The US Supreme Court decided Thursday that when Native Americans administer healthcare through their own programs, the Department of Health and Human Services’ Indian Health Service must pay for costs associated with the operation of the healthcare program.

The case was brought by the San Carlos Apache Tribe and Northern Arapaho Tribe, both of which decided to offer healthcare independently of the Indian Health Service within the last decade.

The Indian Health Service administers healthcare programs within tribes through Medicare, Medicaid, or private insurance. Services provided included ambulances, dental clinics, and hospital services. A tribe can either receive funds through the Indian Healthcare Service (and the Federal Government), or it can administer its own healthcare services within the tribe. If a tribe chooses to utilize its own services, the tribe enters into a self-determination contract to ensure services formerly provided by the IHS are now provided by the tribe.

While there is funding provided by Congress that must “not be less” than the Department of Health and Human Services would have spent, tribes still incur costs that IHS does not. “Contract support costs” can be used to cover costs between the tribes and IHS but leaves gaps in funding from third-party payers which would be used to cover operation costs.

IHS can delegate administrative tasks to the Office of Personnel Management, while tribal governments must use funds for independent insurance, auditing, and financial services. This also leaves gaps in funding that would be used to operate healthcare programs.

The US Supreme Court held that “the self-determination contracts of the San Carlos Apache Tribe and Northern Arapaho Tribe require them to collect and spend program income to further the functions, services, activities, and programs transferred to them from IHS. When the Tribes do so and incur administrative costs, ISDA requires IHS to pay those support costs.”

The Department of Health and Human Services stated that Congress should shift the IHS budget from discretionary funding (which is subject to re-approval each year) to mandatory funding (which continues annually without a re-approval process) within the presidential budget in fiscal year 2025 to make sure there is enough funding appropriated to the IHS for 2026.

The ruling to further equalize IHS and tribal-run healthcare programs applies to all tribes nationwide.

For fiscal year 2025, the IHS budget was increased by 16 percent, or $1.1 billion from fiscal year 2023’s budget.