from the provider any overpayments for 

services covered by these alternate resources.

In contrast, some IHS area and local CHS program officials told us 

they do not issue purchase orders authorizing CHS payment for 

services until the availability of all possible alternate resources has 

been determined. Officials in one IHS area noted that they do this 

to preserve their limited CHS funds and provide access to care to 

 

31GAO-11-767. 

Local CHS Program 

Practices for Implementing 

CHS Eligibility Regulations 

Vary, which May 

Contribute to Variations in 

Timeliness for Aspects of 

the Provider Payment 

Process
 

Page 25 GAO-14-57 IHS Contract Health Claims Administration

as many patients as possible. Officials in this area reported that 

they were not able to fund all Priority 1 cases and that issuing 

purchase orders and obligating CHS funds before alternate 

resources were confirmed could cause them to exhaust their CHS 

funds even earlier.

Requests for information from providers. Officials from some local 

CHS programs reported that they set time limits for providers to 

submit medical documents and deny CHS funding if providers do 

not submit the documents within that time. These limits ranged 

from a week to 45 days, and some of these programs 

automatically issued a denial if the medical documentation was 

not provided either at the same time the program was notified that 

services had been provided or by the specified time limit. CHS 

officials said these denials could be reconsidered if sufficient 

medical documentation were subsequently provided. In contrast, 

officials from another CHS program reported that it does not have 

established time limits within which providers must submit medical 

documentation.

Determination of medical priority. One practice that certain local 

CHS program officials reported was to make all decisions about 

the medical priority of requested services at their program’s 

weekly medical committee meeting. In contrast, another reported 

practice was to have almost all medical priority determinations 

made by a clinician as soon as all necessary information is 

received. (Those determinations are subsequently reviewed by 

the committee.) A combination of both of these practices was also 

reported by another CHS program we spoke to, in which decisions 

on less complex cases were made by a clinician as soon as all 

necessary information was received, while determinations for 

more complicated cases waited until the next weekly medical 

committee meeting,
 

Page 26 GAO-14-57 IHS Contract Health Claims Administration

New health care coverage options available to many IHS beneficiaries as 

a result of provisions in PPACA could provide IHS with an opportunity to 

simplify the complex eligibility rules of the CHS program. IHS has stated 

that its overall service goal is to elevate the health status of American 

Indians and Alaska Natives to the highest possible level. However, as we 

and others have reported, limits on available resources have affected the 

services available to American Indians and Alaska Natives through the 

CHS program. For example, although funding for the CHS program 

significantly increased in recent years, IHS has reported that at current 

funding levels, most programs are approving only medically emergent 

referrals (Priority 1) and less urgent, routine or preventive care is deferred 

or denied pending additional appropriations. According to IHS, limits on 

available funding for the CHS program have caused the agency to 

establish its complex requirements for determining eligibility for CHS 

funds—including reliance on a medical priority rating system and limiting 

eligibility to individuals who reside in CHSDAs. These mechanisms are 

intended to enhance IHS’s ability to stretch limited CHS dollars and 

extend services to more American Indians and Alaska Natives. As we 

previously reported, however, many American Indians and Alaska Natives 

may gain new health care coverage beginning in 2014 as a result of 

PPACA, which could alleviate some constraints on CHS program funds.32

If a better match is achieved between available funding and overall CHS 

program demand, IHS could have the opportunity to streamline eligibility 

requirements for the CHS program and to expand the services it pays for 

with CHS funds, assuming appropriation levels for the CHS program are 

maintained. Because the CHS program is generally the payer of last 

resort, if more American Indians and Alaska Natives gain new coverage, 

services that would have previously been paid for by the CHS program 

will be paid for by other payers. In addition, because some American 

Indians and Alaska Natives will have access to benefits packages through 

these other coverage options—benefits packages that may be more 

comprehensive than the IHS benefits available to them now—more may 

choose to obtain care outside of the IHS system entirely. This could help 

free up some CHS program funds, potentially creating a better match 

between available funding and overall program demand.

 

32GAO-13-553. 

New Coverage 

Options in PPACA 

May Provide IHS an 

Opportunity to 

Simplify CHS 

Eligibility Rules
 

Page 27 GAO-14-57 IHS Contract Health Claims Administration

Some uncertainty remains, however, about the extent to which American 

Indians and Alaska Natives will obtain new health care coverage when 

PPACA is fully implemented. For example, not all states may choose to 

expand their Medicaid programs. In addition, we have reported previously 

on the challenges American Indians and Alaska Natives may face 

enrolling in Medicaid and other public insurance programs.33 Some 

barriers are unique to the American Indian and Alaska Native 

population—such as individuals believing they should not have to apply 

for other public insurance programs because the federal government has 

a duty to provide them with health care as a result of treaties with Indian 

tribes. In our prior work, we recommended that IHS increase its direct 

outreach to American Indians and Alaska Natives who may be eligible for 

new coverage options to help ensure significant new enrollment in these 

options.34

The current CHS program’s eligibility requirements reflect the method that 

IHS has chosen to stretch its funding to ensure that the most critical 

health services can be provided to the maximum number of beneficiaries. 

However, determining eligibility for CHS funding—including the need to 

ascertain each time a referral is received whether the patient met 

residency requirements and the service met medical priorities—is 

inherently complex. As currently structured, it is highly unlikely that the 

CHS program will be as quick a payer as some other payers because of 

the cumbersome steps involved in determining eligibility for each service.

PPACA will expand existing sources of health coverage and create new 

ones for American Indians and Alaska Natives, and this could affect the 

CHS program in a number of ways. In particular, if these changes 

significantly reduce the demand placed on CHS program funds, IHS may 

have the opportunity to not only pay for a greater range of services but 

also restructure the CHS program to include less stringent eligibility 

requirements. For example, increased availability of CHS funding due to 

increased access among American Indians and Alaska Natives to other 

sources of health care coverage options under PPACA could give IHS the 

opportunity to establish a set of defined benefits for IHS beneficiaries, 

 

33See GAO, Medicare and Medicaid: CMS and State Efforts to Interact with the Indian 

Health Service and Indian Tribes, GAO-08-724 (Washington, D.C.: Jul. 11, 2008).

34GAO-13-533. 

Conclusions
 

Page 28 GAO-14-57 IHS Contract Health Claims Administration

which would alleviate the need for CHS programs and providers to carry 

out time-consuming medical priority determinations. The opportunity also 

may arise for IHS to make other changes, such as issuing a form of 

eligibility card to CHS-eligible patients to help providers understand when 

to send claims to IHS, and to which local CHS program a claim should be 

sent, helping improve the timeliness of provider payments.

In the interim, while the changes from PPACA are taking effect, IHS has 

the opportunity to continue to make improvements to the CHS program, 

including how it assesses the timeliness of provider payments and how it 

aligns CHS program staffing levels with workloads, and to proactively 

consider ways to streamline CHS eligibility requirements.

In an effort to ensure that IHS has meaningful information on the 

timeliness with which it issues purchase orders authorizing payment 

under the CHS program and to improve the timeliness of payments to 

providers, we recommend that the Secretary of HHS direct the Director of 

IHS to:

• modify IHS’s claims data system to separately track IHS referrals and 

self-referrals, revise the GPRA measure for the CHS program so that 

it distinguishes between these two types of referrals, and establish 

separate timeframe targets for these referral types; and

• improve the alignment between CHS staffing levels and workloads by 

revising its current practices, where appropriate, to allow available 

funds to be used to pay for CHS program staff.

In addition, as HHS and IHS monitor the effect that new coverage options 

available to IHS beneficiaries through PPACA have on CHS program 

funds, we recommend that the Secretary of HHS direct the Director of 

IHS to proactively develop potential options to streamline program 

eligibility requirements.

We provided a draft of this report to HHS for review and received written 

comments, which are reprinted in appendix I. In its comments, HHS 

concurred with two of our recommendations and did not concur with one 

recommendation.

Recommendations for 

Executive Action

Agency Comments

and Our Evaluation
 

Page 29 GAO-14-57 IHS Contract Health Claims Administration

HHS concurred with our recommendation that IHS modify its claims data 

system to separately track IHS referrals and self-referrals, revise the 

GPRA measure for the CHS program so that it distinguishes between 

these two types of referrals, and establish separate timeframe targets for 

these referral types. HHS also concurred with our recommendation that 

as HHS and IHS monitor the effect that new coverage options available to 

IHS beneficiaries through PPACA have on CHS program funds, IHS 

proactively develop potential options to streamline program eligibility 

requirements. HHS agreed with the premise that Medicaid eligibility 

expansion and private insurance for more American Indians and Alaska 

Natives will reduce the demand for CHS services and noted that IHS will 

monitor the effects of new coverage on program funds and develop 

options to improve and streamline the CHS program processes.

HHS did not concur with our recommendation that IHS improve the 

alignment between CHS staffing levels and workloads by revising its 

current practices, where appropriate, to allow available funds to be used 

to pay for CHS program staff. In its response, HHS stated its intent to 

continue to only use CHS appropriations to purchase health care services 

and not to fund program staff, noting that available CHS program funds 

have not been sufficient to pay for all services and that at some facilities, 

funding was only sufficient to cover cases with the highest medical 

priority. We acknowledge the difficult challenges and choices faced by 

CHS programs when program funds are not sufficient to pay for all 

needed services. However, IHS has noted the importance of the agency 

maintaining an adequate workforce and has established staffing 

standards for the CHS program. As we reported, some IHS officials noted 

that their number of staff was below the staffing ratio established in IHS’s 

staffing standards model, and local CHS program officials told us that 

insufficient CHS program staffing levels have affected their ability to issue 

timely purchase orders. Further, recent increases in CHS funding for 

services have resulted in increased workloads, while staffing levels to 

manage the workloads have not increased. For these reasons, we 

continue to believe that IHS should improve the alignment between CHS 

staffing levels and workloads, making use of all available funding, 

including CHS program funds, when appropriate, to do so.
 

Page 30 GAO-14-57 IHS Contract Health Claims Administration

We are sending copies of this report to the Secretary of Health and 

Human Services, the Director of the Indian Health Service, appropriate 

congressional committees, and other interested parties. In addition, the 

report is available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of the report. GAO staff who made major contributions to this report are

listed in appendix II.

Kathleen M. King

Director, Health Care
Page 31 GAO-14-57 IHS Contract Health Claims Administration

List of Addressees

The Honorable Maria Cantwell

Chairwoman

The Honorable John Barrasso

Vice Chairman

Committee on Indian Affairs

United States Senate

The Honorable Peter DeFazio

Ranking Member

Committee on Natural Resources

House of Representatives

The Honorable Don Young

Chairman

The Honorable Colleen Hanabusa

Ranking Member

Subcommittee on Indian and Alaska Native Affairs

Committee on Natural Resources

House of Representatives

The Honorable Tim Johnson

United States Senate

The Honorable Lisa Murkowski

United States Senate

The Honorable John Thune

United States Senate
Appendix I: Comments from the Department of 

Health and Human Services

Page 32 GAO-14-57 IHS Contract Health Claims Administration

Appendix I: Comments from the Department 

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

Health and Human Services

Page 33 GAO-14-57 IHS Contract Health Claims Administration
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 34 GAO-14-57 IHS Contract Health Claims Administration

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

In addition to the contact name above, Gerardine Brennan, Assistant 

Director; George Bogart; Julianne Flowers; Natalie Herzog; Linda McIver; 

Laurie Pachter; and Michael Rose made key contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
Related GAO Products

Page 35 GAO-14-57 IHS Contract Health Claims Administration

Indian Health Service: Most American Indians and Alaska Natives 

Potentially Eligible for Expanded Health Coverage, but Action Needed to 

Increase Enrollment. GAO-13-553. Washington, D.C.: September 5, 

2013.

Indian Health Service: Capping Payment Rates for Nonhospital Services 

Could Save Millions of Dollars for Contract Health Services. GAO-13-272. 

Washington, D.C.: April 11, 2013.

Medicaid Expansion: States’ Implementation of the Patient Protection and 

Affordable Care Act. GAO-12-821. Washington, D.C.: August 1, 2012.

Indian Health Service: Action Needed to Ensure Equitable Allocation of 

Resources for the Contract Health Service Program. GAO-12-446. 

Washington, D.C.: June 15, 2012.

Indian Health Service: Increased Oversight Needed to Ensure Accuracy 

of Data Used for Estimating Contract Health Service Need. GAO-11-767. 

Washington, D.C.: September 23, 2011.

Indian Health Service: Updated Policies and Procedures and Increased 

Oversight Needed for Billings and Collections from Private Insurers. 

GAO-10-42R. Washington, D.C.: October 22, 2009.

Medicare and Medicaid: CMS and State Efforts to Interact with the Indian 

Health Service and Indian Tribes. GAO-08-724. Washington, D.C.: 

July 11, 2008.

Indian Health Service: Health Care Services Are Not Always Available to 

Native Americans. GAO-05-789. Washington, D.C.: August 31, 2005.

Related GAO Products

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