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Medicaid and American Indians and Alaska Natives

Introduction

American Indians and Alaska Natives face persistent disparities in health and health care, including a high uninsured rate, significant barriers to obtaining care, and poor health status. Treaties and laws establish the federal government’s responsibility to provide certain rights, protections, and services to American Indians and Alaska Natives, including health care. The Indian Health Service (IHS) is the primary vehicle through which the federal government provides health services to American Indians and Alaska Natives. However, chronic underfunding for IHS and other barriers limit access to care for the population.

Given the low incomes of American Indians and Alaska Natives and the limitations of IHS services, the Medicaid program plays an important role for the population. The Affordable Care Act (ACA) Medicaid expansion provides an opportunity to enhance this role by increasing coverage among American Indians and Alaska Natives and providing additional revenue to support IHS- and Tribally-operated facilities. Moreover, the Centers for Medicare and Medicaid Services (CMS) recently released new guidance that expands the scope of Medicaid-covered services provided to American Indians and Alaska Natives for which the federal government would pay 100% of the costs. These changes are intended to help improve access to care for American Indians and Alaska Natives and may provide savings to states.

This brief provides an overview of the health needs of American Indians and Alaska Natives, discusses the role of Medicaid and the potential impact of the Medicaid expansion for this population, and reviews the new CMS guidance that expands the scope of Medicaid services provided to American Indians and Alaska Natives that can qualify for 100% federal match.

Background

Nearly 5 million nonelderly individuals self-identify as American Indian or Alaska Native alone or in combination with some other race, representing nearly 2% of the total nonelderly population. In most cases, data analysis in this brief is based on this inclusive group of American Indians and Alaska Natives. Within this group, some 2.4 million nonelderly individuals identify their race solely as American Indian or Alaska Native, making up roughly 1% of the total U.S. population. Some American Indians and Alaska Natives belong to a federally-recognized Tribe, some belong to a state-recognized Tribe, and others self-identify as American Indian or Alaska Native but are not enrolled in a Tribe. Members and descendents of members of federally recognized Tribes have broader access to certain federal benefits and services. American Indians and Alaska Natives live across the country but are concentrated in certain states (Figure 1). While many American Indians and Alaska Natives live in rural areas, only 22% live on reservations or land trusts. As of 2010, 60% of American Indians and Alaska Natives live in metropolitan areas. 1

Figure 1: American Indians and Alaska Natives as a Share of the Nonelderly Population, by State, 2014

Figure 1: American Indians and Alaska Natives as a Share of the Nonelderly Population, by State, 2014

While the majority of American Indians and Alaska Natives are in working families, they have high rates of poverty. More than seven in ten (74%) of nonelderly American Indians and Alaska Natives are in working families, but American Indians and Alaska Natives are less likely than the overall nonelderly population to be in the workforce and have significantly higher rates of poverty (26% vs. 16%) (Figure 2).

Figure 2: Income and Work Status for Nonelderly American Indians and Alaska Natives, 2014

Figure 2: Income and Work Status for Nonelderly American Indians and Alaska Natives, 2014

American Indians and Alaska Natives face significant physical and mental health problems. Among nonelderly adults, American Indians and Alaska Natives are more likely than the overall population to report being in fair or poor health, being overweight or obese, and having diabetes (Figure 3). Moreover, the suicide rate for American Indian and Alaska Native adolescents and young adults is two and half times higher than the national average.2

Figure 3: Health Status and Rates of Selected Chronic Diseases for American Indian and Alaska Native Nonelderly Adults, 2014

Figure 3: Health Status and Rates of Selected Chronic Diseases for American Indian and Alaska Native Nonelderly Adults, 2014

The Role of IHS

The IHS is responsible for providing health care and prevention services to American Indians and Alaska Natives. IHS-funded health services are provided through a network of hospitals, clinics, and health stations that are managed directly by IHS, Tribes or Tribal organizations, and urban Indian health programs. In general, services provided through IHS- and Tribally-operated facilities are limited to members of and descendants of members of federally recognized Tribes that live on or near federal reservations. Urban Indian health programs serve a wider group of American Indians and Alaska Natives, including those who are not able to access IHS- or Tribally-operated facilities because they do not meet eligibility criteria or reside outside the service areas. American Indians and Alaska Natives receiving services through IHS providers are not charged or billed for the cost of their services.

As a discretionary program, IHS funding is limited and must be appropriated by Congress each fiscal year. The appropriated funds are distributed to IHS facilities across the country and serve as their annual budget. If service demands exceed available funds, services are prioritized or rationed. In FY2016, a total of $4.8 billion was appropriated for IHS services, with $3.3 billion going to health care services and the remaining funds supporting preventive health and other services (Figure 4). Some 63% or $2.1 billion of the $3.2 billion going to direct health services was appropriated to Tribally-operated facilities, with the remaining $1.2 billion going toward those directly operated by IHS. Only 1% of total program funding was directed toward urban Indian health. In addition to direct appropriations, revenues from third-party payers are a significant part of IHS funding, including Medicare, Medicaid, the Veterans Administration, and private insurance. A total of $1.2 billion will be collected from third-party payers in FY2016, with the largest share—$808 million—coming from Medicaid.

Figure 4: Allocation of Indian Health Service Program Funding, in Billions, FY2016

Figure 4: Allocation of Indian Health Service Program Funding, in Billions, FY2016

IHS services historically have been underfunded to meet the needs of American Indians and Alaska Natives. The services provided through the IHS consist largely of primary care, but include some ancillary and specialty services. If facilities are unable to provide needed care, the IHS and Tribes may contract for health services from private providers through the Purchased/Referred Care (PRC) program. However, urban Indian health organizations do not participate in the PRC program and do not receive PRC funding for additional health services beyond the scope of what they can provide. Although the IHS budget has increased over time, funds are not equally distributed across facilities and remain insufficient to meet health care needs. 3 As such, access to services through IHS varies significantly across locations, and American Indians and Alaska Natives who rely solely on IHS for care often lack access to needed care. 4

The Role of Medicaid

Medicaid is an important source of health insurance coverage for the American Indian and Alaska Native population. Medicaid helps to fill the large gaps in private coverage for American Indians and Alaska Natives, enables American Indians and Alaska Natives to access a broader array of services and providers than they can access solely through IHS-funded services, and provides a key source of financing for IHS providers. The program plays a larger role in Indian health and American Indians and Alaska Natives account for a larger share of Medicaid enrollees in states with high numbers of American Indians and Alaska Natives. The Medicaid program also includes a number special financing rules and consumer protections that apply specifically to American Indians and Alaska Natives.

Medicaid fills gaps in private coverage for nonelderly American Indians and Alaska Natives, but they remain more likely than the overall nonelderly population to be uninsured (Figure 5). American Indians and Alaska Natives have limited access to employer-sponsored coverage because they have a lower employment rate and those working tend to be employed in low-wage jobs and industries that typically do not offer health coverage. Medicaid and other public coverage help fill this gap, covering one in three (34%) nonelderly American Indians and Alaska Natives. However, even with this coverage, nonelderly American Indians and Alaska Natives are significantly more likely to be uninsured than the national average (21% vs. 13%). Nationwide, 1 million American Indians and Alaska Natives lack coverage, although the number and share of American Indians and Alaska Natives who lack coverage varies across states (Appendix A, Table 1). Medicaid plays a more expansive role for American Indian and Alaska Native children than adults, covering more than half of American Indian and Alaska Native children (51%), but their uninsured rate is still nearly twice as high as the national rate for children (11% vs. 6%).

Figure 5: Health Insurance Coverage for Nonelderly American Indian and Alaska Natives Compared to U.S. by Age, 2014

Figure 5: Health Insurance Coverage for Nonelderly American Indian and Alaska Natives Compared to U.S. by Age, 2014

Just as with other eligible individuals, American Indians and Alaska Natives who meet state eligibility standards are entitled to Medicaid coverage in the state in which they reside. American Indians and Alaska Natives may qualify for Medicaid regardless of whether they are a member of a federally-recognized Tribe, whether they live on or off a reservation, and whether they receive services (or are eligible to receive services) at an IHS- or Tribally-operated hospital or clinic. American Indians and Alaska Natives with Medicaid can access care through all providers who accept Medicaid for all Medicaid covered benefits. As such, they have access to a broader array of services and providers than those who rely solely on IHS services for care. Moreover, Medicaid has special eligibility rules and provides specific consumer protections to American Indians and Alaska Natives (see Appendix B).

Medicaid provides a key source of revenue for IHS providers, including IHS and Tribal facilities. Federal Medicaid funding is available on an ongoing basis for covered services provided to American Indians and Alaska Natives. In contrast to IHS funds, which are limited at a fixed amount appropriated per year, Medicaid funds are not subject to annual appropriation limits. In addition, since Medicaid claims are processed throughout the year, facilities receive Medicaid payments on an ongoing basis. As such, Medicaid revenues help facilities cover needed operational costs, including provider payments and infrastructure developments, supporting their ability to meet demands for care and maintain care capacity.

Impact of the ACA Medicaid Expansion

Prior to the ACA, states already had significantly expanded eligibility for children through Medicaid and the Children’s Health Insurance Program. In contrast, prior to the ACA, Medicaid eligibility levels for parents remained very low in most states and other non-disabled adults were excluded from the program regardless of their income levels. Effective January 2014, the ACA expanded Medicaid to adults with incomes at or below 138% of the federal poverty level (FPL) ($16,394 for an individual in 2016). The federal government will cover 100% of the cost for all adults made newly eligible by the expansion through the end of 2016, and then the matching rate will phase down over time to 90%. Although intended to occur nationwide, the expansion was effectively made a state option by the June 2012 Supreme Court ruling on the ACA. As of February 2016, 31 states and DC have adopted the Medicaid expansion. In states that do not expand, many poor adults fall into a coverage gap. These adults have incomes above Medicaid eligibility limits but below the lower limit for Marketplace premium tax credits, which begin at 100% FPL. Although a number of states that include a relatively large share of the American Indian and Alaska Native population have expanded Medicaid, such as California, Arizona, and New Mexico, other states that are home to a large share of the population have not, including Oklahoma and Texas (See Appendix A, Table 1).

The Medicaid expansion provides a significant opportunity to expand coverage for American Indians and Alaska Natives, but many poor adults living in states that have not expanded remain in a coverage gap. Given the low incomes of American Indians and Alaska Natives, the Medicaid expansion provides a new coverage option for many uninsured American Indians and Alaska Natives in states that have implemented it. Nationwide, over four in ten (41%) or over 440,000 American Indians and Alaska Natives who were uninsured as of 2015 are eligible for Medicaid (Figure 6). This includes newly eligible adults in states that have expanded Medicaid as well as adults and children who were previously eligible but not enrolled in both expansion and non-expansion states. However, 65,000 uninsured poor adult American Indians and Alaska Natives fall into the coverage gap in states that have not expanded Medicaid. If all states were to expand Medicaid, this gap would be eliminated and more than one in two (51%) or over 550,000 uninsured American Indians and Alaska Natives would be eligible for Medicaid.

Figure 6: Eligibility for Coverage Among American Indians and Alaska Natives Who are Uninsured as of 2015

Figure 6: Eligibility for Coverage Among American Indians and Alaska Natives Who are Uninsured as of 2015

The Medicaid expansion also provides an opportunity for increased Medicaid revenues for IHS-and Tribally-operated facilities. As noted, Medicaid serves as a key source of revenue for IHS providers. In states that expanded Medicaid, the share of patients served by IHS providers with Medicaid coverage will likely grow, resulting in increased revenues for these facilities that may enhance their capacity to provide services. In contrast, in states that do not expand, IHS providers will not benefit from these increased revenues.

Expanding Services that Qualify for 100% Federal Funding

Medicaid is a federal-state matching program—the federal government matches the costs states incur in paying for covered services provided to eligible individuals. The rate at which the federal government matches state Medicaid costs varies across states from 50% to 74%, depending on a state’s per capita income.5 However, the federal government covers 100% of costs for services provided to American Indian and Alaska Native beneficiaries that are received through an IHS- or Tribally-operated facility.6 This 100% matching rate reflects a policy judgment that states should not have to contribute state general funds to the cost of care provided by a federal facility, whether operated by the IHS or on its behalf by a Tribe. (This 100% federal matching rate is separate from the 100% federal matching provided to the “newly eligible” ACA expansion population and will remain in place when the 100% federal matching rate provided for all new eligibles begins to phase down.)

On February 26, 2016, CMS released new guidance that expands the scope of services considered “received through” an IHS/Tribal facility that may qualify for 100% federal match.7 CMS indicates that these changes are “intended to help states, the IHS, and Tribes to improve delivery systems for American Indians and Alaska Natives by increasing access to care, strengthening continuity of care, and improving population health.”8 States also have expressed interest in expanding the scope of services that qualify for 100% federal match. Prior to the release of the CMS guidance, Alaska began developing a proposal to expand the scope of services that qualify for 100% federal match to include transportation and accommodation services and referrals. Similarly, in a waiver concept paper, South Dakota outlined a proposal to expand the scope of services that qualify for 100% federal funding to include services such as telehealth services and expanded specialty and primary care provided through partnerships with other providers. Both states indicate that expanding the services that would qualify for 100% federal match would improve access to care for American Indians and Alaska Natives and support IHS services. They also anticipate that these changes would result in state savings. In South Dakota, the Governor’s proposal would utilize such savings to support implementation of the Medicaid expansion. (Alaska has already implemented the expansion.)

The guidance broadens the scope of services that can qualify for 100% federal match. Under previous policy, services that qualify for 100% federal match were limited to “facility services,” meaning that the service is within the scope of services a facility (such as a hospital, clinic, or nursing facility) may offer under Medicaid laws and regulations. Under the guidance, the scope of services that may qualify for 100% federal match is expanded to include any Medicaid benefit covered by the state plan that the IHS or Tribal facility is authorized to provide. These services could include emergency and non-emergency transportation and related travel expenses. They also could include home and community based services, personal care, and other types of services that would not qualify as “facility services” under previous policy.

The guidance expands the range of providers that can furnish services that qualify for 100% federal match. Under previous policy, to qualify for 100% federal match, services had to be provided directly by the IHS/Tribal facility, its employees, or individuals contracted to provide “facility services.” Under the guidance, when an IHS/Tribal facility requests services for an American Indian or Alaska Native patient from a non-IHS/Tribal provider under a care coordination agreement, the services may qualify for 100% federal match. These providers may include Urban Indian Health Organizations or any other Medicaid participating provider. Certain conditions must be met, as follows:

  • Both the IHS/Tribal facility and non-IHS/Tribal provider must be Medicaid providers.
  • The service must be requested by a practitioner at an IHS/Tribal facility; it may not be self-requested by the beneficiary or requested by the non-IHS/Tribal provider.
  • The patient must have an established relationship with a provider at the IHS/Tribal facility. This relationship can be based on visits, including the initial visit, conducted using telehealth procedures.
  • The care must be provided pursuant to a written care coordination agreement between the IHS/Tribal facility and the non-IHS/Tribal provider, under which the IHS/Tribal facility remains responsible for overseeing the patient’s care and retains control of the patient’s medical record.

Care coordination agreements established between IHS/Tribal facilities and non-IHS/Tribal providers can take various forms, including a formal contract, a provider agreement, or a memorandum of understanding. The IHS/Tribal facility may decide the form of the written agreement. Under the care coordination agreement, certain minimum conditions must be met, including the following:

  • The IHS/Tribal facility provides a request for specific services and relevant information about the patient to the non-IHS/Tribal provider.
  • The non-IHS/Tribal provider sends information about the care it provides to the patient and results of any procedures to the IHS/Tribal facility;
  • The IHS/Tribal facility continues to assume responsibility for the patient’s care by assessing the information and taking appropriate action, including furnishing or requesting additional services, when necessary; and
  • The IHS/Tribal facility incorporates the patient’s information into the medical record.

Obtaining or furnishing care through these expanded options is voluntary for American Indian and Alaska Native Medicaid beneficiaries and IHS/Tribal providers. States may not require beneficiaries to receive services through an IHS/Tribal facility or non-IHS/Tribal provider that has established a care coordination agreement with an IHS/Tribal provider. Moreover, states may not delay providing Medicaid coverage by requiring beneficiaries to initiate or continue a relationship with an IHS/Tribal facility. Additionally, there is no requirement for IHS/Tribal facilities to enter into care coordination agreements with non-IHS/Tribal providers.

There are several billing options for services provided to American Indian and Alaska Native Medicaid beneficiaries by non-IHS/Tribal providers under care coordination agreements with IHS/Tribal facilities. A non-IHS/Tribal provider can bill the Medicaid agency directly or an IHS/Tribal facility can bill on behalf of the non-IHS/Tribal provider. How the services are billed may impact the provider reimbursement rate for the service, but the services will qualify for 100% federal match regardless of how they are billed. In managed care arrangements, states can claim 100% federal match for a portion of the capitation payment based on the cost of services received through IHS/Tribal facilities and provided through non-IHS/Tribal providers under care coordination agreements as outlined above.

The state Medicaid agency must establish a process for documenting claims for expenditures for items or services that would qualify for 100% federal match under these policies. The documentation must establish that the item or service was furnished to an American Indian or Alaska Native patient who is an established patient at an IHS/Tribal facility under a referral from that facility, that the service was within the scope of the care coordination agreement, that the payment rate is consistent with the requirements outlined in the guidance, and that there is no duplicate billing by the IHS/Tribal facility and non-IHS/Tribal provider for the same services.

Looking Ahead

The ACA Medicaid expansion offers an important opportunity to increase coverage and access to care for American Indians and Alaska Natives. In states that have expanded Medicaid, many adults have become newly eligible for the program, providing a new coverage option for many previously uninsured American Indians and Alaska Natives. Gains in coverage may help increase access to services and providers for American Indians and Alaska Natives that used to rely solely on IHS services since they will no longer be restricted to care available through IHS and Tribal facilities. At the same time, increases in Medicaid coverage may also help expand capacity within IHS and Tribal facilities since their Medicaid revenues will increase if more patients enroll in Medicaid. With gains in Medicaid coverage among patients, fewer individuals will need to rely on the PRC program for referral services outside of facilities. Moreover, additional Medicaid revenues may support facilities’ abilities to retain providers, hire additional staff, and purchase new equipment, for example, to increase telehealth capacity. Targeted outreach and enrollment efforts will be key for translating the expansions into increased coverage and overcoming specific enrollment barriers faced by American Indians and Alaska Natives, including mistrust of federal and state governments, certain cultural beliefs, and a preference for relying on IHS services for care or the belief that the federal government should fund all needed care through IHS.

American Indians and Alaska Natives will continue to face gaps in coverage and growing inequities in states that do not expand Medicaid. In states that do not expand Medicaid, many poor adults remain without an affordable coverage option and will likely remain uninsured. Similarly, IHS providers in these states will not realize gains in Medicaid revenue. Moreover, Medicaid expansion decisions create unique equity issues for American Indians and Alaska Natives since some Tribal nations have boundaries that extend across states that have made differing expansion decisions. For example, the Navajo nation extends into Utah, Arizona, and New Mexico. Arizona and New Mexico have expanded Medicaid, while Utah is not moving forward at this time. As a result, a Navajo Tribal member in Arizona may have access to Medicaid coverage, while a Navajo member in Utah might not. As such, state Medicaid expansion decisions will drive variations in coverage and access both within and between Tribes.

The expansion in the scope of services provided to American Indians and Alaska Natives that can qualify for 100% federal match may help improve access to care, increase support for IHS services, and provide savings to states. Previously, 100% federal match was available only for facility services provided by IHS/Tribal facilities to American Indians and Alaska Natives enrolled in Medicaid. However, given the remote locations in which many American Indians and Alaska Natives reside and the limited capacity of IHS/Tribal providers, broader services are often necessary to meet their health care needs. Expanding the scope of services that can qualify for 100% federal match may support increased access to care for American Indians and Alaska Natives and expand the capacity of IHS and Tribal services. For example, the changes may create new incentives for IHS and Tribal providers to develop arrangements with other providers to expand their patients’ access to specialty services and supportive services, including transportation. The changes also may result in increased federal spending while providing savings for states, since some costs that are currently reimbursed at the regular state match rate would be matched with 100% federal funds. In addition, the changes may reduce state costs associated with the Medicaid expansion for American Indians and Alaska Natives (when the state share begins phasing in), since a larger share of their costs could be reimbursed at 100% federal match. Additional guidance will be needed for details on how the changes may be implemented by states and IHS/Tribal facilities.

Samantha Artiga is with the Kaiser Family Foundation. Anthony Damico is an independent consultant to the Kaiser Family Foundation.

Summary Appendices

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.