Native Americans are twice as likely as others to have overdue medical bills in collection, and major problems within the Indian Health Service are a key reason, a new federal report shows.
The December report from the Consumer Financial Protection Bureau found that 8% of Native American people living in Census tracts with a majority Native American population had medical debt in collections from 2021 to 2023, compared to a national average of 4%. The figure is higher in Census tracts without an IHS facility, at 11.5%. The bureau found that Native Americans had an average of $4,000 in medical debt, 33% above the national average.
In many cases, the report found, the problems stem from major issues within an IHS program that refers patients to outside providers for medical care and then often doesn’t pay the bill — leaving patients on the hook for debts that should not be their responsibility.
“The pervasive challenges in the Purchased/Referred Care program — administrative delays, billing errors, and rationed budgets — not only burden Native consumers with debt they should not owe but also deepen health disparities and erode trust in the system designed to serve them,” the report said.
There are proposals at the federal level to erase medical debt from credit reports, including proposed legislation and a Biden administration plan, but with a new president and congressional majorities, the status of those potential changes is uncertain.
U.S. Rep. Kim Schrier, a Washington Democrat who has two bills before Congress that aim to address issues with the IHS’ billing processes and the disproportionate medical debt held by Native Americans, says the high rate of debt for Native Americans is “particularly egregious” since they are guaranteed coverage by the IHS.
“You’ve been promised this by the Indian Health Service, and now (it’s) putting people in a predicament where they may not go see the specialist they would (if) they had been referred to because they were worried about whether IHS would pay, or whether they would be on the hook for a bill that they could not possibly afford to pay,” Schrier said. “So it has had health impacts, and financial and emotional impacts.”
The federal analysis reaffirms recent reporting by InvestigateWest that examined the disproportionate medical debt and lack of access to health care for Native Americans, finding that administrative delays, billing errors and insufficient funding often leave patients responsible for medical costs that should be covered by the IHS. This remains a problem for tribal communities in the Northwest, especially those receiving health care services directly through the Indian Health Service.
Although Medicaid expansion has proven effective in reducing debt for Native Americans, significant gaps remain in states that chose not to expand Medicaid, such as Idaho.
The Indian Health Service, a federally operated health care provider, was created in 1955 to help fulfill the federal government’s trust obligations to Native American tribes — legal and moral obligations to protect tribal lands, assets, resources and tribal sovereignty, which the Supreme Court has affirmed includes health care.
The Purchased and Referred Care Program is intended to provide speciality and emergency care to Native American patients when the services are unavailable at IHS facilities, but bureaucratic issues and systemic underfunding undermine its effectiveness, leaving thousands of patients with unexpected medical debt when it fails to perform as designed.
The analysis found a multitude of problems undermining the success of the referred care program, including administrative complexities, strict eligibility requirements and payment delays.
“Consequently, providers often inappropriately bill patients for care that has been authorized for payment through the IHS system, leading to coerced payments or collections fees even for bills patients do not owe,” the report says.
As InvestigateWest reported last October, Native Americans in the Northwest, particularly citizens of the Confederated Tribes of the Colville Reservation, have been left with substantial medical debt as a result of the IHS’ failure to pay bills for care received through the agency’s referred care program. The tribe, which receives all of its health care services directly through IHS, has just one doctor at the local clinic, forcing its citizens to travel long distances for basic care, which then often results in billing issues.
The administrative complexity of the program contributes to the problem. It requires patients to meet strict eligibility requirements pertaining to where they live and where they are treated. Patients must also notify the agency within three days when emergency care is needed, then secure preapprovals before obtaining specialty care. The report notes that these requirements are prone to delays and errors, increasing the chances that patients are improperly billed or sent to collections.
The report highlights further problems, including providers’ noncompliance with program regulations — particularly the practice of providers demanding patients sign liability waivers that make them responsible for costs that should be covered by the IHS. Such practices violate federal law, the analysis notes.
A primary issue within the referred care program is payment delays. There are multiple processes prone to error that the IHS follows before providing reimbursement for purchased and referred care, including verifying patients’ use of alternative insurance, like Medicaid or private coverage. The IHS is strictly a payer of last resort, meaning patients must exhaust all other options for payment before the IHS will cover services.
The IHS is underfunded as a whole, and the purchased and referred care program in particular is severely limited in funding, resulting in rationed care for life-threatening conditions. Patients with less-urgent needs often face denials for coverage or must wait for care until additional funding is available, exacerbating well-documented health disparities affecting Native American communities.
The chairman of the Confederated Tribes of the Colville Reservation, Jarred-Michael Erickson, said in a July 2024 letter to Congress the issues with IHS payments have caused serious problems for his citizens.
“On the Colville Reservation, these management deficiencies have resulted in tribal members having their credit negatively impacted because of unpaid medical bills, fewer health providers, and even deaths,” Erickson said.
After patients are sent to collections, the analysis notes, many are unaware they are carrying medical debt until it shows up on their credit report, making a positive resolution for the patient unlikely even if the agency eventually pays the outstanding bills.
Payment issues for providers in the referred care program are so prevalent that some leave the program altogether.
Congress is working on two bills to address the issue, the Protected Native Americans Credit Act and the Purchase and Referred Care Improvement Act, both co-sponsored by Schrier, who represents Washington’s 8th Congressional District. She said the harm caused by unforeseen medical debt can be devastating for Native Americans in her district.
“When somebody’s credit report is impacted, then they have trouble with insurance rates and buying a house, and buying a car and other things,” Schrier said. “But there’s also the emotional impact when people are getting hounded by credit agencies, and there’s the dignity of, you know, being able to go and get the health care you need.”
Schrier’s proposed bills, co-sponsored by Rep. Dusty Johnson, R-S.D., would retroactively remove the erroneous debt from qualified Native Americans’ credit reports, clarify the IHS’ responsibilities for handling bills in the Purchased and Referred Program, and create a mechanism for reimbursement for tribal citizens who paid the outstanding bills themselves.
Separately, the White House is looking to address the issue by finalizing a proposed rule in the waning days of the Biden administration that would ban medical debt from appearing on any American’s credit reports. Initially proposed in June 2024, the rule would require the Consumer Financial Protection Bureau to strike the roughly $49 billion in Americans’ outstanding medical debt.
Schrier says she’s awaiting details of Biden’s new plan — including whether the rule applies retroactively — to see how it will impact her proposed bipartisan legislation. She’s also waiting to see how the new Republican-led Congress will address the issue, saying she remains committed to the issue.
“I just want to make sure that these tribal families are made whole, and so if we need that separate legislation, we’ll do it,” Schrier said.
The rule would take effect in 60 days, meaning it will overlap significantly with the incoming Trump administration — and some Republicans have expressed the possibility of reversing rules made in the final days of the Biden administration once Trump takes office. When the rule was proposed last summer, some Republicans called it “regulatory overreach” and said it would undermine the credibility of credit reports.
In a statement, the IHS said that it was aware of the report and continuing to prioritize the referred care program, educate staff about the program, inform providers about the “No Liability” language for referrals, and referred to the recent Biden administration announcement about eliminating medical debt.
As it stands, the IHS’ referred care program has well-known deficiencies that the recent report highlighted.
“Even when bills are finally paid by IHS or the consumers themselves, Native consumers may still be stuck with collections fees and charges, reflecting the systemic failures of a program intended to ensure affordable health care access,” the report said.
- - -
This story was originally published by InvestigateWest.