Native American and Tribal Medicare

Native American Medicare beneficiaries occupy a legal and operational space in the federal health system that has no parallel. They hold sovereign treaty rights to healthcare through the Indian Health Service, a system created to fulfill the federal government’s trust responsibility to tribal nations. They are simultaneously Medicare beneficiaries, entitled to the same coverage as every other person over 65 or qualifying through disability. The interaction between those two systems produces a coverage architecture that is more complex, more fragmented, and more dependent on administrative capacity at the facility level than anything in mainstream Medicare policy analysis. IHS serves approximately 2.6 million American Indian and Alaska Native people across 37 states. Among those who are Medicare-eligible, the question is not whether they have coverage in theory. It is what that coverage produces in practice when the system designed to serve them is funded at roughly half the level needed.

The Medicare-IHS Interface

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IHS facilities and tribally operated programs under P.L. 93-638 self-determination contracts and compacts are authorized to bill Medicare for services provided to eligible Medicare beneficiaries. The billing operates on an encounter-based system: IHS and tribal facilities are reimbursed at the All-Inclusive Rate published annually in the Federal Register by HHS, a single per-encounter payment that covers all services delivered during a qualifying visit. For fiscal year 2024, projected third-party collections for the IHS system totaled approximately $1.8 billion, of which $252 million came from Medicare, $1.3 billion from Medicaid, and $213 million from private insurance.

Medicare beneficiaries receiving care at IHS or tribally operated facilities are exempt from Medicare cost-sharing. The federal government covers the cost-sharing obligation as part of the trust responsibility. This exemption is operationally significant: a Native American beneficiary who receives a Medicare-covered service at an IHS or 638 facility pays nothing out of pocket, a protection that does not extend when that same beneficiary receives care from a non-IHS provider using their Medicare coverage.

The coverage scope matters more than it appears. Medicare covers a broader range of services than IHS base appropriations can fund. When a Medicare-eligible tribal member presents at an IHS facility, the facility can bill Medicare for covered services that IHS funding alone could not support. This interaction creates a coverage expansion effect: the combination of IHS infrastructure and Medicare billing authority produces access to services that neither system alone would deliver. The effect is real but unevenly realized. Many smaller tribal health programs lack the administrative capacity, billing infrastructure, and coding expertise to capture the full Medicare revenue they are entitled to. Revenue left on the table is not an abstraction. It represents services not funded, positions not filled, and capacity not built.

The 638 landscape is substantial and growing. Tribally operated health programs under self-determination contracts and compacts now manage a significant share of IHS-funded services, operating with more local control over staffing, budgeting, care models, and payer contracting than IHS-operated facilities. Some tribal health systems have built sophisticated revenue cycle operations. Others, particularly smaller programs in remote areas, operate with minimal billing staff and limited EHR capacity. The administrative infrastructure gap is not uniform. It is correlated with tribal government size, geography, and the availability of health administration professionals willing to work in reservation and rural settings.

The Coverage Gap Architecture

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When an IHS or 638 facility cannot provide a needed service, the Purchased/Referred Care program is the primary mechanism for paying outside providers. PRC is the system through which IHS funds specialist referrals, hospitalizations, emergency care, and other services unavailable within the IHS network. It is chronically underfunded relative to need.

PRC operates on a priority system. Medical services are categorized by urgency, with life-threatening emergencies at the highest priority level and elective or preventive services at the lowest. As of November 2024, 98 percent of IHS federal sites were able to fund referrals at medical Priority 3 or higher. That statistic means that elective procedures, some preventive services, and lower-acuity specialist consultations routinely fall below the funding threshold. For an elderly tribal member who needs a hip replacement, cataract surgery, or colonoscopy, PRC may not cover the referral.

When PRC declines to fund a referral, the beneficiary’s option is to use their Medicare coverage to access the service through a non-IHS provider. In practice, this fallback is not straightforward. Some beneficiaries have deferred Part B enrollment because IHS care was available without premiums. Some face Part B late enrollment penalties accumulated during years when they relied on IHS and did not enroll. Network access in rural reservation areas is limited, with the nearest specialist sometimes hours away. The claims process requires navigating standard Medicare administrative procedures without the support infrastructure that IHS provides within its own system.

The Consumer Financial Protection Bureau’s analysis found that 8 percent of Native Americans living in Census tracts with majority Native American populations had medical debt in collections from 2021 to 2023, compared to a national average of 4 percent. In tracts without an IHS facility, the figure was 11.5 percent. Average medical debt for Native Americans was $4,000, one-third above the national average. Much of this debt traces to PRC administrative failures: authorized referrals where IHS did not pay the provider in a timely manner, providers who billed patients for services that should have been covered, and the documentation gaps that leave beneficiaries caught between two systems.

The enhanced ACA premium subsidies that expired on December 31, 2025 have compounded the coverage gap problem. Tribal health insurance programs that leveraged the subsidies to expand coverage for their members are now facing dramatically higher costs. The Urban Institute estimates 125,000 Native Americans will become uninsured in 2026 as a result. The downstream effect on IHS and tribal facilities is increased PRC demand from patients who no longer have insurance to cover outside referrals, further straining a program already funded at levels that ration care.

State Variation and the Most Affected Markets

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The geographic distribution of Native American Medicare beneficiaries concentrates the interface problems in specific states.

Arizona is home to the Navajo Nation, the largest reservation in the United States, with an IHS service area that spans Arizona, New Mexico, and Utah. The Navajo Area IHS operates hospitals and health centers across a geography the size of West Virginia. WISeR’s prior authorization requirements, applied to Original Medicare, create an additional administrative burden in a state where many Native American beneficiaries remain in FFS Medicare because MA plan availability on reservations is limited and because the IHS cost-sharing exemption applies differently in the MA context.

Alaska presents a distinct set of challenges. The Alaska Native Tribal Health Consortium is the largest tribally operated health system in the country. Alaska’s geography creates extreme PRC utilization pressure because specialty care requires travel to urban centers that may be accessible only by air. The cost structure of PRC in Alaska is fundamentally different from the lower 48.

Montana, South Dakota, and North Dakota have Plains tribal health programs with high rates of Medicare and Medicaid dual eligibility. The dual eligible integration complexity covered in Series 9 layers on top of the IHS-Medicare interface, creating three-system coordination problems for beneficiaries who are simultaneously IHS-eligible, Medicare-enrolled, and Medicaid-covered. Medicaid expansion in Montana has been a significant revenue source for tribal facilities, with all services provided at IHS qualifying for 100 percent federal Medicaid reimbursement at no cost to the state. Whether Medicaid expansion survives OBBBA-driven budget pressure in these states directly affects the revenue base of tribal health programs.

The AHEAD and ACCESS CMMI models raise participation questions for tribal health systems. AHEAD’s geographic accountability structure could theoretically include IHS and 638 facilities operating in AHEAD states, but the model’s design was not built with the IHS billing and cost-sharing architecture in mind. ACCESS, focused on chronic disease management through digital health, is relevant to a population with diabetes prevalence rates several times the national average, but participation requires technology infrastructure and connectivity that reservation-based programs may not have.

What Policy Can Do and What It Cannot

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IHS appropriations are the root constraint. The agency’s FY 2023 budget was approximately $6.96 billion. The Tribal Budget Formulation Workgroup has estimated that $51 billion would be needed to provide adequate health services and address existing health disparities. IHS was funded through advance appropriations for the first time in FY 2024, a structural improvement that protects the agency from government shutdowns, but the FY 2025 appropriation dropped to $5.19 billion. Per capita IHS spending remains roughly one-third of Medicare per capita spending and half of Veterans Health Administration per capita spending.

PRC funding adequacy is the most immediate pressure point for Medicare-age tribal members. Closing the PRC funding gap would allow referrals at lower priority levels, reducing the number of elderly tribal members who must navigate Medicare independently for services IHS could have coordinated. The legislative history of PRC underfunding is long and the appropriation has never matched need.

Medicare administrative simplification for tribal facilities would address a different dimension of the problem. Investing in billing infrastructure, coding capacity, and EHR interoperability at smaller 638 programs would increase the Medicare revenue these facilities capture, expanding the services they can provide without requiring additional appropriations. CMS has a Tribal Affairs Group and the American Indian/Alaska Native Center, but the technical assistance available has not matched the scale of the infrastructure gap.

CMS is required to consult with tribal governments on Medicare and Medicaid policy changes that affect tribal populations. The tribal consultation process has produced meaningful input on specific regulatory proposals but has not generated systematic changes to the Medicare-IHS interface. The data problem persists: Native American beneficiaries are underrepresented in Medicare administrative data analyses because sample sizes in most counties are too small for reliable subgroup reporting. National analyses that aggregate to the “American Indian/Alaska Native” category obscure the variation between a Navajo beneficiary in northeastern Arizona and an Alaska Native beneficiary in Bethel.

The question for Medicare policy is whether Native American beneficiaries are part of the population that payment reform, innovation models, and quality measurement are designed to reach. The honest answer, at present, is that the systems designed to produce accountable, coordinated, high-value Medicare care have not been built with the IHS interface in mind. Until they are, the coverage that Native American Medicare beneficiaries hold on paper will continue to diverge from what that coverage delivers in practice.

Related Reading

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MCR-11_03 Colorado and Utah: Frontier Medicare in Conservative Policy Environments MCR-11_04 Arizona and Nevada: Sun Belt Medicare in the WISeR Era