Why Tribal Healthcare Is So Unique (with Kevin Chambers)

This video provides an in-depth exploration of the unique mechanisms and entitlements governing tribal healthcare plans in the United States, featuring Kevin Chambers, SVP and Tribal Practice Leader at Lucent Health. The discussion centers on how self-funded tribal plans can leverage specific federal mandates to achieve substantial cost savings and superior member benefits, often resulting in claim savings and avoidance that outperform traditional commercial plans. Chambers emphasizes that tribal healthcare is a highly specialized niche, often misunderstood or avoided by carriers due to the concept of sovereign immunity, yet it presents significant opportunities for financial efficiency when managed correctly.

The core of the strategy revolves around four distinct federal entitlements, or "pillars," designed to subsidize tribal healthcare. The first pillar is the ability for Native American members to receive reimbursement at Medicare-like rates for facility services, effectively eliminating balance billing risks for the member and providing the "ultimate Reference-Based Pricing" for the plan. The second pillar utilizes a caveat in the Affordable Care Act (ACA) allowing tribes to sponsor high-cost members onto the ACA Exchange every 30 days. By actively monitoring diagnostic coding for upcoming high-cost events (like complex surgeries or high-risk pregnancies), the plan can divert catastrophic risk to a primary ACA plan, significantly improving the self-funded plan's health and loss ratio.

Pillar three addresses pharmacy and clinical services through self-governed tribal clinics (known by the IRS code 638). These clinics, funded and controlled by the tribe rather than the federal government, can acquire and dispense medicines at 340B pricing—the lowest wholesale cost. This allows the tribe to not only provide affordable care to native members but also generate a margin by dispensing to non-native employees at a slightly higher rate, creating a revenue stream. Finally, the fourth pillar is the Catastrophic Health Emergency Fund (CHEF), a federally funded emergency program that reimburses self-funded tribes for specific claims exceeding $25,000 within a fiscal year. Although the fund is finite and operates on a fiscal year basis, leveraging it effectively acts as reinsurance on reinsurance, allowing tribes to potentially raise their specific deductibles while mitigating catastrophic risk.

Chambers stresses that successful management of tribal plans requires a TPA with the specialized systems and legal knowledge to properly adjudicate claims according to these unique rules, manage the constant migration of members on and off the ACA Exchange, and ensure timely submission to the CHEF program. The combination of these entitlements makes a population that might otherwise be deemed high-risk highly attractive to specialized stop-loss carriers, provided the carrier accepts the jurisdiction of tribal court due to sovereign immunity. The ultimate goal is to increase transparency and efficiency in healthcare, which Chambers believes could eliminate 30% to 40% of waste in the system if exploitative practices were exposed and regulated.

Key Takeaways

• Tribal Healthcare is Governed by Four Cost-Saving Pillars: Consultants and TPAs must understand the four distinct federal entitlements (Medicare-like rates, ACA sponsorship, 340B clinics, and CHEF) to effectively serve tribal clients and maximize plan savings.
• Medicare-Like Reimbursement is the Ultimate RBP: Native American members are entitled under the Medicare Modernization Act to have facility claims reimbursed at Medicare rates with no balance billing risk, offering significant cost control for the self-funded plan. This requires the TPA system to accurately identify native status during claim adjudication.
• Strategic Risk Diversion via ACA Sponsorship: Tribes can actively monitor diagnostic coding (e.g., for complex medical events) and sponsor members onto the ACA Exchange for 30-day periods, effectively diverting high-cost claims away from the self-funded plan. This process requires sophisticated, proactive claims monitoring and execution capabilities by the TPA.
• 340B Drug Pricing as a Revenue Stream: Self-governed 638 tribal clinics can acquire drugs at 340B wholesale pricing. When dispensing to non-native employees covered under the tribal plan, the tribe can apply a margin, turning the clinic into a cost-center reducer and potential revenue generator.
• Catastrophic Health Emergency Fund (CHEF) Optimization: The CHEF program reimburses claims over $25,000, acting as a secondary layer of reinsurance. Tribes should consider raising their specific stop-loss deductibles to take advantage of this fund, but must ensure timely claim submission as the fund is finite and operates on a fiscal year basis, potentially running out before the end of September.
• Sovereign Immunity is a Carrier Hurdle: A major reason why many stop-loss carriers avoid tribal business is the requirement to litigate disputes in tribal court. Brokers must partner with carriers (such as Swiss Re or those using London market paper like Hudson/Tribal First) who are willing to accept this condition.
• Data Systems are Critical for Compliance and Savings: The ability to execute these entitlements (especially monitoring diagnostic codes for ACA migration and tracking CHEF submissions) hinges on the TPA having robust data engineering and administrative systems tailored to the tribal space.
• Higher Native Population Improves Risk Profile: A higher percentage of native members in a commingled plan makes the risk more favorable because more members qualify for the deep discounts provided by Medicare-like rates and the CHEF program, offsetting typical risk assumptions.
• Tribal Clinics Offer Quality of Care Control: Tribes often choose to self-govern their clinics (638 model) due to the poor reputation and long wait times associated with federally run Indian Health Services (IHS) clinics, allowing them to provide higher quality, localized care.
• Healthcare Waste Exposure is Key to Future Savings: The speaker believes that 30% to 40% of healthcare costs could be eliminated if greater transparency and honesty were enforced, exposing wasteful and potentially fraudulent practices within the hospital system.

Tools/Resources Mentioned

• Face Rock: An outfit in Oregon and Oklahoma mentioned for executing ACA Exchange enrollment for tribal members.
• Tribal First: A company mentioned that provides its own stop-loss paper (through Hudson/London Li slip) and embraces tribal risk, including property and casualty.
• Lucent Health: The TPA represented by the speaker, specializing in tribal practice.

Key Concepts

• Sovereign Immunity: The legal principle that tribes possess inherent authority to govern themselves, meaning any legal disputes related to the health plan are tried in tribal court, not state or federal court.
• 638 Clinics (Self-Governed Clinics): Tribal healthcare clinics that are funded by the federal government but are governed and controlled by the tribe itself, allowing them to manage care delivery and utilize programs like 340B.
• 340B Pricing: A federal program requiring drug manufacturers to provide outpatient drugs to eligible healthcare organizations and pharmacies (including tribal clinics) at significantly reduced prices.
• Catastrophic Health Emergency Fund (CHEF): A finite, federally funded program that reimburses self-funded tribes for specific claims exceeding $25,000 within a given fiscal year.
• Medicare Modernization Act (MMA): The federal law that created the caveat allowing Native Americans to be reimbursed at a Medicare-like rate for healthcare services.