GM 14-096

IHS Proposed Rule on Medicare-Like Rate Expansion

On December 5, 2014, the Indian Health Service (IHS) published the attached proposed rule that would expand Medicare-Like Rates (MLRs) to non-hospital Purchased and Referred Care (PRC) services (formerly known as Contract Health Services or CHS). 79 Fed. Reg. 72160 (Dec. 5, 2014). Comments are due by January 20, 2015, should refer to RIN 0917-AA12, and may be submitted at

In 2003, Congress provided that hospital services would be reimbursed by IHS, Tribes and Tribal organizations, or urban Indian organizations (I/T/Us) using “Medicare-like” rates rather than the higher, billed rates charged by external providers. However, I/T/U programs often continue to pay the higher, billed rate for non-hospital services, including physician services. IHS’s proposed rule would cap the amount that I/T/Us can pay for PRC services at the Medicare-Like Rate. Specifically, the proposed rule provides that I/T/Us could only pay the lowest of (1) the Medicare rate under the applicable fee schedule, prospective payment system, or waiver; (2) the amount negotiated by a repricing agent; or (3) the amount the provider or supplier bills the general public. The proposed rule also provides that payment from an I/T/U under the rule’s guidelines would constitute payment in full, and the provider or supplier would not be permitted to impose additional charges on the patient.

Because the proposed rule would not allow I/T/Us the discretion to negotiate a higher rate, I/T/Us would effectively be prohibited from authorizing PRC services where the provider or supplier declines to accept the MLR. IHS acknowledges that this “could impact the delivery of patient care,” and it is seeking comment on whether there should be exceptions “in circumstances where it may be appropriate for the I/T/U to retain more flexibility over the payment rate.”

Please let us know if we may provider more information or assistance drafting comments on the proposed rule for Medicare-Like Rates.