Indian Health Service: Opportunities May Exist to Improve the Contract Health Services Program
Published: 2013-12-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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-by-case basis, evaluating each case against a number of eligibility requirements involving multiple steps. This process can lead to payment delays. Officials noted that delays also can occur when processing payments and that staffing shortages can affect the timeliness of payments. Some program officials noted that their staffing levels were below standards established by IHS.
New coverage options in the Patient Protection and Affordable Care Act (PPACA) may provide an opportunity to simplify CHS eligibility requirements. PPACA made significant changes to the Medicaid program and included new health care coverage options that may benefit many American Indians and Alaska Natives beginning in 2014. IHS officials reported the agency developed the current CHS program eligibility requirements to manage CHS program funding constraints. In particular, some of the complexities of the program were designed to allow the program to operate within the constrained levels of program funding. With the availability of new coverage options under PPACA, some constraints on CHS program funds could be alleviated, providing IHS an opportunity to streamline service eligibility requirements and expand the range of services it pays for with CHS funds.
section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: 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.  These services are provided at federally or tribally operated health care  facilities, which receive IHS funding and are located in 12 federally  designated geographic areas overseen by IHS area offices. These  facilities vary in the services they are able to provide; for example, some  facilities offer comprehensive hospital services, while others offer only  primary care services. When services are not available at these facilities,  the facilities may use IHS’s contract health services (CHS) program funds  to obtain care for eligible patients from external health care providers,  including hospitals and office-based physicians.
At the local level, the CHS program is administered by individual CHS  programs generally affiliated with IHS-funded facilities. IHS has oversight  authority over local CHS programs that are affiliated with IHS-operated  facilities.from external providers based on requirements that are unique to CHS.
The local CHS programs determine whether to pay for services  This report is one in a series of reports we have conducted in the last   3 years that have examined the CHS program. we identified challenges cited by providers with the CHS program  payment process. 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. In  addition, we reported on the number of American Indians and Alaska  Natives who may gain new health care coverage beginning in 2014 as a  result of provisions in the Patient Protection and Affordable Care Act  (PPACA) of 2010.
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).
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  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. Claims data from fiscal year 2011 were  the most recent sufficiently complete data available for our analysis. We  assessed the reliability of IHS’s federal CHS program claims data by  reviewing documentation and discussing the data with knowledgeable  officials. We also performed data reliability checks, such as examining the  data for missing values and obvious errors, to test the internal  consistency and reliability of the data. We determined that the data were  sufficiently reliable for our purposes.
To examine IHS’s performance measures for the amount of time it takes  IHS-operated CHS programs to process provider payments, we reviewed  relevant statutes, agency documentation, and interviewed officials from  IHS headquarters, areas, and CHS programs.
To determine the factors that affect the length of time to pay providers, we  interviewed IHS officials in selected areas and CHS programs. We  conducted interviews in four areas: Albuquerque, Billings, Navajo, and  Oklahoma; and within each of these areas, at three local IHS-operated  CHS programs. We selected these 4 areas and 12 programs to reflect a  range in the length of time for paying CHS claims based on previous  claims data. In our interviews, we asked officials about their procedures  for processing CHS referrals and the factors they believed affected the  length of time to pay providers. In addition, we interviewed IHS’s fiscal  intermediary, who is responsible for the final processing of payments to  providers. We also reviewed relevant statutes and agency regulations  and documentation.
To determine the effect that new coverage options available in PPACA  might have on the CHS program, we reviewed relevant statutes and our  recent report on eligibility among American Indian and Alaska Natives for  new coverage options available in PPACA.
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.
subsections: section_title: Background
subsections: section_title: CHS Program Organization
paragraphs: 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.
section_title: CHS Program Funding and Service Eligibility Requirements
paragraphs: The CHS program is funded through annual appropriations and must   Based on the  operate within the limits of available appropriated funds.regulations that IHS has established for the CHS program, a number of  requirements must be met in order for a service to be eligible for CHS  payment.payment, local CHS programs must consider the following:   Based on the requirements, before approving a service for  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.
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. Exceptions exist for students who are temporarily  absent from their CHSDA during full-time study and individuals who  are temporarily absent from the CHSDA for less than 180 days due to  travel or employment.
Are alternate health care resources available to the patient?  Many users of IHS services are also eligible for other sources of  payment for care, including Medicaid, Medicare, and private  insurance. The CHS program is typically the payer of last resort.  Therefore, before a service is approved for CHS payment, the patient  must apply for and use all alternate resources that are available and  accessible. Services from an IHS facility are also considered a  resource, so CHS funds cannot be used for services reasonably  accessible and available at IHS facilities.
Did the CHS program receive timely notification of services  provided from a non-IHS facility? In non-emergency cases, the  local CHS program should be notified and the service approved for  payment prior to the patient receiving care. In cases where the patient  was not referred for care by an IHS provider, such as with emergency  room services, the CHS program must be notified within 72 hours of  when the service was delivered. Notification may be made by the  individual, provider, hospital, or someone on behalf of the individual in  order for the service to be eligible for CHS payment. The notification  time is extended to 30 days for the elderly and disabled.
Are the services considered medically necessary and listed as  one of the established area medical or dental priorities? To be  eligible for payment under the CHS program, the service must be  considered medically necessary and listed as one of the established  IHS area’s medical or dental priorities. A program committee that is  part of the local CHS program evaluates the medical necessity of the  service, for example, at a weekly meeting. IHS has established four  broad medical priority levels of health care services eligible for  payment and a fifth for excluded services that cannot be paid for with  CHS program funds. Each area is required to establish priorities that  are consistent with IHS’s medical priority levels and are adapted to  the specific needs of the CHS programs in its area. CHS programs  that are affiliated with IHS-operated facilities must assign a priority  level to services based on the priority system established by their area  offices. Funds permitting, these CHS programs first pay for the  highest priority services and then for all or some of the lower priority  services they fund. Our prior work has found that available CHS  program funds have not been sufficient to pay for all eligible  services. At some IHS facilities, the amount of CHS funding  available was only sufficient to cover cases with the highest medical  priority—Priority 1—emergent or acutely urgent care services that are  necessary to prevent immediate death or serious impairment of  health. (See table 1 for a description of the medical priority levels and  related services.)
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.
section_title: CHS Payment Process
paragraphs: In general, three entities are involved in the CHS payment process:   (1) the local CHS program, (2) the provider, and (3) IHS’s fiscal  intermediary (FI). The timing of the CHS program’s and the provider’s  involvement depends on whether the service was prompted by a referral  from an IHS provider prior to the date of service—called IHS referrals, or  prompted by the patient seeking care without first obtaining a referral from  an IHS provider—these are typically emergency services and called self- referrals.
subsections: section_title: IHS Referrals
paragraphs: IHS referrals are cases in which an IHS-funded provider refers a patient  for care to an external provider. The local CHS program receives the  referral and evaluates it against the eligibility requirements. Once the  CHS program receives the needed information to make its determination,  it will: approve the service for payment and issue a purchase order to  obligate the funds and send copies of the purchase order to the  provider and to the FI; defer funding if it meets all the eligibility criteria, but funds are not 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.)
For services that are ultimately paid for under the CHS program, whether  they are IHS or self-referrals, the CHS payment process consists of three  main steps that encompass the time from the date a service is delivered  to the date the provider is paid.  1.  Local CHS program issues the purchase order. The time for this  step can be measured by the length of time between when a service  is provided and when the local CHS program issues the purchase  order. (Sometimes the purchase order is issued before the service is  provided, such as for some IHS referrals; in these cases this step has  no effect on the time it takes to pay the provider.)  2.  External provider submits a claim to IHS’s FI. The time for this step  can be measured by the length of time between when the CHS  program issues the purchase order and when the FI receives the  claim.  3.  The FI pays the claim. The time for this step can be measured by the  length of time between when the FI receives a claim from an external  provider and when the payment is made.
section_title: Health Care Coverage Options in PPACA Affecting American Indians and Alaska Natives
paragraphs: 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.  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. For individuals obtaining insurance through the exchanges,  PPACA provides premium tax credits for those meeting certain income  requirements and cost-sharing exemptions for qualifying American  Indians and Alaska Natives. 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.
In previous work, we found that, after these changes are implemented  many American Indians and Alaska Natives may gain new health care  coverage options. For example, we estimated that more than half of  American Indians and Alaska Natives may be eligible either for cost- sharing exemptions and premium tax credits for insurance obtained  through the exchanges, or eligible for health care coverage through the  new Basic Health Program or Medicaid, including those who are currently  eligible for Medicaid but not enrolled, and those who will be newly eligible  under 2014 eligibility rules. A significant proportion of American Indians  and Alaska Natives reflected in this potential new enrollment live in IHS  service areas.
section_title: More than Two-Thirds of CHS Claims Were Paid within 6 Months but Some Took Much Longer to Pay
paragraphs: 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.)
The amount of time it took to pay providers was not the same across all  IHS areas. The areas varied in the amount of time between the date a  service was provided and the date the claim was paid, particularly with  respect to the percentage of claims that were paid within 3 months and  within 6 months of service delivery. For example, although more than  one-third of claims IHS-wide were paid within 3 months or less of service  delivery, across IHS areas this percentage ranged from 18 percent in  Albuquerque to 48 percent in Billings. Similarly, the percentage of claims  paid within 6 months or less of service delivery ranged from 59 percent to  80 percent, also in Albuquerque and Billings, respectively. There was less  variation among IHS areas in the percentage of claims paid within 1 year  or less of service delivery, ranging from 87 percent in Albuquerque to   94 percent in Nashville. For 8 of the10 IHS areas we reviewed,   90 percent or more of their claims were paid within 1 year of service  delivery. (See fig. 3.)
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.)
section_title: IHS Has Three Timeliness Measures for Processing Provider Payments, but the Two Involving Purchase Order Issuance Do Not Provide a Clear Picture of Timeliness
paragraphs: 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. Descriptions of the three  timeliness measures follow.
Government Performance Results Act (GPRA) measure. The first of two  measures that IHS uses to assess the timeliness of the first step in the  provider payment process is the average time it takes for IHS to issue a  purchase order after a service has been provided. IHS established this  measure in fiscal year 2009 in response to GPRA, and has set annual  targets for the measure since then. GPRA requires federal agencies to  develop performance plans with annual goals and measures. (Hereafter,  we refer to this as the GPRA measure.)
For fiscal years 2009 and 2010, IHS set the target for the GPRA measure  at 82 days and 78 days, respectively. IHS missed the target by 28 days in  2009 and by 4 days in 2010. IHS kept the target at 78 days in fiscal year  2011, then lowered it to 74 days in 2012 and met these targets in both  years. For fiscal year 2013, IHS kept the target at 74 days, and an IHS  official said it would remain there for fiscal year 2014. According to IHS  officials, the basis for the GPRA measure’s target was a health care  industry consultant’s report showing average times that other health  insurers, including private insurers and Medicaid, took to pay claims.
Although clear targets have been established for the GPRA measure, the  way the measure is calculated does not result in a clear picture of  whether the goal of the measure is being achieved. In our previous work,  we found that successful performance metrics should demonstrate the  degree to which desired results are achieved.goal of the GPRA measure is to decrease the average number of days  from the provision of services to purchase order issuance. However, the  GPRA measure does not provide a clear picture of the timeliness of  purchase order issuance because it combines self-referrals with some  IHS referrals when calculating the average time it takes for IHS to issue a  purchase order, even though the timing of when purchase orders are  issued relative to service delivery can be very different for the two referral  types. The GPRA measure calculates the average time it takes to issue  purchase orders for services for which the purchase order was issued  after the service was provided. This includes all self-referrals, where none  of the work to determine whether the service is eligible for CHS payment  can be started before the service is delivered because IHS does not know  about it until after the service has been delivered. However, it also  includes some IHS referrals—referrals for which all of the work to  determine whether the service is eligible for CHS payment generally is  completed before the service is delivered. Some local CHS programs said  they wait to issue purchase orders for IHS referrals until shortly after they  confirm that the services were actually delivered. Officials from one local  CHS program told us that for these referrals, it may take only one day  from the date of service to issue the purchase order. Including these IHS  referrals in the calculation of the GPRA measure gives an unclear picture  of performance because the inclusion of IHS referrals lowers the overall  GPRA average. IHS officials agreed that the calculation of the GPRA  measure mixes IHS referrals with self-referrals, and CHS officials at one  area office said the measure would be more useful if IHS and self- referrals were analyzed separately. However, IHS officials told us that  because the agency’s claims data system does not include a data field  that tracks referral type, it does not have a way to separate the two  different types of referrals that would allow the agency to systematically  determine the average time it takes to issue purchase orders by referral  type.
According to IHS, the  IHS officials expressed varying opinions about the utility and quality of the  GPRA measure. Some officials noted that before the measure was  established, there was no timeliness performance measure for the CHS  program. These officials told us that the measure has helped to identify  local CHS programs that have implemented practices that help improve  timeliness of payments. But officials also criticized the GPRA measure,  noting that many of the factors that help to determine whether an area or  local CHS program meets the target are not within the area’s or the  program’s control, such as how quickly a program receives information  from providers.
The time it takes to make a decision about a claim. The other measure  that IHS uses to assess the timeliness of the first step in the provider  payment process is how long it takes from the time IHS is notified of a  claim to when the agency makes a decision about it. Under a statutory  provision, IHS must approve or deny the claim within 5 days of receiving  “notification” of a provider’s claim for a service or accept the claim as  valid. (Hereafter, we refer to this provision as the 5-day rule.) According  to IHS officials, the agency has interpreted the rule’s clock as beginning  once a claim is “clean,” or “completed,” meaning that all information  necessary to determine whether the claim should be approved, deferred,  or denied has been obtained. IHS officials told us, however, that it is in  obtaining this information—including medical records to determine  medical priority and the availability of alternate resources—that delays  most typically occur. Thus, the 5-day rule’s clock does not begin until after  completion of the part of the process in which IHS officials believe delays  most typically occur. Although IHS officials said the agency’s  interpretation of the 5-day rule currently is not included in any official  written guidance, they said the agency plans to include an explanation of  its interpretation of the rule in revisions to the CHS chapter of the Indian  Health Manual, which officials said is expected to be completed by early  2014.
The time it takes the FI to pay the claim. The third measure that IHS uses  to assess the timeliness of the payment process focuses on the last step  in the process—the length of time that the FI should take to process  payments to providers once it receives claims from them. IHS’s contract  with its FI specifies that at least 97 percent of clean claims are to be paid  within 30 days of receiving the claim from the provider. Similar to the   5-day rule, the FI defines clean claims as those containing all required  information, including the purchase order; passing all IHS and FI agreed- upon internal checks; and not requiring additional investigation by the FI.  The FI issues monthly reports to IHS documenting its compliance with  this provision. According to these reports, this target was met every  month from January 2012 through July 2013.
section_title: Complexity of the CHS Program, CHS Staffing and Funding Availability, and Variations in Program Practices Can Affect the Timeliness of Payments to Providers
paragraphs: 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.
subsections: section_title: Complex Processes for Determining Whether a Service Is Eligible for CHS Funding Can Affect the Timeliness of Provider Payments
paragraphs: IHS’s process for determining whether services are eligible for CHS  program funds is complex and different from processes used by other  payers, which can affect the timeliness of provider payments. Unlike other  payers that offer a defined set of benefits—including Medicare, Medicaid,  and private insurers—the CHS program makes decisions about what care  will be funded on a case-by-case basis, so that each time a referral for  care is received by a local CHS program, it is evaluated against a number  of eligibility requirements as well as against available funding. Evaluating  a service against each of the service eligibility requirements involves  multiple steps, some of which depend on the CHS program receiving  information from providers, patients, and others, and delays can occur  during the evaluation of some of these eligibility requirements, according  to CHS officials. In some cases, making these eligibility determinations  can be fairly involved, and can ultimately affect the amount of time it takes  for a provider to receive payment after the service is delivered. The  effects of this process on payment times is greater for self-referrals— situations in which the service was provided before it was approved for  payment—because the entire process for determining whether the  service was eligible for CHS payment does not begin until after the  service was delivered. According to IHS officials, the agency developed  the CHS program eligibility regulations in order to carefully manage and  stretch limited CHS funding to provide the most critical services to the  most patients.
Two aspects of the process for determining eligibility for CHS program  funding were frequently reported as resulting in payment delays:   (1) determining whether a service meets the area’s medical priorities and  (2) identifying all available alternate resources. Officials from 8 of 12 local  CHS programs we interviewed reported payment delays related to  determining whether a service met the area’s medical priorities, and  officials from 8 of 12 local CHS programs reported payment delays  related to identifying all available alternate resources.
Determining medical priority can result in delays because local CHS  programs must obtain from the provider medical records with sufficient  detail to assess whether a service is medically necessary and falls within  the established medical priorities. Officials reported that, while in some  cases the necessary records have been provided relatively quickly   (e.g., within a week) in other cases it has taken much longer. For  example, some local CHS programs reported situations when it has taken  weeks or months to obtain necessary medical documentation, and one  program reported situations when it has taken as long as 1 to 2 years to  receive this documentation. Program officials noted different reasons for  these delays. For example, officials reported situations where providers  have sent documentation to the wrong CHS program when the providers  were unaware in which CHSDAs the patients resided. Another reason  cited by local CHS program officials for delays in receipt of medical  documentation included situations in which incomplete documentation  was provided and the program needed to follow up with the provider.
Officials reported a number of situations in which determining whether the  patient has alternate resources to pay for the service, has resulted in  delays. For example, some local CHS program officials told us that when  they believe a patient is eligible for alternate resources—such as  Medicaid—they have the patient apply for those resources, and will hold  off on approving a service for CHS funding until the determination is  made on the application. Officials from one local CHS program said that  Medicaid determinations in their state can sometimes take months. In  another example, officials from one local CHS program stated that for  situations involving car accidents or a fall on private property, determining  liability can take a long time, and availability of alternate resources cannot  be determined until decisions on liability have been determined. In  another example, officials from one CHS program said delays can occur  when patients do not inform the CHS program of the alternate resources  available to them, necessitating the CHS program doing the research  itself.
Program officials also reported some delays related to the other three  aspects of the process for determining eligibility for CHS payment. For  example, officials from one CHS program said determining whether a  patient is a member of a federally recognized tribe can result in a delay if  they have never seen the patient before, and must obtain documentation  of that patient’s tribal affiliation. Similarly, officials from one CHS program  said determining whether a patient resides in its CHSDA can result in a  delay when the program needs to wait on documentation from patients  confirming their addresses. Finally, one local CHS program reported that  determining whether the program has been notified within required  timeframes can result in a delay when an incorrect decision is made to  deny the service, which is later overturned.
The complexity of determining whether services delivered to American  Indians and Alaska Natives are eligible for CHS funding can also result in  misunderstandings in which providers think payments have been delayed,  when in fact the services provided were not eligible for payment. For  example, IHS officials told us that sometimes patients do not understand  CHS rules and seek emergency care from external providers, expecting  the CHS program to cover it, when they are in fact not eligible for CHS.  The officials also said that providers will send claims to the CHS program,  assuming the patient and service are eligible, and expect to be paid. IHS  does not issue eligibility cards to beneficiaries that would indicate to  external providers their eligibility for CHS services or information about  which local CHS program is responsible for payment. In a previous GAO  review of the CHS program, several providers noted that, in the absence  of a process they can use prior to providing service to determine patient  eligibility for the CHS program, they submit claims for payment to the  CHS program for all patients who self-identify as American Indian or  Alaska Native or as eligible for the CHS program. IHS officials said that  they believe situations such as these—in which the provider will never be  paid because the patient or service was not eligible, as opposed to  situations in which the service is eligible but the payment process is  prolonged—accounted for the majority of provider complaints about the  timeliness of CHS payments.
Local CHS program officials noted that providers’ lack of understanding of  the complex CHS approval process was due in part to provider staff  turnover or was exacerbated when the provider’s billing functions were  located out of state, which could result in delays in providing information  needed to determine eligibility. These officials noted that education of  provider staff was an ongoing necessity for CHS programs. Some IHS  officials also noted that providing such training took staff time away from  processing referrals. Officials from a number of CHS programs noted that  they meet regularly with some of their high-volume providers to reconcile  specific outstanding cases, and that over time these meetings have  helped improve providers’ understanding of the unique rules and  procedures of the CHS program. However, officials also mentioned that  turnover among provider staff often necessitated starting the process of  educating providers again.
section_title: Complexities Associated with the CHS Processes for Paying Providers Also Can Affect Timeliness
paragraphs: Even after a service has been approved for CHS funding and a purchase  order has been issued, delays can occur because of complexities in the  last step in the payment process, which is managed by IHS’s FI. Officials  said this can occur because the providers do not understand the CHS  process used by the FI. For example, officials said some providers do not  understand that after receiving a purchase order, they also need to  submit the claim to the FI to be paid.
Officials from local CHS programs and from the FI also reported  examples where delays occurred because claims submitted by providers  to the FI could not be matched to a corresponding purchase order in the  FI’s system. According to FI officials, it will issue only one payment for  each purchase order. However, some purchase orders are intended to  cover multiple services, such as for a series of physical therapy  treatments. FI officials reported that providers sometimes submit claims  for services that pertain to only a portion of the services authorized on the  purchase order. In these cases, the FI pays for those services and closes  out the purchase order. When providers submit subsequent claims  related to other services that were authorized on the original purchase  order, the FI is unable to pay the provider because the purchase order  was closed. The provider then must go back to the CHS program to  request a new purchase order and payment to the provider is delayed  until the new purchase order is issued and submitted to the FI.
In addition to delays in payments to providers from issues matching  claims and purchase orders, claims may be put on hold by the FI for other  payment processing issues. One of the most common causes for claims  being put on hold by the FI is when alternate resources have been  confirmed, but the FI is waiting for information from the provider showing  the amount paid by the other resources and the remaining amount that  the provider is claiming from IHS.
section_title: CHS Staffing and Funding Availability Also Can Affect Timeliness of Payments to Providers
paragraphs: 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.  Some CHS program officials noted that their number of staff was below  these standards. Further, local CHS program officials in programs that  had a very small number of CHS staff (e.g., two or three) said that a  vacancy or extended leave for even one staff person could affect the  timeliness of issuing purchase orders—and one of these programs  reported that related delays could be significant. Furthermore, IHS  officials noted that, pursuant to agency practice, CHS funding has been  used only to pay for services and not to increase staffing levels. As a  result, recent increases in CHS funds have resulted in increased  workloads, but staffing levels to manage the workloads have not  increased. Staffing levels can affect the timeliness of payment for  services, particularly for self-referrals where the entire process for  determining eligibility for CHS payment does not begin until after the  service is provided.
Officials from a few CHS programs also noted that funding issues could  result in delays issuing a purchase order authorizing CHS funding, which  would delay payments. In our prior work, some providers told us that  delays in receiving payment from CHS of several months, or in some  cases years, tended to occur when the CHS program’s funding for the  fiscal year had been depleted.noted, funding shortages affect the amount of time it takes to pay  providers for self-referrals more than IHS referrals because the self- referral service is already provided before the program determines if  funds are available while for an IHS referral, the service can be  postponed until funds become available.
section_title: Local CHS Program Practices for Implementing CHS Eligibility Regulations Vary, which May Contribute to Variations in Timeliness for Aspects of the Provider Payment Process
paragraphs: We found variation in local CHS program practices for implementing CHS  eligibility rules, which may contribute to the variation in timeliness of the  provider payment process across IHS areas. IHS officials said they allow  flexibility in local CHS program practices because each has a different set  of circumstances to consider. These circumstances include challenges  regarding CHS funding levels among areas, state Medicaid program  procedures for verifying eligibility, providers’ familiarity with the CHS  program, and the number of staff available to determine CHS eligibility for  services.
During our interviews, IHS area and local CHS program officials reported  differences in practices that could contribute to variation in the amount of  time overall it takes to pay providers. Examples of these differences  include:  Consideration of alternate resources. Local CHS programs varied  in the actions they took while they were determining the extent of  patients’ alternate resources. One practice IHS area office officials  said some local CHS program staff used, in certain  circumstances, was to issue purchase orders to providers before  patients’ alternate resources were confirmed. In these cases, if the  FI paid the claim before alternate resources were confirmed, the  FI would seek to recover from the provider any overpayments for  services covered by these alternate resources.
In contrast, some IHS area and local CHS program officials told us  they do not issue purchase orders authorizing CHS payment for  services until the availability of all possible alternate resources has  been determined. Officials in one IHS area noted that they do this  to preserve their limited CHS funds and provide access to care to  as many patients as possible. Officials in this area reported that  they were not able to fund all Priority 1 cases and that issuing  purchase orders and obligating CHS funds before alternate  resources were confirmed could cause them to exhaust their CHS  funds even earlier.
Requests for information from providers. Officials from some local  CHS programs reported that they set time limits for providers to  submit medical documents and deny CHS funding if providers do  not submit the documents within that time. These limits ranged  from a week to 45 days, and some of these programs  automatically issued a denial if the medical documentation was  not provided either at the same time the program was notified that  services had been provided or by the specified time limit. CHS  officials said these denials could be reconsidered if sufficient  medical documentation were subsequently provided. In contrast,  officials from another CHS program reported that it does not have  established time limits within which providers must submit medical  documentation.
section_title: New Coverage Options in PPACA May Provide IHS an Opportunity to Simplify CHS Eligibility Rules
paragraphs: 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.
If a better match is achieved between available funding and overall CHS  program demand, IHS could have the opportunity to streamline eligibility  requirements for the CHS program and to expand the services it pays for  with CHS funds, assuming appropriation levels for the CHS program are  maintained. Because the CHS program is generally the payer of last  resort, if more American Indians and Alaska Natives gain new coverage,  services that would have previously been paid for by the CHS program  will be paid for by other payers. In addition, because some American  Indians and Alaska Natives will have access to benefits packages through  these other coverage options—benefits packages that may be more  comprehensive than the IHS benefits available to them now—more may  choose to obtain care outside of the IHS system entirely. This could help  free up some CHS program funds, potentially creating a better match  between available funding and overall program demand.
Some uncertainty remains, however, about the extent to which American  Indians and Alaska Natives will obtain new health care coverage when  PPACA is fully implemented. For example, not all states may choose to  expand their Medicaid programs. In addition, we have reported previously  on the challenges American Indians and Alaska Natives may face  enrolling in Medicaid and other public insurance programs. 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.
section_title: Conclusions
paragraphs: The current CHS program’s eligibility requirements reflect the method that  IHS has chosen to stretch its funding to ensure that the most critical  health services can be provided to the maximum number of beneficiaries.  However, determining eligibility for CHS funding—including the need to  ascertain each time a referral is received whether the patient met  residency requirements and the service met medical priorities—is  inherently complex. As currently structured, it is highly unlikely that the  CHS program will be as quick a payer as some other payers because of  the cumbersome steps involved in determining eligibility for each service.
PPACA will expand existing sources of health coverage and create new  ones for American Indians and Alaska Natives, and this could affect the  CHS program in a number of ways. In particular, if these changes  significantly reduce the demand placed on CHS program funds, IHS may  have the opportunity to not only pay for a greater range of services but  also restructure the CHS program to include less stringent eligibility  requirements. For example, increased availability of CHS funding due to  increased access among American Indians and Alaska Natives to other  sources of health care coverage options under PPACA could give IHS the  opportunity to establish a set of defined benefits for IHS beneficiaries,  which would alleviate the need for CHS programs and providers to carry  out time-consuming medical priority determinations. The opportunity also  may arise for IHS to make other changes, such as issuing a form of  eligibility card to CHS-eligible patients to help providers understand when  to send claims to IHS, and to which local CHS program a claim should be  sent, helping improve the timeliness of provider payments.
In the interim, while the changes from PPACA are taking effect, IHS has  the opportunity to continue to make improvements to the CHS program,  including how it assesses the timeliness of provider payments and how it  aligns CHS program staffing levels with workloads, and to proactively  consider ways to streamline CHS eligibility requirements.
section_title: Recommendations for Executive Action
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to HHS for review and received written  comments, which are reprinted in appendix I. In its comments, HHS  concurred with two of our recommendations and did not concur with one  recommendation.
HHS concurred with our recommendation that IHS modify its claims data  system to separately track IHS referrals and self-referrals, revise the  GPRA measure for the CHS program so that it distinguishes between  these two types of referrals, and establish separate timeframe targets for  these referral types. HHS also concurred with our recommendation that  as HHS and IHS monitor the effect that new coverage options available to  IHS beneficiaries through PPACA have on CHS program funds, IHS  proactively develop potential options to streamline program eligibility  requirements. HHS agreed with the premise that Medicaid eligibility  expansion and private insurance for more American Indians and Alaska  Natives will reduce the demand for 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.
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.
section_title: Appendix I: Comments from the Department of Health and Human Services
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: 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.
section_title: Related GAO Products
paragraphs: 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.