In a decisive and impactful ruling, the United States Supreme Court has mandated more comprehensive reimbursement for the administrative costs incurred by tribal health care programs. By clarifying the federal government’s funding obligation under the Indian Self-Determination and Education Assistance Act (ISDEAA), the ruling significantly enhances the financial stability of Tribal Nation health care programs, enabling them to operate on equal terms with those managed directly by the Indian Health Service (IHS). This historic decision ensures that these providers will receive crucial funding to cover costs associated with furthering health care program objectives with revenue obtained from third-party payments such as Medicare, Medicaid and private insurers.

Case Background

The dispute in Becerra v. San Carlos Apache Tribe originated from a conflict over the administration of health care services and funding under IHS contracts. For context, ISDEAA allows Native American tribes to enter into contracts with IHS to administer health care programs the agency would otherwise manage itself. Under these agreements, IHS must transfer the funds it would have used to operate these programs to the Tribal government, along with an additional amount to cover “contract support costs.” These costs represent administrative expenses Tribes incur but IHS avoids by utilizing existing government resources.

Tribes also have the ability to collect payments from third-party payers—such as Medicare, Medicaid and private insurers—to further support their health care programs. The central question in this case was whether ISDEAA obligates IHS to reimburse tribes for contract support costs associated with services that yield these third-party payments.

The Supreme Court’s Ruling

In a 5–4 decision, the Supreme Court sided with the San Carlos Apache Tribe, holding that ISDEAA indeed requires that IHS cover contract support costs for Tribal healthcare programs financed by third-party payments. The ruling highlights that the program income received from these third-party payments is “directly attributable” to the ISDEAA contracts between Tribes and IHS. By affirming the obligation to fund these costs, the Court has reinforced the principle that Tribal health care programs should be supported on equal footing with those operated by IHS.

Impact on Tribal Grantees

For Tribal grantees, the Supreme Court’s ruling will likely mean increased financial stability and should bolster Tribes’ ability to allocate more resources toward necessary administrative infrastructure, improving program efficiency and ensuring compliance with federal regulations without diverting funds from direct healthcare services. The assurance of comprehensive reimbursement allows Tribal grantees to focus on improving health outcomes for their communities without the burden of unmanageable administrative costs. Ultimately, this decision strengthens Tribes’ capacity to deliver culturally appropriate and sustainable healthcare services, fostering greater self-determination and sovereignty in healthcare management.

Feldesman attorneys will continue to monitor IHS and other federal agency responses, including new regulations and ensuing agency policies and procedures to implement this important development in IHS funding.

If you have any questions about this decision or other matters relating to Tribes and Tribal Organizations, please contact Phillip A. Escoriaza (pescoriaza@feldesman.com) or call 202.466.8960.