Edward J. Fox, PhD

Medicaid Changes the Financing Picture

The Indian Health Service is not an insurance program. Medicaid is a public health
coverage program for eligible people, administered jointly by the federal government
and the states.

For American Indians and Alaska Natives, Medicaid can become a source of financing
for care provided through Indian health programs. That makes Medicaid important not
only as a coverage program, but also as a source of revenue to Indian health providers.

Enrollment Is Only the Beginning

A Medicaid enrollment count tells us how many people are enrolled. It does not by itself
tell us how much Medicaid financing reaches Indian health programs.

To understand the financing impact, we also need to consider utilization, covered
services, claims, reimbursement rates, and where care is delivered.

This distinction is central to Indian health finance research. A population estimate,
an enrollment estimate, a number of users, and a spending estimate answer different
questions.

The Indian Health Care Improvement Act Connection

The Indian Health Care Improvement Act established a direct relationship between
Medicaid and the Indian health delivery system. CMS notes that the law permitted
Medicaid reimbursement for services provided to AI/AN people in IHS and Tribal
health care facilities and provided for a 100 percent federal medical assistance
percentage for covered Medicaid services received through an IHS or Tribal facility
by eligible AI/AN beneficiaries.

That special financing rule is one reason Medicaid is so important to Indian health
finance. It means the Medicaid dollar flowing through an Indian health facility can
have a different federal-state financing structure from an ordinary Medicaid claim.
CMS continues to describe this 100 percent FMAP treatment for covered services
received through IHS and Tribal facilities by AI/AN Medicaid beneficiaries.

Why the Provider Matters

Medicaid financing is not determined solely by who the patient is. The type of
provider and the way the service is delivered also matter.

IHS and Tribal facilities can participate in Medicaid and receive reimbursement for
covered services. IHS also publishes annual All-Inclusive Rates used for reimbursement
of certain services; these rates are developed from cost reports and are used in
Medicare and Medicaid payment systems.

This is why a serious analysis of Medicaid financing should connect enrollment data
to provider and claims data rather than treating enrollment as equivalent to spending.

Medicaid and the State–Tribal Relationship

Medicaid is a federal-state program, but Indian health adds an important Tribal
dimension. Federal law and CMS policy provide specific protections for AI/AN
beneficiaries and require states to engage in Tribal consultation on Medicaid and
CHIP policies that directly affect Indians, Indian health programs, or urban Indian
organizations.

Managed care adds another layer. States and managed care organizations must account
for Indian-specific protections and relationships with Indian Health Care Providers.
CMS maintains a Tribal protections toolkit for states, plans, and Indian health
providers.

Why Medicaid Matters to Indian Health Programs

Third-party reimbursement is an important part of Indian health financing. IHS
describes third-party billing and collections as critical activities because many
AI/AN people are covered by private insurance or eligible for Medicare and Medicaid.
Revenue from these sources can augment the health services provided by Indian health
programs.

This creates an important distinction between appropriated resources
and reimbursed resources. An Indian health program may depend on its
federal base funding while also generating additional revenue when it bills a
third-party payer for an eligible service.

The Research Problem: How Much Medicaid Money?

The question “How much does Medicaid spend on AI/AN health care?” sounds simple.
It is not.

A credible estimate requires decisions about the population, the period, the definition
of AI/AN, the type of Medicaid expenditure being measured, the provider receiving the
payment, and whether the data capture services delivered through Indian health programs.

This is where enrollment research becomes valuable—but only when enrollment is connected
to the financing question. The course will later return to data sources and methods,
including the problems created when administrative enrollment counts and population
estimates do not measure the same thing.

From Medicaid to the Evidence

Medicaid is more than another line in an Indian health financing table. It is a
mechanism through which public coverage, patient eligibility, provider participation,
and reimbursement come together.

The next segment examines Medicare and the people who are covered by both Medicare
and Medicaid. Dual eligibility provides another important window into how multiple
financing systems can operate around the same patient.