Indian Health Service Recovery Efforts Against Commercial Health Plans

Health plans across the country are increasingly receiving demands for payment from the Indian Health Service, tribal health programs (“Indian Organizations”) and the U.S. Department of the Treasury for services provided by Indian Organizations to a health plan’s members. These claims for recovery are premised on the fact that Indian Organizations are generally considered a “payor of last resort.” 25 U.S.C. § 1623(b); see also, 42 C.F.R. § 136.61. To effectuate this principle, federal law provides Indian Organizations with a right of recovery against certain third parties, including health insurers, for services provided to a health plan’s members by an Indian Organization provider. 25 U.S.C. § 1621e(a). However, some Indian Organizations have apparently interpreted that right as unlimited. A broad, unlimited interpretation of the recovery right does not appear to be supported by the plain language of the recovery statute, which specifically states that Indian Organizations can only recover “to the same extent” that the member or a nongovernmental provider of services would be eligible to receive reimbursement if a nongovernmental provider had provided the medical service, and further, if the member had been required to pay for the medical expenses and did in fact pay them. The central question is the extent to which the statute’s “to the same extent” provision limits an Indian Organization’s recovery right, particularly in cases where a nongovernmental out-of-network provider would not be eligible to receive payment from a commercial health insurer due to a member’s coverage restrictions. If the statute is strictly construed in accordance with its apparent intent, certain health plan coverage limitations (including limitations restricting coverage for out-of-network services) would be permissible. It is important for a health plan to address any recovery demand as soon as possible. Ignoring the demand may lead to debt collection efforts by the Department of the Treasury, and limit the health plan’s options for disputing the attempted recovery.

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