EXECUTIVE SUMMARY:

As a Federal purchaser of inpatient health care from the private sector, the Indian Health Service (IHS) should be receiving rates commensurate with other Federal agencies who engage in similar purchases. However, IHS paid an aggregate $4.8 million more than Medicare rates for services provided in Fiscal Year 1995--an amount that included $8.2 million paid to hospitals over Medicare rates, reduced by $3.4 million for certain instances where IHS actually paid hospitals less than Medicare rates. The IHS is paying too much because there is no law requiring providers to offer Medicare or lower rates, and IHS has not been fully successful in its efforts to obtain favorable rates through contracts and other procurement mechanisms. The IHS concurred with our recommendation to pursue legislative action requiring favorable Medicare or lower rates for payment of IHS health services.

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