Tribal Authority to Collect and Use Third-Party Revenues

1. Tribal Authority to Collect and Use Third-Party Revenues Geoff Strommer, Partner Hobbs, Straus, Dean, & Walker, LLP January 2015

2. Background • On November 24, 2014, HHS Office of Inspector General Alert: • Cautioned Tribes and Tribal Organizations (T/TO) to ensure that ISDEAA funds and M/M and CHIP reimbursements are properly allocated and spent • Question: What are the limits on how third-party reimbursements, for services provided to individuals with alternative health coverage, may be used?

3. Overview • Types of third-party reimbursements • Tribal authority to collect • Limits on funds in IHS “special fund” • How to use M/M and CHIP reimbursements when directly billed • Collections for services to non-beneficiaries • Open questions and other possible limitations

4. Third-Party Revenues • Medicare – federal program for individuals age 65+; younger based on certain disabilities • Medicaid – state-run federal program for low-income individuals and families • Children’s Health Insurance Program (CHIP) – state-run federal program offering free/low-cost care to eligible children, and sometimes families and pregnant women

5. Third-Party Revenues • Private health insurance – (e.g., Blue Cross) • Tortfeasors – collections from liable third-parties, such as a person who caused an accident resulting in injury/medical care • Catastrophic Health Emergency Fund (CHEF) – IHS funds for high-cost PRC • Veterans Administration – reimbursements VA makes to Tribes for services to veterans

6. Tribes and Third-Party Funds • Tribes authorized by law to seek reimbursement for services from M/M, CHIP, other third-party payers – as health care providers responsible for health under ISDEAA • Use of third-party reimbursements may depend on provider type, facility type, relevant program and other factors

7. History of Third-Party Funds • Before IHCIA in 1976, IHS facilities could not bill for and collect M/M • Congress amended the Social Security Act via Title IV of the IHCIA in 1976 to authorize billing M/M

8. History of Third-Party Funds Cont’d • Applied to “facilities of the IHS,” whether operated by IHS or T/TO • Largely required collections to be placed into a “special fund” • Had to use the special fund for improvements necessary to achieve compliance with M/M participation/accreditation standards • Requirement now in Section 401(c) of IHCIA

9. IHCIA Reauthorization: Direct Billing • Section 401(c)(2) now exempts tribal health programs from the “special fund” limitation if they elect to directly bill • Section 401(d) now specifically authorizes T/TO to directly bill M/M, CHIP and any other third-party payer

10. Use of M/M & CHIP Funds: Section 401(d)(2)(A) M/M and CHIP funds collected under the direct billing authority must be used for: • Achieving or maintaining compliance with the requirements applicable to M/M and CHIP programs; or • Health care services; or • Improvements in health facilities or health programs; or • Any “health-related purpose;” or • To otherwise achieve the objectives of Section 3 of the IHCIA (e.g., ensure highest possible health status)

11. Services to Non-Beneficiaries • The same use provisions in Section 401(d)(2)(A) apply to all third-party collections for services provided to non-beneficiaries under Section 813 of the IHCIA • M/M and CHIP • All other third-party reimbursements • Statute: “shall be used for the purposes listed in section 401(d)(2).”

12. Other Third-Party Reimbursements • Question whether Section 401(d)(2)(A) also applies to other third-party reimbursements collected for services to eligible beneficiaries • e.g., services not covered by Section 813 • e.g., private insurance collections • Hinges on interpretation of Section 207 of the IHCIA regarding “crediting reimbursements”

13. ISDEAA Provisions • May not be necessary to solve the open legal question/interpret Section 207 • ISDEAA requires T/TO “program income” to be spent: • Title I: “[T]o further the general purpose of the contract” • Title V: “[A]s supplemental funding to that negotiated in the funding agreement”

14. ISDEAA Provisions, Cont’d • Applicable to all “program income” • Any third-party reimbursement received or recovered by Title I and Title V Tribes • M/M, CHIP, private insurance, etc. • Generally understood to mean that funds are to be used to supplement the funds Tribes receive to carry out health care-related programs

15. Special Issues • Construction of New Facilities • Contract Limitations • CHEF Funds • Reimbursements from the VA • State Law

16. New Facility Construction • Can third-party funds that are subject to 401(d)(2)(A) be used for new facility construction? • A limitation on IHS in appropriations law, prohibiting use of M/M and CHIP collections for new facilities—does not appear in provision applicable to T/TO • Broad language in 401 should be read to include new facilities

17. CHEF Funds • Designed to reimburse T/TO’s PRC programs for catastrophic expenses • No statements in IHCIA about how CHEF must be spent • IHS Administrative Guidelines for CHEF: • Funds made available for expenditures on patients • Solely for meeting extraordinary medical costs • Amounts unused on approved case must be returned to IHS CHEF Account

18. Veterans Administration • Section 2901(b) of ACA: T/TO are payers of last resort • VA must pay for services provided by T/TO to veterans per Section 405(c) of IHCIA • Individual reimbursement agreements between T/TO and the VA may provide limitations on use of reimbursements (e.g., refer to Section 401(d) of IHCIA) or may say nothing

19. Other Possible Limitations • ISDEAA Contracts: Individual T/TO may have agreed to language in their ISDEAA agreements on use of third-party revenues • State Law: T/TO should consider whether they have agreed to comply with, or are otherwise subject to, any state law limitations on use of third-party collections

20. Questions or Comments? Geoff Strommer: gstrommer@hobbsstraus.com 503-242-1745