Rounds Requests Audit of Indian Health Service
July 6, 2016
WASHINGTON – U.S. Senator Mike Rounds (R-S.D.) today formally requested an audit of the financial aspects of hospital and health care, medical services and overall financial management at Indian Health Service (IHS). In a letter sent to the Inspector General of the U.S. Department of Health and Human Services (HHS), Rounds outlined specific areas of focus for the audit based on an in-depth profile analysis conducted by Rounds and his staff.
“Despite the agency’s well-documented history of failing to meet trust obligations by not providing quality health care, there has never been a systemic review of IHS to address and ultimately reform these issues in attempt to improve health outcomes for tribal members. Furthermore, there has been a continuing lack of consultation with the tribes,” wrote Rounds.
“Based on our review, our office has identified primary areas of concern with IHS’s administrative management, financial management and the quality of care delivered at IHS facilities. We are attempting to address many of the administrative concerns through legislation in the House and Senate. We believe an audit, similar to what was recently conducted at the Veterans Health Administration, which identified shortfalls and recommended solutions, is a potential model for addressing these critical financial and quality issues within IHS.”
During a Senate Indian Affairs Committee field hearing in Rapid City on June 17, 2016, HHS Acting Deputy Secretary Mary Wakefield stated that she ‘would welcome’ such an audit. Similarly, on April 15, 2016, the Great Plains Tribal Chairman’s Association passed a resolution urging Congress to demand an audit of IHS.
The full text of the letter is available below:
July 6, 2016
The Honorable Daniel R. Levinson
U.S. Department of Health & Human Services
Office of Inspector General
330 Independence Avenue, SW
Washington, DC 20201
Dear Inspector General Levinson:
Pursuant to the United States trust obligations to Native American tribes, the federal government established Indian Health Service (IHS) to provide health care for federally recognized tribal members. However, for decades IHS has been criticized by tribes and federal officials for their shortcomings outlined in numerous Government Accountability Office (GAO) reports. Despite the agency’s well-documented history of failing to meet trust obligations by not providing quality health care, there has never been a systemic review of IHS to address and ultimately reform these issues in attempt to improve health outcomes for tribal members. Furthermore, there has been a continuing lack of consultation with the tribes.
Most recently, a Great Plains Area hospital diverted emergency services because the hospital has been unable to meet basic requirements set by the Centers for Medicare and Medicaid Services (CMS). It now faces potential termination of its CMS certification. Additionally, a second hospital within the Great Plains Area lost its CMS certification and two other Great Plains Area hospitals are in jeopardy of losing this necessary requirement. We believe these CMS issues plaguing the Great Plains Area IHS facilities appear to be symptoms of a larger problem.
Therefore, our office has been researching IHS’s history, funding, systems management and organizational structure. During our review, we have evaluated GAO reports, Congressional Research Service (CRS) publications and the Department of Health and Human Services (HHS) fiscal year budget books. Further, we have had discussions with IHS officials and continue to have frequent communication with tribal leadership. Our analysis strongly suggests there are indeed systemic management and quality concerns. In the Great Plains Area, particularly in South Dakota, this issue has reached a crisis stage. People are literally dying waiting for a solution.
Based on our review, our office has identified primary areas of concern with IHS’s administrative management, financial management and the quality of care delivered at IHS facilities. We are attempting to address many of the administrative concerns through legislation in the House and Senate. We believe an audit, similar to what was recently conducted at the Veterans Health Administration, which identified shortfalls and recommended solutions, is a potential model for addressing these critical financial and quality issues within IHS. Such action is supported by the Great Plains Tribal Chairman’s Association, which recently passed a resolution calling upon Congress to demand an audit of IHS (enclosed).
I specifically mentioned the idea of an IHS financial audit to HHS Acting Deputy Secretary Mary Wakefield during the Senate Committee on Indian Affairs field hearing on June 17, 2016. Dr. Wakefield responded that HHS “would welcome” such an audit. With your support and understanding of the need to identify issues of concern with IHS, I am respectfully asking you to pursue this important investigation. My request is as follows:
AUDIT OF THE HEALTH CARE DELIVERY SYSTEMS AND FINANCIAL MANAGEMENT PROCESSES OF THE INDIAN HEALTH SERVICE.
I am respectfully requesting that you conduct an audit of the financial aspects of hospital and health care, medical services and overall financial management of Indian Health Service (IHS) within the Department of Health and Human Services. I request the audit address each of the following:
Budget Allocation and Distribution: There is no funding formula to determine how the budget is distributed between regions; just historical distribution.
1. How is IHS able to appropriately operate without an overall funding formula? How does IHS arrive at their distribution decisions without a formula? Are there specific reasons for not having such a formula?
a. How are area directors informed of their budget allocation and how are they instructed to distribute their allocation amongst the area’s facilities?
b. Are local facilities able to manage their own budget or do they wait to receive allocation from the area office?
2. IHS has previously estimated that, in FY2015, it would have needed an additional $645 million to provide additional services for Purchased and Referred Care (PRC) eligible IHS beneficiaries. What is a realistic analysis of PRC shortages?
a. How does each area employ their PRC program and medical priority levels?
b. Why do different areas have different medical priority levels?
3. Is the amount spent on administration compared with direct health care comparable to private health care standards?
a. What is the allocation of budget spent on administration compared with the allocation of budget spent on direct health care?
b. Does this vary between IHS-operated and Tribally-operated facilities?
c. Tribal members report that a facility may have a number of vacant positions, yet the facility is not actively advertising employment opportunities. There is speculation that some full-time equivalent (FTE) positions are created with no intent to fill, but to support a high salary classification for a supervisor. Are there FTE employees that IHS has no intention to fill/has not filled for over 36 months?
i. Since the vacancy rate is so high, what happens with the budgeted personnel money that is not spent because FTE’s are open? Is this money redeployed?
ii. If so, how is the redeployment of funds determined?
d. According to IHS’ annual budget book, there are 3700 “Medicaid reimbursable FTE.”
i. How many are certified coders?
ii. Is this amount necessary?
4. Are there consistent tracking of “dual eligible” patients (e.g. Patients eligible for Medicaid, IHS and/or other federal healthcare programs)?
a. How are “dual eligible” patients managed?
5. We noticed extreme discrepancies in the HHS Fiscal Year (FY) 2017 Budget Book for IHS. The FY2017 annual budget book showed that IHS intended to spend $40 million more on tribally-operated facilities compared to federally-operated facilities in the Great Plains Area, even with the area being highly IHS-operated. IHS/HHS officials analyzed this discrepancy and recently posted revised documents showcasing almost an $80 million change in funding distribution in the Great Plains Area alone. Were these errors only documented incorrectly, or was this funding inappropriately distributed too? What was the budget justification for suddenly correcting the error? How many years has this error gone unnoticed?
a. Were area directors made aware of this error? If so, when?
b. If the funding was correctly distributed, how were area directors correctly distributing this funding while not noticing the budget book error?
Facilities and Asset Management: Management structure and process for construction and maintenance projects, the facilities leasing process, the purchasing, distribution and use of pharmaceuticals, medical and surgical supplies, medical devices and equipment.
1. How are long-term growth facility construction plans determined? Is there a priority based upon population trends, history and care demands? What analysis is considered? Are buildings depreciated at a 30-year lifecycle? What happens at the end of the lifecycle, are they remodeled or replaced?
2. Is the maintenance budget updated/increased to reflect increase maintenance expense with the addition of new facilities? Is the increase enough to support the growth of facilities?
3. How is equipment purchased and deployed? Is there a comprehensive plan for maintaining basic necessary equipment? How do facilities request equipment maintenance and upgrades? What resources are available to satisfy these requests?
4. How many procurement contracts/awards were authorized by IHS utilizing the Buy Indian Act (48 C.F.R. 370.501) authority? How does this compare to all awards/contracts made through IHS in the last five years?
a. What process do IHS facilities use to ensure compliance with 48 C.F.R. 370.501?
Transparency: There has been a lack in transparency in the culture of IHS for many years. Tribal leadership has consistently requested for increased transparency and more open communication between the IHS and the people they serve.
1. How are tribal/residual shares determined for each tribe? What are those share amounts?
2. How are funds distributed from area office budgets to local service units? Are there set formulas or budgets for this?
3. How does IHS audit or evaluate that funds were distributed appropriately?
a. Are there periodic or end-of-year records to document how the budget is actually distributed?
b. Are these records audited following generally accepted accounting principles (GAAP)?
4. Are there checks and balances to assess potential fraud or misuse of funds?
We look forward to working with you to address the issues we have already identified and to learn more about other issues that your investigation uncovers. My office would be happy to provide any resources available to us to assist in your efforts. We would also be available to meet to discuss any questions or refinements to this request. Please contact Gregg Rickman of Senator Rounds, at 202-224-5842 if you or your staff have any questions concerning this request.
M. Michael Rounds
United States Senator