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Some States Leveraging Tribes for Medicaid Money

By Marissa Evans, CQ Roll Call

October 19, 2015 -- Lawmakers in some states mulling Medicaid expansion are tacking on a new stipulation: more money from the federal government to serve clients of the Indian Health Service.

Republican South Dakota Gov. Dennis Daugaard met with Department of Health and Human Services (HHS) officials last month to push the federal agency to pick up the full cost of serving Medicaid-eligible Indian Health Service (IHS) patients who go to non-IHS facilities.

Right now Medicaid, the joint federal-state health insurance program for the disadvantaged, pays for beneficiaries who are also eligible for IHS services but are forced to go outside of the IHS network for care. State and federal governments share the cost.

Without a commitment by the federal government to pick up the full cost of supplementing IHS coverage, Daugaard "is not going to suggest Medicaid expansion," says South Dakota Secretary of Health Kim Malsam-Rysdon.

IHS patients get twice as much care outside IHS as they do within it, Malsam-Rysdon says. The state would use the money it saves from supplementing IHS care to support its Medicaid expansion plan, estimated to cost between $30 million and $33 million by 2020, she says. In fiscal 2014, South Dakota's Medicaid plan paid $133 million for care provided outside of IHS for Native Americans.

Under the 2010 health care overhaul, state Medicaid programs could be expanded to enrollees with incomes up to 138 percent of the federal poverty line. The full cost is covered by the federal government until 2020, when states that expanded will be responsible for chipping in 10 percent. Already participating in the expansion are 29 states and the District of Columbia. Montana is awaiting final approval of its expansion plan from HHS.

South Dakota wouldn't be the first state to try to tie IHS to its Medicaid expansion.

Alaska expanded its so-called Healthy Alaska Plan for 42,000 beneficiaries in September after HHS Secretary Sylvia M. Burwell had signed off on the state's request for the agency to pay the full cost for Medicaid-eligible Alaska Natives and American Indians receiving care in non-IHS facilities.

Alaska Gov. Bill Walker, an independent, said in his initial July 21 letter to Burwell that the change is expected to save the state about $158 million.

"Many Alaskans are working two or three jobs to make ends meet and have not been able to afford health insurance," Walker said in a Sept. 1 news release. "The Healthy Alaska Plan ensures that working Alaskans will no longer have to choose between health care and bankruptcy."

Matt Salo, executive director of the National Association of Medicaid Directors, said that for years states have lamented being financially on the hook when IHS clinics push patients to go to non-IHS facilities. When IHS patients have to go outside IHS for care they automatically become eligible for Medicaid. This means the state has to pay for a portion of their care. He said Alaska's recent success is a step in the right direction.

"It has always been a struggle for Medicaid to say we're happy to treat them," Salo said. "You can't have IHS either abdicate its responsibility or actively try to reduce its own cost by pushing folks out of its facilities."

State Sen. Troy Heinert, a Democrat in the South Dakota legislature, says he's been pushing Medicaid expansion for years, as many of the working poor and Native Americans "have fallen through the cracks."

Congress covers an estimated 60 percent of the health care needs of eligible American Indians and Alaska Natives, according to the IHS website. However, not all IHS facilities provide the same services. Patients are often sent outside of the reservation to receive care through contracted health service providers. But with limited funding, services and medications for non-life-threatening situations aren't always available.

Heinert says he's optimistic that Daugaard's negotiations with HHS and action by the legislature can make Medicaid expansion a reality. "We live in a pretty red state, and I don't think that we've always looked at things on the human level—we've looked at it fiscally first," Heinert says. "When it comes to things like Medicaid expansion, the human cost is greater than the fiscal cost from the data that we've seen."

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