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FY 2006 Budget in Brief

Indian Health Service

The Indian Health Service raises the physical, mental, social, and spiritual health of American Indians and Alaska Natives to the highest level.

The FY 2006 budget request is $3.8 billion, a net increase of $72 million over FY 2005. Indian Health Service (IHS) funding increases are targeted toward the provision of services to a growing population of eligible Indian people. IHS will continue to seek ways to become more efficient and effective in internal operations, helping to leverage funding towards services while improving service quality.

Agency Description

As part of the Federal government's special relationship with Tribes, IHS provides health care to members of more than 560 Federally recognized Tribes. An estimated 1.8 million American Indians and Alaska Natives will be eligible for IHS services in 2006, an increase of 1.6 percent over 2005 and 9.4 percent since 2001.

Care is provided directly in 49 hospitals, over 240 outpatient centers, and over 300 health stations and Alaska village clinics located primarily in the Southwest, Oklahoma, the Northern Plains, and Alaska. Tribes currently operate 15 of the hospitals and 80 percent of the smaller facilities under self-determination agreements with the Agency. IHS also contracts with hospitals and health care providers outside of its own network to provide care for Indian people. In addition to providing traditional inpatient and ambulatory care, IHS and Tribes provide extensive disease prevention and health promotion activities, including sanitation construction to provide water and waste disposal for Indian homes, diabetes prevention and disease management, injury prevention, mental health services, and alcohol and substance abuse treatment and prevention. IHS also funds 34 urban Indian health organizations which provide access to care for Indians living in urban areas.

Continuing to Serve a Growing Population

The challenge for IHS is to continue to provide access to quality health care for an increasing population. Additional funding in the FY 2006 budget is targeted to the provision of additional services.

Population and the Cost of Providing Care: The budget includes new funds to provide for the additional 29,000 people who are expected to seek services in FY 2006, cover increased pay costs for the Federal and Tribal employees who provide these services, and meet the rising costs of providing these servi-ces. Based on past experience, these funds will pay for a variety of additional services, including 116,000 additional outpatient visits in IHS and Tribally operated facilities, 7,800 additional outpatient visits purchased from outside the IHS system, and 4,200 additional days of inpatient treatment for alcohol and substance abuse. Funds will go primarily to Clinical Services - operation of hospitals and clinics, purchase of medical care - but also to other IHS programs which are providing additional services and are experiencing increased costs. Tribally operated programs will receive funding on the same basis as the programs IHS operates directly.

Opening New Health Facilities: Additional funds are included to staff six new outpatient facilities in FY 2006, placing larger and more modern health facilities in the areas which most need them to provide additional health services. Tribes have financed construction of two of these facilities, saving IHS $22 million in construction costs. When fully operational, these facilities will increase the number of primary care visits that can be provided at these sites by nearly 75 percent and allow the provision of new services - 24-hour emergency rooms, physical therapy, wellness centers, upgraded diagnostic imaging and laboratory services, and expanded dental services. Including these 6 sites, IHS has opened 13 new health facilities since 2001.

Benefits of Improved Blood Control

IHS has been able to increase the proportion of its diabetic patients who maintain good blood sugar control from 25 percent in FY 1997 to 34 percent in FY 2004. This increase is important. NIH-supported clinical trials have found that an improvement in blood sugar control from poor to ideal results in a 42 percent decrease in total mortality for people with diabetes.

This increase was achieved even while the total number of diabetics the IHS served increased 45 percent during this period.

Special Diabetes Program for Indians: Through the Special Diabetes Program for Indians, IHS provides funds to over 300 Tribes and Indian organizations. In FY 2006, IHS will award $150 million - for a total of $650 million in the last five years - to support diabetes prevention and disease management at the local level. The program has substantially increased the availability of services - physical activity specialists; registered dieticians and nurses; wellness and physical activity centers; newer and better medications - which has led to a steady increase in the percentage of diabetic patients with ideal blood sugar control. IHS has recently revised the way it distributes program funds by adding a competitive element in addition to the existing formula grant. In November of 2004, IHS awarded $24 million competitively, funding 66 Diabetes Program demonstration project grants. Thirty-six grants were awarded for prevention of diabetes and 30 were awarded for reduction of cardiovascular disease in people with diabetes. Successful applicants demonstrated a significant burden of diabetes, prior demonstrated success at prevention or treatment, the basic health infrastructure to support planned interventions, and evidence of successful compliance with past program requirements.

Urban Indian Health Program: While most IHS services are provided on or near reservations, approximately one percent of the budget is used to provide services to Indian people living in urban areas. Clients of the Urban Indian program commonly experience barriers in accessing basic health services; examples of such barriers include poverty, lack of health insurance, lack of cultural awareness on the part of health professionals, unemployment, and homelessness. IHS funds a total of 34 Urban Indian health organizations to reduce barriers to access in urban areas. In FY 2006, Urban Indian health is funded at $33 million. Urban Indian health organizations also typically leverage funding in order to maximize service provision. IHS provides about half of all funding available to these organizations. Other major funders include Medicaid, State and local programs, and other Federal programs separate from IHS. Services provided vary from outreach, referral and case management to comprehensive care, including: ambulatory medical care; dental services; community education (health education, transportation, patient advocacy); alcohol and substance abuse prevention, treatment and counseling; AIDS and STD information; mental health counseling; and social services.

Health Insurance Reimbursements: In FY 2006, IHS expects to receive a total of $642 million in health insurance reimbursements, including Medicare, Medicaid, and payments from private insurers. This amount represents an increase of $9 million over FY 2005 estimated collections. IHS facilities receive Medicare and Medicaid under a cost-based methodology developed in close cooperation with the Centers for Medicare & Medicaid Services. Health insurance collections are an essential element of the funding that supports IHS hospitals and clinics. In some cases, insurance revenue represents up to 50 percent of the operating budget of a given facility. This revenue allows IHS to hire additional medical staff and supports activities related to facility operations, such as supplies, equipment, and building utilities and maintenance.

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) included several provisions that benefit the American Indian and Alaska Native (AI/AN) population. IHS estimates the transitional assistance credit of $600 per year for low-income Medicare beneficiaries, including AI/ANs, could provide $10 million in new Medicare revenue for prescription drugs dispensed at IHS facilities in FY 2005. The Medicare Part D prescription drug benefit program, when implemented in January 2006, will extend outpatient prescription drug coverage to IHS Medicare beneficiaries and increase Medicare revenues at IHS facilities. Other sections of the MMA expand the benefits covered under Medicare Part B for IHS beneficiaries and allow the IHS to pay for additional medical care by increasing its bargaining power when buying services from non-IHS Medicare-participating hospitals.

Construction: The budget includes a total of $94 million for Sanitation Construction to provide safe water and waste disposal systems to an estimated 20,000 Indian homes. The sanitation program has played a key role in decreasing the rates of infant mortality, gastroenteritis, and other environmentally related diseases over the last thirty years. Consistent throughout HHS, FY 2006 requests for facilities funding focus on maintenance of existing facilities; no funding is requested to initiate new projects. A total of $3 million is included for health facility construction, sufficient to fully fund the Fort Belknap staff quarters project. The Fort Belknap project will provide 24 units of new and 5 units of replacement staff quarters for the Harlem and Hays outpatient facilities in Montana. Available decent local housing makes it easier to recruit and retain health professionals at remote sites.

Improving Service Delivery

IHS is continually working to improve its internal operations so as to target as much funding as possible towards needed services. To this end, IHS will implement a new organization plan, and continue the implementation of new information technology to make patient health records easier to access and track, and to streamline insurance billing processes. Headquarters Reorganization: Following two years of planning and tribal consultation, IHS announced a reorganization of its headquarters in July, 2004. The reorganization eliminated an administrative layer and moved those offices which had direct contact with Tribes, tribal organizations, and Urban Indian programs into the Office of the Director. The goals of the reorganization are: improved management - with more focus on results rather than oversight; better alignment with field programs; and improved collaboration between IHS and other HHS programs - all leading to improved health care for Indian people.

Electronic Health Records: Information technology is vital to improving the efficiency and quality of health facility operations. By improving the quality of patient data, facilities are able to both increase the quality of services and improve operations efficiency. IHS has been a leader among HHS agencies in the use of information technology to improve health facility operations. The majority of IHS facilities currently use a software system that stores patient information and offers the ability to keep life-long medical records for patients. This software will be used to create an electronic health record (EHR) system with clinical case management capabilities for five diseases prevalent among Indian people: diabetes, coronary vascular disease, asthma, HIV, and obesity. The EHR will be implemented in 32 sites by the end of 2005 and IHS anticipates full implementation by 2008. The EHR will:

Improve patient safety through direct provider order entry;
Reduce risk to patients through improved and more legible documentation;
Strengthen protection of private health information through electronic security;
Improve quality of care through better documentation of services provided to each patient; and
Increase cost efficiency through improved billing capabilities.

Indian Self-Determination

Tribes continue to increase the number of IHS programs they operate. In FY 2006, Tribes will control an estimated $1.8 billion, or 55 percent of IHS's total budget request. To enable Tribes to develop the administrative infrastructure critical to their ability to successfully manage these programs, the budget includes a total of $269 million for contract support costs, an increase of $5 million over FY 2005. The additional funds will allow IHS to provide contract support costs for the 20 to 25 additional programs it anticipates Tribes will want to take over administration of in FY 2006.

As part of the Federal Government's special relationship with Tribes, an HHS-wide budget consultation session is held annually to give Tribal leaders the opportunity to consult with HHS on budgetary issues which concern them. In order to bring Indian issues to the attention of all parts of the department, the Intradepartmental Council on Native American Affairs was reactivated in 2002. The Council consists of the heads of all HHS agencies and other senior staff.

IHS Funds Managed by Tribes

(Dollars in Millions)
	2004	2005	2006
IHS Funds Managed by Tribes	$1,677	$1,718	$1,769

FY 2006 Budget in Brief Home

Last revised: March 28, 2005

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