Edward J. Fox, PhD

Medicare Is Another Payer in the System

Medicare is the federal health insurance program primarily serving people age 65 and older and certain younger people with disabilities or specific medical conditions. For Indian health financing, Medicare matters because eligible AI/AN patients can continue to receive care through Indian health providers while Medicare provides payment for covered services.

CMS specifically provides Medicare information and outreach materials for American Indians and Alaska Natives, including information on Parts A, B, C, and D and on working with Indian health providers.

The Four Parts of Medicare

Why Medicare Matters to Indian Health Programs

The Indian Health Care Improvement Act created a legal pathway for Medicare and Medicaid reimbursement for services provided to AI/AN people in IHS and Tribal health care facilities. That relationship has made third-party reimbursement an important part of the financing structure.

Medicare is therefore not simply a benefit available to individual patients. When eligible services are billed and reimbursed, Medicare can also generate revenue for the Indian health provider.

CMS materials emphasize that AI/AN beneficiaries can continue to use their Indian health provider while also receiving Medicare-covered services. Medicare Part D can likewise reimburse an Indian health provider for covered prescriptions when the beneficiary uses a participating plan.

Dual Eligibility Changes the Question

A person who qualifies for both Medicare and Medicaid is commonly described as dually eligible. For these patients, the question is no longer simply “Does this person have coverage?”

We also need to ask which program pays first, which program pays second, and which services each program covers.

Medicare Pays First for Covered Services

When a person has both Medicare and Medicaid, Medicare generally pays first for services covered by both programs. Medicaid may then help with remaining costs, subject to the applicable Medicaid rules and payment limits.

Medicaid can also cover services that Medicare does not generally cover or can provide additional assistance for premiums and cost-sharing through Medicaid programs such as Medicare Savings Programs.

This coordination is important for Indian health financing because one patient can generate payments from multiple coverage sources without those payments representing the same thing.

Dual Eligibles Are Especially Important in Indian Health Research

Dual eligibility provides a useful way to study the interaction of financing streams. A patient may have IHS access, Medicare coverage, Medicaid coverage, and possibly other coverage at the same time.

That makes dual eligibility valuable for studying questions about utilization, reimbursement, and the relationship between public insurance and Indian health program resources.

But it also creates a measurement problem. A dataset that counts Medicare spending and a separate dataset that counts Medicaid spending may both describe services received by the same people. The amounts should not automatically be interpreted as separate measures of unique health care need.

What Does “Medicare Spending on AI/ANs” Mean?

The phrase sounds precise, but it can describe several different measures. A study might examine Medicare enrollment, Medicare claims, payments to Indian health providers, payments for AI/AN beneficiaries, or total Medicare spending associated with a particular population.

Those are not interchangeable measures.

The same principle applies to Medicaid. Before comparing Medicare and Medicaid spending, researchers need to establish the population definition, time period, services included, and payment measure.

The Opportunity for Indian Health Programs

Third-party reimbursement can supplement the resources available to Indian health programs. Medicare and Medicaid therefore have a role that extends beyond the individual beneficiary’s insurance card.

CMS notes that payments to Indian health providers can help support health services in Tribal communities. This makes enrollment and reimbursement important indicators of the broader financing system.

The practical question is how much financing actually reaches Indian health programs, for which services, and for which populations.

Questions to Keep in Mind

From Coverage to Measurement

The first five segments have now established the basic financing architecture: the system has multiple sources, the IHS appropriation is only one source, Medicaid and Medicare bring additional financing into Indian health, and dual eligibility shows how several programs can operate around the same patient.

The next step is to ask the harder question: Is Indian health adequately financed? That requires moving from descriptions of programs and payments to evidence about spending, utilization, need, and unmet requirements.