The US Supreme Court heard arguments Monday on whether Indian Health Services (IHS) should be reimbursed for “contract support costs” associated with third parties, such as Medicare and Medicaid. In a US Court of Appeals for the Ninth Circuit decision, the court found that third-party reimbursements could not be excluded under its statute. In contrast, a Tenth Circuit decision found that third-party expenditures could fall under contract support costs. The Supreme Court heard this issue because of the split among the circuit courts.

The IHS is under the Health and Human Services umbrella, for which Xavier Becerra is the secretary. After Congress passed the Indian Self-Determination and Education Act (ISDA), Congress enacted 25 U.S.C. § 5325 to promote the Native tribes’ self-determination. The statutory language that the IHS attributes is for direct costs and not necessarily for indirect costs, for example, building construction, as opposed to medical ambulatory services. The tribes argue that these indirect costs or “overhead costs” should be paid for by the IHS, and tribes should not have to pay for these costs due to the lack of administrative infrastructure out of funds that should be going to healthcare for Indian healthcare services. Chief Justice John Roberts noted that the tribe is “worse off” the more it undertakes self-determination.

The general purpose of the contract under 25 U.S.C. § 5325(m) is for tribes to have self-determination and receive the benefit of IHS funds without having to absorb overhead costs that the IHS does not have to. In that vein, Justice Sonia Sotomayor asked if the practical consequences of the contract would be to “deprive” tribes of receiving health services from the IHS. Tribal counsel stated that by allowing the tribes to have more discretion over healthcare allocation funding, they are stepping into the shoes of being a contractor for the IHS for contract support costs.

The court is expected to decide this case in June of this year.