Edward J. Fox, PhD

Purchased/Referred Care

Purchased/Referred Care (PRC) is one of the most important—and often misunderstood—parts of a Tribal health program.

PRC is sometimes described as if it were simply an insurance program that pays for care somewhere else.

It is not.

For many Tribal health programs, PRC is a way of helping patients obtain medically necessary services that the local program cannot provide. Managing PRC therefore requires the Health Director to understand eligibility, available resources, medical priorities, referral processes, and the relationship between local services and outside care.

PRC is part of the health system

PRC should not be managed as a program completely separate from clinical services.

A referral for outside care may reflect something that is missing or difficult to provide locally.

Patterns in PRC use can therefore tell the Health Director a great deal about the health program.

• Are patients regularly being referred for the same specialty?
• Is a local provider or service unavailable?
• Are patients traveling long distances for care?
• Are referrals increasing?
• Are there services the Tribe should consider developing locally?
• Are facilities or equipment limiting what can be provided?
• Are third-party coverage issues affecting access?

PRC data can become a management tool rather than simply an accounting report.

PRC resources are limited

One of the hardest realities for patients, staff, and Tribal leaders to understand is that PRC resources are not unlimited.

The need for outside care can exceed available resources.

That means the program needs clear policies and consistent processes for determining which services can be purchased or referred.

The Health Director cannot solve a shortage of PRC resources simply by approving every request.

Doing so may create an obligation the program cannot sustain and can ultimately jeopardize access for other patients.

Eligibility and PRC

Eligibility is closely connected to PRC.

A person may have access to some services through a Tribal health program but not necessarily qualify for every PRC service.

Residence, eligibility status, other health coverage, referral requirements, and other applicable rules can affect whether PRC resources can be used.

This is one reason eligibility decisions need to be consistent and well documented.

A Health Director should not have to decide each case based on who is asking or how much political pressure is being applied.

The program needs rules that staff can understand and apply consistently.

Third-party coverage matters

PRC and third-party coverage also intersect.

When a patient has Medicaid, Medicare, private insurance, or another source of coverage, that coverage may be relevant to how outside services are paid.

The health program therefore needs effective eligibility, billing, referral, and financial processes.

The objective is not simply to spend PRC dollars.

It is to use all available resources appropriately so that the health program can serve as many patients as possible.

Managing the referral process

A PRC referral is more than a piece of paper sent to an outside provider.

The patient needs to know:

• Where to go.
• Why the referral is being made.
• Whether the service has been authorized.
• What coverage is available.
• What happens after the outside visit.
• Who receives the information from the outside provider.
• What happens if additional services are recommended.

The last point is particularly important.

A patient may leave the Tribal health program for a specialty consultation and return with recommendations for additional testing, treatment, or follow-up.

The Tribal health program needs to know what happened.

Otherwise, the patient can effectively fall between two systems.

PRC and local services

PRC data can help answer a larger strategic question:

What should the Tribal health program provide itself, and what should it continue to obtain from outside providers?

There is no universal answer.

Providing a service locally may improve access and continuity, but it also creates workforce, facility, equipment, administrative, and financial obligations.

In some cases, purchasing the service from outside providers may be the better choice.

In other cases, a persistent pattern of referrals may indicate that the Tribe should consider developing the service locally.

That is a management decision—not simply a clinical decision.

PRC and Tribal leadership

Tribal Council does not need to manage individual PRC cases.

It does need to understand the larger picture.

• How much PRC is being used.
• What types of services account for the largest expenditures.
• Whether PRC demand is increasing.
• What services are difficult to obtain.
• How much third-party coverage is available.
• Whether there are recurring gaps in local services.
• What investments might reduce avoidable outside referrals.
• What additional resources may be required.

These are strategic questions.

When PRC problems reveal health-system problems

A growing PRC budget does not necessarily mean that PRC is being poorly managed.

It may indicate that the community has substantial unmet health needs.

It may also reveal:

• A shortage of local providers.
• Lack of specialty services.
• Aging facilities.
• Inadequate equipment.
• Workforce recruitment problems.
• Transportation barriers.
• Growing demand for services.
• Changes in the population served.

The Health Director’s job is to distinguish among these possibilities.

Sometimes the answer is better PRC management.

Sometimes the answer is additional clinical capacity.

Sometimes the answer is a facility investment.

Sometimes the answer is better coordination with outside providers.

Questions for Tribal leadership

• What are the major reasons patients are referred outside the local program?
• Which services account for the largest PRC expenditures?
• Are PRC referrals increasing or decreasing?
• Are there services that could reasonably be provided locally?
• What would it cost to provide them locally?
• Are patients experiencing delays in obtaining outside care?
• Are third-party resources being used appropriately?
• What does PRC data tell us about unmet health needs in the community?

A practical management principle

PRC is not simply a bill-paying function.

It is part of the Tribal health system.

A well-managed PRC program helps patients obtain necessary care while giving Tribal leadership and health-program management information about where the health system is working, where it is under pressure, and where additional investment may be needed.

PRC should be managed as part of the health system—not as a program operating on the side of it.

For the research behind this page, see the Indian Health Financing Series and the PRC graphics on the Graphics page.