SEARHC to receive $53 million settlement from federal goverment

SEARHC serves from about 17,000 Alaska Natives and American Indians in Southeast Alaska. (Photo by Lisa Phu/KTOO)

SEARHC serves about 17,000 Alaska Natives and American Indians in Southeast Alaska. (Photo by Lisa Phu/KTOO)

The Southeast Alaska Regional Health Consortium will receive a $53 million settlement from Indian Health Service for about fifteen years of unpaid contract costs.

Now, SEARHC president and CEO Charles Clement hopes the federal agency will continue to pay its bills.


The Indian Health Service pays the Southeast Alaska Regional Health Consortium to provide health care services to about 17,000 Alaska Natives and American Indians in Southeast.

But for more than 15 years, IHS failed to reimburse SEARHC for nearly $40 million in contract support costs.

SEARHC CEO and president Charles Clement says contract support covers such things as building insurance, audits, electricity bills and other compliance activities required by IHS.

“We don’t have a choice whether we buy insurance. We have to have an audit every year. We pay an auditor to come in and fully audit everything. And it’s genuinely bizarre that they would say, ‘You have to do this, but we’re not going to compensate you for that,'” Clement says.

The Indian Self-Determination and Education Assistance Act requires such costs be paid in full. When that doesn’t happen, Clement says SEARHC has to use other revenue to pay the bills and that means sacrifices in patient care.

“We hear lots of feedback from patients about access to care and timeliness of care and formularies and we try to resolve them and take them into consideration continuously. But, at the end of the day, when you spend all the money that you have providing these services, there’s only so much that you can do,” Clement says.

SEARHC has an annual operating budget of around $115 million. Clement says almost half comes from IHS, with the rest from a slew of grants and third party payers, like Medicare, Medicaid and insurance companies.

2014 is the first fiscal year in more than 15 years that SEARHC has received full support payments from IHS.

The two entities signed the final settlement agreement July 23. Clement says SEARHC will likely receive the entire payment in the fall. He says the settlement puts an end to any contentious issues between SEARHC and IHS.

“I’m ecstatic. This is a big deal. I mean to have something this big interrupting a relationship that we have with the Indian Health Service. It’s hard to just overlook the fact that you have a deal and someone’s not fulfilling their end of the bargain, because the Indian Health Service is really our partner. And so to have that resolved is a huge relief,” Clement says.

The settlement includes interest and will go into a reserve fund. Clement says SEARHC also will use the one-time payment on deferred building maintenance, information technology and medical equipment.

U.S. Sen. Mark Begich recently introduced a pair of bills requiring the federal government to honor contractual obligations made with tribal organizations. Heather Handyside is Begich’s press secretary.

“His two new bills will ensure that these payments are not just made at the whim of the current senate and house representatives and president but are going to be written into law so that they will not only be approved but also funded, and won’t come out of discretionary funding. So those are all important steps to make sure this doesn’t continue the same cycle that we’ve seen historically,” Handyside says.

SEARHC is one of several tribal organizations across the state that filed claims and reached a settlement with IHS for unpaid contract support. Settlements range from several hundred thousand dollars to more than $150 million.