1. 0 Financial Aspects of the Alaska Tribal Health Compact Presented by: Lee Olson, VP Finance, Southcentral Foundation David Mather, Mather and Assoc.

2. Overview Review of ISDEAA activities in Alaska The Alaska Tribal Health Compact (ATHC)- Financial Negotiation Issues with IHS- Resource Distribution Issues within the ATHC- Questions? 1

3. Self Determination in Alaska Alaska has a long history of regional and statewide tribal political activism, self determination and working together dating back to before the Alaska Federation of Natives (AFN)was founded in 1966 to respond to indigenous land rights which were eventually recognized in the Alaska Native Claims Settlement Act (ANCSA) in 1971. The Yukon Kuskokwim Health Corporation and Norton Sound Health Corporation first contracted to operate the IHS Community Health Aide program in 1972. After the passage of the ISDEA in 1975 Tribal Organizations began the self determination process by contracting village and community health services. Throughout the 1980s and early 1990s the Alaska Tribal Health System was focused on assuming Tribal control of IHS operations in Alaska. By 1995 the Alaska Compact was created and all IHS operating units in Alaska were operated by Tribal Health Organizations (THO’s) except the Anchorage Service Unit, and the statewide Alaska Native Medical Center (ANMC). 2

4. Self Determination in Alaska In 1997 the Alaska Native Tribal Health Consortium was authorized by Congress and formed to contract for the statewide health services of the Alaska Area Office and, in cooperation with the Southcentral Foundation, operate the Alaska Native Medical Center. The Alaska Tribal Health System is now fully tribally controlled and operated and focused on continually improving environmental quality and the access, quality and level of Native health services throughout Alaska. 3

5. The Alaska Compact Was established in FY1995 to support and encourage all tribal health providers in Alaska to continue to support a statewide, locally controlled, integrated health care system. Was established to avoid competition between Alaska Tribes and Tribal Organizations (T/TOs). (At the time Self Governance (SG) was still a demonstration project with a limited number of new Tribes eligible each year). When established a multiparty compact was not envisioned by the IHS – but the Alaska Compact was supported by the Area Director. Was open to any Alaska T/TO eligible for Self Governance. Was designed to support local sovereignty and control (individual funding agreements) while supporting and enhancing the statewide Native Health Care System(consensus decision making, joint negotiations and common resource distribution recommendations). 4

6. The Alaska Compact Has a single Compact Agreement and 25 separate co- signer Funding Agreements with individual funding tables for each co-signer. Is directly authorized by 221 of 229 Alaska tribes and serves all Alaska Natives and American Indians (AN/AI) in the Alaska Area. Includes over 741 million dollars or 98% of the IHS funding in the state. The Alaska Compact represents over 40% of all Self Governance funding in the nation. 5

7. Alaska Co-signers All co-signers rely on the common Alaska Tribal Health compact- a perpetual agreement. There are no other T-V compacts in the Alaska Area. There are a few very small T-I agreements for single villages or programs. Co-signers negotiate individual Funding Agreements (annually or less frequently) and annual funding tables. Co-signers are extremely diverse, ranging in size from single small villages serving less than 50 members to the Alaska Native Tribal Health Consortium serving the entire state (over 147,000). Financially the co-signers are very different as well ranging from small community health programs under $60,000 to a large statewide medical center and environmental health program with over 2000 employees and a budget of $400,000,000+. 6

8. Alaska Statewide Health System The Alaska Compact was designed to support an integrated statewide Tribal Health System. The Alaska Tribal Health System (compact) has over 7,500 employees in Alaska. The IHS has 35 (residual and transitional) federal employees at Area Office. The Alaska Tribal Health System (and compact) has: 180 small community primary care centers in village clinics 25 subregional mid-level care centers Seven (7) multi-physician health centers Six (6) regional hospitals Alaska Native Medical Center: tertiary care center Referrals to private medical providers and other states for complex care (‘purchased care’) 7

9. Health Resources (Tribal Shares) for One Individual or Village may be spread across Several THO’s Referred to ANMC ANMC treats patient or may refer further to Contract Care (PRC) for more complex care Referred to Regional Corp. Patient evaluated and Referred to Regional Program for outpatient treatment or purchases care, if available or referred to Regional Hospital or ANMC. Patient visits Village or Subregional System Patient may be from village or small village consortium that operated Village Health Aide Program independently. 8

10. Alaska Tribal Health System Referral Patterns 9

11. Decision Making All final common decisions affecting the compact (resource distribution and others etc.) are made through the consensus process with tribal representatives of the co-signers. The Alaska Tribal Health Compact relies on a wide range of technical experts and health and program experts and statewide standing ad hoc committees of the Alaska Tribal Health System for advice to Tribal Caucus Representatives affecting the development and financial allocation within the Alaska Tribal Health system. The Tribal Caucus has formed a special workgroup to make recommendations on resource distribution. This Tribal Share Workgroup consists of technical and tribal members (open to any caucus member) and is charged to offer recommendations to the caucus on resource distribution issues. 10

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13. Determining Overall Compact Funding Levels Key concepts Residual and Transitional Funding for Alaska Area Buyback costs and pricing Retained services and Continuing Service Agreement (CSA). Formulas for funding allocation 12

14. Associated Key Concepts means programs, services, functions, and activities (or portions thereof) that IHS carries out that an Indian Tribe may elect to carryout through a contract or compact means the associated portion of funds used by IHS to carryout the PSFAs to be contracted at all levels. (In this presentation Tribal share is also used to refer only to Area and HQ tribal shares) mean those governmental functions which only IHS must perform which cannot legally be delegated to Tribes means associated portion of funds used by IHS to carry out remaining inherent Federal functions when all other PSFAs are contracted activities IHS carries out associated funds 13

15. Total of 3 Levels of Shares are Available IHS-wide (HQ) Shares AK Portion (about 11% of national total) benefiting AK Tribes Area Level Shares* All Alaska Area funding less Residual and Transitional funds Local Level Shares Portion benefiting each Tribe or Tribal Organization plus share for “statewide services” to ANTHC and SCF. PSFA and associated funds are available for each AK co-signer from all 3 levels of the IHS. + + * Restricted somewhat by sec 325 which limits transfer of some statewide tribal shares 14

16. Funding Growth Alaska Compact IHS funding structure is changing over time- Tribal shares from Headquarters and Area Office are diminishing as a portion of all funding, from about 7% in 1995 to about 3% now. Routine increases for pay act, inflation, and population growth and facilities are shrinking while rescissions and sequesters continue to erode program funding on a recurring basis. Contract Support Costs are increasing with full funding of CSC. CSC policy, methodologies and documentation requirements are changing. Funding for CSC full funding have been one of the largest source of new funds in FY14, FY15 and FY16. 15

17. Alaska Tribal Health Funding Only applies to Headquarters and Area TS funding: Sources of Funds Annual Funding* (in thousands) Percent Area Office (Residual, Transitional and Admin support) $5,1000.7% IHS Non Recur. and IHS Grants $8,0001.1% Headquarters Tribal Share $9,0001.2% Area Tribal Shares $12,9001.7% M& I and Equipment (formula) $10,4001.4% Contract Support Costs $201,80026.7% Purchases and Referred Care (PRC)$86,40011.5% Recurring Health Services Program Base $421,80055.7% Total Annual Funding* $754,700100.0% * Estimated for FY2015. Includes T-I and T-V. Excludes Grants from Non IHS sources and 3 RD party collections 16

18. History of Funding Negotiations with IHS Early negotiations (1994-1996) for the Alaska Compact were difficult as many issues were without precedent. Negotiations were time consuming and contentious and often required multiple week long meetings to resolve. These issues included: Negotiation of Headquarters Residual and defining the national TSA formula for Headquarters Tribal share. Negotiation of Area Office Residual (Alaska Area has one of the smallest residuals in the IHS with less than.5% funding and 23 positions devoted to residual functions.) Negotiation of downsizing plan for Alaska Area Office. (Alaska Area reduced itself from over 225 employees to the current level of 35 which includes residual, transitional and buyback service support employees). 17

19. History of Funding Negotiations with IHS continued Negotiation of Continuing Service Plan and Transitional budgets for IHS services still desired by co-signers Negotiation of pricing and terms for buyback services. Establishing a process to continue to allocate or pool statewide resources in support of the Alaska Native Medical Center ANMC and selected statewide community health activities. Integrating statewide services (Area and ANMC) into the compact Dealing with Contract Support Cost issues (tribal shares and policy shifts). Most of these issues have been settled in negotiations or litigated and settled and while still subject to periodic review and updates they no longer require extensive changes in annual negotiations. 18

20. Common Factors used in IHS Resource Distribution Formulas Historical Recurring Base of Program- (primary driver of many formulas) Population- (primary driver of many formulas) IHS active user (used in most IHS formulas) IHS service population (used for Pop Growth only) Census- (used by ATHC in Alaska Tribal Share formula) 19

21. Factors in IHS Resource Distribution Formulas Modifiers for formulas- Size of program (economies of scale) Number of Tribes (used in Alaska TSA formula) Cost of care (geographical factor) Dependency on program (PRC) Need (poverty and mortality or disease incidence rates) Facility size and condition (M&I) Indirect cost rate (CSC) Level of existing funding from all sources (IHCIF-FDI) Alaska formulas for resource distribution rely on similar modifying factors but may combine and weight them differently. 20

22. National TSA Formula Each tribe or operating unit in the country gets a flat allocation per number of active users served under the compact. In FY2010 everyone around $55 per user with adjustments for pay act increases. In addition each operating unit receives an allocation based on the size of the tribe- for units with multiple tribes each individual tribe allocation is computed and summed to provide to OU. This is a dynamic formula that depends of size. Tribes between 1 and 340 active users receive an additional $73.53 per user up to total limit of $25,000 in addition to the active user allocation. Tribes between 340 (median size) and 2500 (TSA cutoff point) receive a gradually declining amount per active user (and in total) until the amount declines to $0 at 2500. Tribes over 2500 do not get any tribal size adjustment dollars in the formula. 21

23. Questions? 22

24. Principles for Resource Distribution in Alaska In the initial years of Compact negotiations the Alaska Tribal Caucus developed several principles to guide discussions of resource distribution. Support stable base budgets. Operating Unit funding once distributed is recurring to each co signer to the maximum extent possible( this now includes all funds except for some directed grant funds and national program formula funding primarily in Facilities categories. Maximize Resources to Alaska - Alaska Tribes (and co-signers) have generally agreed to work together through the Alaska Native Health Board, Alaska Tribal Caucus and other Alaska tribal entities to maximize the total funding to the Alaska Tribal Health System (not a single co-signer). United statewide position – The Alaska Native Health Board in cooperation with the Tribal Caucus develops and supports a statewide unified position on funding priorities. 23

25. Principles for Resource Distribution in Alaska - continued Alaska internal distributions Co-signers have agreed the Alaska Tribal Health system has unique needs and requirements for support which are different from IHS national requirements. It has agreed to review all new resource allocation decisions in Alaska in Tribal Caucus once resources reach the Area Office for internal fairness and support of statewide services and objectives. It has agreed to allocate all Headquarters TSA shares and Area tribal shares using a locally approved Alaska Tribal Share Adjustment Formula. Transparency - Alaska co-signers have agreed to share all financial information contained in the compact or individual funding agreements. Resource distribution decisions continue to be some of the most difficult to manage within the Alaska Tribal Caucus with all participants forced to compromise at times. 24

26. Tribal Caucus Resource Distribution Guidelines The Caucus adopted some principles to use when adopting internal Alaska resource distribution formulas. The variables used for proxy measures should be : Non Biased (collected by a third party) Reliable (replicable from year to year and across regions) Valid (measure intended funding need) Distributions normally are recurring except in rare cases where the tribal caucus agrees to make non- recurring. 25

27. Unique Financial Aspects of ATHC The Alaska Tribal compact redistributes all Headquarters TSA Tribal Share according to a unique Alaska specific tribal share formula (Alaska TSA). The Alaska Compact also uses the Alaska TSA formula from time to time to distribute other new funding coming to Alaska in designated programs. The Alaska Area Tribal compact reserves some of the Area Tribal share for federal “transitional” activities to support the Buyback and retained services provided through the Alaska Area Office. 26

28. Unique Financial Aspects of ATHC The Alaska Tribal compact includes a statewide Tribal Organization, the Alaska Native Tribal Health Consortium responsible for most of the (non primary care) statewide functions of the Alaska Native Medical Center. The ANTHC functions under a state wide BOD of special legislative authority provided by Congress. As a statewide entity the ANTHC has no “tribal share” assigned by the Alaska Tribal Caucus- requiring adjustment on many funding formulas utilized in the compact. 27

29. Unique Financial Aspects of ATHC The Alaska Tribal caucus negotiates on a common basis most decisions regarding the overall level of compact funding available in the Alaska Compact. This includes negotiating special categories such as Residual, Transitional, Buyback and centrally paid expense costs, and the costs of some retained services (OIT). The ATHC recommends to the Area Director internal distribution methodologies for most types of routine and ongoing program increase received thru the compact on a annual basis such as pay act increases, population increases, PRC increases, IHCIF increases, and ongoing program expansions. Exceptions to this are individual national PFSAs or national program formulas not affecting others in the ATHC such as: Staffing funding for new facilities Contract support funding Formula driven “Facilities” funding 28

30. Alaska Adjustments to Funding Distribution in Compact The Alaska Tribal caucus commonly modifies national funding formulas to reflect the characteristics of the Alaska Tribal Health System The tribal caucus normally reviews program increases and recommends allocations that reflect the unique characteristics of the Alaska Tribal Health System. The Tribal Caucus normally reserves a portion of most increases (normally about 25%) to support ANMC which is not included in many national allocation formulas and the Alaska Tribal Share Formula. 29

31. Determining Funding for Alaska Area Most IHS funding is distributed to Alaska and to each co- signer each year on the basis of prior year amounts (recurring stable base budgets). Increases in funding provided by Congress can be based on several formulas including: The existing recurring base for the PFSA (pay act, inflation). Special formulas such as FDI (IHCIF), PRC (Contract Health) formula, Oklahoma Formula (M&I), CSC policy and the ACC tool, pop growth, special program formula (MSP, Domestic Violence, etc.), HQE and Area tribal share formulas. Ad hoc formulas agreed to by ATHC which rely on several indicators blended to reflect, population, ongoing costs, location and size and other factors. 30

32. Alaska Tribal Share Distribution Formula The Alaska tribal health compact in 1994 determined in caucus to reallocate all headquarters tribal shares and distribute all area tribal shares on one formula. The “Alaska tribal share” formula is based on 35% population (census); 30% number of federally recognized tribes in T/TO ; And 35% recurring base. 31

33. Alaska Tribal Share Distribution Formula The formula has been extremely stable with only minor changes to the formula since adoption. In FY15 the Tribal Caucus agreed to make the Alaska TSA % recurring at FY15 levels to further stabilize funding and allow most Tribal Shares to be distributed on a recurring basis. The number of federally recognized tribes is not adjusted unless new tribes are recognized or a village (Tribe) moved its resolution. 32

34. Alaska Tribal Share Distribution Formula During the adoption of the Alaska tribal share formula there was some debate over the appropriate tribal share (if any) to reserve for the statewide services of the Alaska Native Medical Center (ANMC). The final decision of the tribal share workgroup was not to reserve any tribal share for the ANMC. 33

35. Alaska Tribal Share Formula- FY15 Co-signer rec. share of Alaska Tribal Share Formula 30% cosigner # tribes/ AK tribes (228) 35% cosigner 2010 census #/AK native census 35% Co-signer recurring FY13 base/ Total Alaska adjusted* recurring base. * Total Recurring base adjusted to remove ANTHC and VBC program costs. 34

36. PRC Program Increases Alaska The Alaska Tribal Caucus normally makes recommendations on the reallocation of PRC increases for program increases only. The national PRC allocation is normally adjusted to provide a share for ANMC based on the recurring PRC base for ANMC (approx. 25% of total increase). The remaining funding for PRC program (after the ANMC set aside) increases have normally been allocated based on the of PRC recurring base (50%) and Alaska tribal share formula (50%). 35

37. IHS Resource Distribution- Non Recurring Funding Some categories of funding are non recurring to the operating unit and are distributed according to Program Formulas, IDC rates or other agreed upon criteria. These funds are normally not redistributed by the Alaska Tribal Caucus. Facilities funding which is based on workload or facility based formulas which change very little (M&I, Eq. EHS, FSA). Other grant based or reimbursement categories (MSP/DVI) and Diabetes are based on formulas and competitive grants. Contract Support Costs (CSC) is the largest of these categories and depends primarily on the approved Indirect Cost rate and exclusions negotiated by co-signers and DHSS or DOI. 36

38. Challenges in Alaska Resource Distribution Formulas ANTHC is a statewide organization and has no Alaska Tribal Share for Area or HQ funds. Historically the ANTHC was not tribally operated when the Alaska Tribal Formula was agreed upon- therefore they had no seat in the tribal caucus when the formula was determined. The Tribal caucus has often “carved out” funds for ANTHC in distributions using the recurring base of ANTHC. ANTHC receives a large portion (about half) of “tribally restricted Area Office share” to provide statewide services under the provisions of Sec.325. Different Tribal Programs provide widely varying levels of care. 37

39. Challenges in Alaska Resource Distribution formulas- cont. Responsibilities for care for single individuals may overlap widely from village based, to regional (or subregional) to statewide (ANMC)- Most proxy formulas cannot consider this complexity. Funding base for programs is widely variable in Alaska.- Most programs are ongoing and have a need for stability- so limited new funds can address the many co-signer needs. Service populations are shifting from rural to urban programs, especially Mat-Su and Anchorage over time- again limited funds are available to address this need. 38

40. ANMC Resource Allocation One of the most difficult challenges to the ATHC is the fair allocation of resources to ANMC. As a statewide referral center providing support to all Alaska Natives and American Indians including: Direct support in sub-awards for many smaller Alaska tribal health programs. System support for statewide planning and system development, telemedicine, Medivac support. Statewide secondary and tertiary care in ANMC for all patients referred for care from T/TOs. Statewide PRC support for tertiary care. 39

41. ANMC Resource Allocation All AN/AI residents of Alaska have access to the statewide tertiary referral services of ANMC on referral of any T/TO provider in the state. Utilization of ANMC varies widely across the state due to location, scope of service in local regional hospital or health center, referral patterns and other factors Some regions have relatively low user demand of ANMC inpatient and outpatient direct services. Some co-signers have a relatively high user of ANMC field clinic services. Most patients appear to utilize tertiary care at similar per capita rates across most Tribal Health Organizations. 40

42. Section 325 of PL 105-83 (FY1998 Appropriation Act) Created the ANTHC to provide “statewide services” and defined ANTHC Tribal Board Structure Froze ISDA contracting for Statewide services by other tribal organizations. Authorized award of Statewide Services to ANTHC for both ANMC and contractible services of Area Office (including OEHE) ANTHC provided assurances to maintain statewide service levels at least at 10-1-97 level Authorized award of ANMC Primary Care Services to SCF ◦ Required SCF to maintain statewide primary care services at least the level provided as of 10-1-97. 41

43. Section 325 of PL 105-83 (c) The statewide health services (including any programs, functions, services and activities provided as part of such services) of the Alaska Native Medical Center and the Alaska Area Office may only be provided by the Consortium. Statewide health services for purposes of this section shall consist of all programs, functions, services, and activities provided by or through the Alaska Native Medical Center and the Alaska Area Office, not under contract or other funding agreement with any other tribe or tribal organization as of October 1, 1997, except as provided in subsection (d) below. All statewide health services provided by the Consortium under this section shall be provided pursuant to contracts or funding agreements entered into by the Consortium under Public Law 93- 638 (25 U.S.C. §450 et seq.), as amended, and for such purpose as defined in section 4(h) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. § 450b(h)). 42

44. Statewide Services Statewide Services from the ANTHC (formerly provided by the Alaska Area Office) include: Area Business Office Support Community Health Program Support Services CHAP Program Coordination. Certification and Training Contract Health Coordination (from Area Office) Information Technology (transferred to ANMC) Professional Recruitment and Training Support Regional Supply Service Center Environmental Health and Engineering (includes sanitation and facilities support services) 43

45. Other Agreements The Tribal Caucus also negotiates common language for agreements for support services provided by the government to tribe- Agreements are optional to tribe and government and separate from the FA- The IHS is required by statute to recover the “full costs of providing the service”. May be funded wholly with retained funding amounts left at the IHS or with Buyback Agreements or a combination of both. Includes but not limited to: Federal Personnel (IPA and MOAs) Procurement for drugs and supplies (Regional or National Warehouse Agreement) Leases and other services provided by the federal government Costs are normally based on actual cost incurred by IHS to provide the service as reconciled at end of funding period plus a very small agreed administrative fee. 44

46. Retained vs. Buyback Services IPA/MOA and other costs must be fully reimbursed to the IHS by the Tribe. The reimbursement can be through leaving all the funds with IHS (to be reconciled at end of year) to be used to reimburse full costs for the services The service can be paid for through a buyback agreement which transfers 9 to 10 months funding to the Tribe with the remainder to be paid to IHS as used (again to be reconciled at end of year) Buy Back maximizes cash flow to tribe. 45

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