In Narrow Victory For Tribal Nations, US Supreme Court Requires Federal Government To Reimburse Tribal Nations For Healthcare Administration Costs



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On June 6, 2024, the US Supreme Court decided Becerra v. San Carlos Apache Tribe and Becerra v. Northern Arapaho Tribe (Nos. 23-250 and 23-253), holding that the Indian Health Service (IHS) must reimburse Native...
United States Food, Drugs, Healthcare, Life Sciences
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On June 6, 2024, the US Supreme Court decided Becerra v. San Carlos Apache Tribe and Becerra v. Northern Arapaho Tribe (Nos. 23-250 and 23-253), holding that the Indian Health Service (IHS) must reimburse Native nations, bands, and tribes that run their own healthcare systems for costs associated with program income from Medicare, Medicaid, and private insurers. The 5–4 affirmance is a major victory for Indian Country that could provide billions of dollars more in reimbursement of costs to support tribal healthcare programs.

The Indian Self-Determination and Education Assistance Act (ISDA) allows tribes to exercise greater sovereignty by entering into "self-determination contracts" with IHS to administer healthcare programs that IHS would otherwise operate. Federal law requires IHS to provide contracting tribes with the appropriated funds IHS would have otherwise used to operate the program. While tribes and IHS receive similar funding, when tribes administer their healthcare programs, they incur overhead costs that IHS does not. To put tribes on an equal footing with IHS and support self-determination efforts, Congress amended the ISDA to provide reimbursement for certain "contract support costs" attributable to the self-determination contracts.

The respondent tribes in these cases—the San Carlos Apache Tribe and the Northern Arapaho Tribe—each alleged that IHS refused to pay contract support costs for services funded by revenue from Medicare, Medicaid, and private insurers (third-party revenue), even though federal law required the tribes to spend that revenue to provide healthcare services. In a 5–4 decision, the Supreme Court ruled in the tribes' favor, holding that ISDA requires IHS to reimburse tribes for those costs.

The majority opinion, authored by Chief Justice Roberts and joined by Justices Sotomayor, Kagan, Gorsuch, and Jackson, reasoned that because the ISDA requires tribally run healthcare programs to spend the third-party revenue on healthcare to remain in compliance with their IHS contracts, the administrative costs associated with that spending are eligible for reimbursement. To hold otherwise would result in a "systemic funding shortfall" that would penalize tribes for self-determination. That penalty is inconsistent with Congress's express intent—reflected in the statute's text—to place contracting tribes in the same financial position as IHS.

Administrative costs make up a substantial portion of healthcare spending, so the Court's ruling opens the door to significant reimbursements for critically underfunded healthcare in Indian Country. As noted by Justice Kavanaugh in dissent, tribes that run their own healthcare programs could see an increase in funding of between $800 million and $2 billion annually. Tribal governments may also seek reimbursement for IHS's past failure to provide required contract support costs, subject to any applicable statutes of limitations.

Justice Kavanaugh's dissent, joined by Justices Thomas, Alito, and Barrett, suggests that without congressional change, the Court's decision "will divert funding from poorer tribes to richer tribes" because tribes with fewer resources are less likely to administer their own healthcare programs. The dissent suggests that this is an "appropriations" decision that should be left for the political branches to work out through the legislative process.

*WilmerHale filed an amicus brief on behalf of 11 legal scholars in support of the San Carlos Apache and Northern Arapaho Tribes. The team included Seth P. Waxman, Tommy Beaudreau, Kevin M. Lamb, Laura E. Powell, and Britany Riley-Swanbeck.

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