Hospitals and critical access hospitals are prohibited from refusing to provide services to an individual on the basis that payment is subject the requirements of Medicare Like Rates ((42 CFR Part 136). The new rule clarifies that payment for hospital services that the Medicare program would pay under a prospective payment system (PPS) will be based on that PPS. For example, payment for inpatient hospital services shall be made per discharge based on the applicable PPS used by the Medicare program to pay for similar hospital services under 42 CFR part Payment for outpatient hospital services shall be made based on a PPS used in the Medicare program to pay for similar hospital services under 42 CFR part 419. Payment for skilled nursing facility (SNF) services shall be based on a PPS used in the Medicare program to pay for similar SNF services under 42 CFR part 413. A hospital may not continue to bill Indian patients for the difference between full billed charges and Medicare Like Rates. There shall be no additional charges for services provided under this regulation. A payment made in accordance with this regulation shall constitute payment in full and the hospital or its agent may not impose any additional charge on the patient. All Urban Indian Organizations may participate and take advantage of the new Medicare Like Rates. An urban Indian organization may authorize for purchase items and services for an eligible urban Indian patient (as those terms are defined in 25 U.S.C. 1603(f) and (h)) according to section 503 of the IHCIA and applicable regulations. Services and items furnished by Medicare-participating inpatient hospitals shall be subject to the payment methodology set forth in § 136.30.

Hospitals may not refuse service to an individual on the basis that the payment for services is authorized under the Medicare Like Rate regulations. Providers that refuse to accept Medicare Like Rate payments or deny patients should be reported to your local IHS Area Office and to the Native American Contact in your CMS Regional Office. 

(a) Scope. All Medicare-participating hospitals, which are defined for purposes of this subpart to include all departments and provider-based facilities of hospitals (as defined in sections 1861(e) and (f) of the Social Security Act) and critical access hospitals (as defined in section 1861(mm)(1) of the Social Security Act), that furnish inpatient services must accept no more than the rates of payment under the methodology described in this section as payment in full for all items and services authorized by IHS, Tribal, and urban Indian organization entities, as described in paragraph (b) of this section.

(b) Applicability. The payment methodology under this section applies to all levels of care furnished by a Medicare-participating hospital, whether provided as inpatient, outpatient, skilled nursing facility care, as other services of a department, subunit, distinct part, or other component of a hospital (including services furnished directly by the hospital or under arrangements) that is authorized under part 136, subpart C by a contract health service (CHS) program of the Indian Health Service (IHS); or authorized by a Tribe or Tribal organization carrying out a CHS program of the IHS under the Indian Self-Determination and Education Assistance Act, as amended, Pub. L. 93-638, 25 U.S.C. 450 et seq.; or authorized for purchase under §136.31 by an urban Indian organization (as that term is defined in 25 U.S.C. 1603(h)) (hereafter ``I/T/U'').

(c) Basic determination. (1) Payment for hospital services that the Medicare program would pay under a prospective payment system (PPS) will be based on that PPS. For example, payment for inpatient hospital services shall be made per discharge based on the applicable PPS used by the Medicare program to pay for similar hospital services under 42 CFR part 412. Payment for outpatient hospital services shall be made based on a PPS used in the Medicare program to pay for similar hospital services under 42 CFR part 419. Payment for skilled nursing facility (SNF) services shall be based on a PPS used in the Medicare program to pay for similar SNF services under 42 CFR part 413. (2) For Medicare participating hospitals that furnish inpatient services but are exempt from PPS and receive reimbursement based on reasonable costs (for example, critical access hospitals (CAHs), children's hospitals, cancer hospitals, and certain other hospitals reimbursed by Medicare under special arrangements), including provider subunits exempt from PPS, payment shall be made per discharge based on the reasonable cost methods established under 42 CFR part 413, except that the interim payment rate under 42 CFR part 413, subpart E shall constitute payment in full for authorized charges.

(d) Other payments. In addition to the amount payable under paragraph (c)(1) of this section for authorized inpatient services, payments shall include an amount to cover: The organ acquisition costs incurred by hospitals with approved transplantation centers; direct medical education costs; units of blood clotting factor furnished to an eligible patient who is a hemophiliac; and the costs of qualified non-physician anesthetists, to the extent such costs would be payable if the services had been covered by Medicare. Payment under this subsection shall be made on a per discharge basis and will be based on standard payments established by the Centers for Medicare & Medicaid Services (CMS) or its fiscal intermediaries.


(e) Basic payment calculation. The calculation of the payment by I/T/Us will be based on determinations made under paragraphs (c) and (d) of this section consistent with CMS instructions to its fiscal intermediaries at the time the claim is processed. Adjustments will be made to correct billing or claims processing errors, including when fraud is detected. I/T/Us shall pay the providing hospital the full PPS based rate, or the interim reasonable cost rate, Section 42 CF 136.30 Continued without reduction for any co-payments, coinsurance, and deductibles required by the Medicare program from the patient.

(f) Exceptions to payment calculation. Notwithstanding paragraph (e) of this section, if an amount has been negotiated with the hospital or its agent by the I/T/U, the I/T/U will pay the lesser of: The amount determined under paragraph (e) of this section or the amount negotiated with the hospital or its agent, including but not limited to capitated contracts or contracts per Federal law requirements;


(g) Coordination of benefits and limitation on recovery. If an I/T/U has authorized payment for items and services provided to an individual who is eligible for benefits under Medicare, Medicaid, or another third party payor--
(1) The I/T/U shall be the payor of last resort under §136.61;
(2) If there are any third party payers, the I/T/U will pay the amount for which the patient is being held responsible after the provider of services has coordinated benefits and all other alternative resources have been considered and paid, including applicable co-payments, deductibles, and coinsurance that are owed by the patient; and
(3) The maximum payment by the I/T/U will be only that portion of the payment amount determined under this section not covered by any other payor; and
(4) The I/T/U payment will not exceed the rate calculated in accordance with paragraph (e) of this section or the contracted amount (plus applicable cost sharing), whichever is less; and
(5) When payment is made by Medicaid it is considered payment in full and there will be no additional payment made by the I/T/U to the amount paid by Medicaid (except for applicable cost

(h) Claims processing. For a hospital to be eligible for payment under this section, the hospital or its agent must submit the claim for authorized services--
(1) On a UB92 paper claim form (until abolished, or on an officially adopted successor form) or the HIPAA 837 electronic claims format ANSI X12N, version 4010A1 (until abolished, or on an officially adopted successor form) and include the hospital's Medicare provider number/National Provider
(2) To the I/T/U, agent, or fiscal intermediary identified by the I/T/U in the agreement between the I/T/U and the hospital or in the authorization for services provided by the I/T/U; and
(3) Within a time period equivalent to the timely filing period for Medicare claims under 42 CFR 424.44 and provisions of the Medicare Claims Processing Manual applicable to the type of item or


(i) Authorized services. Payment shall be made only for those items and services authorized by an I/T/U consistent with part 136 of this title or section 503(a) of the Indian Health Care Improvement Act (IHCIA), Public Law 94-437, as amended, 25 U.S.C. 1653(a).

(j) No additional charges. A payment made in accordance with this section shall constitute payment in full and the hospital or its agent may not impose any additional charge--
(1) On the individual for I/T/U authorized items and services; or
(2) For information requested by the I/T/U or its agent or fiscal intermediary for the purposes of payment determinations or quality assurance 

42 CF 136.31 Authorization by urban Indian organization. An urban Indian organization may authorize for purchase items and services for an eligible urban Indian (as those terms are defined in 25 U.S.C. 1603(f) and (h)) according to section 503 of the IHCIA and applicable regulations. Services and items furnished by Medicare-participating inpatient hospitals shall be subject to the payment methodology set forth in §136.30.

Advantages of using Health West

Every year there  are  changes  in the  Medicare  Pricing  Methodology  and we  find  that  most  Tribal  Entities  are  over  paying  on  their  MLR   claims because  other companies  do not stay  abreast of the  changes and update their  systems  in a timely  manner. Based  on  actual  audits  we have found that 1 out of every 2 claims  were  paid incorrectly. The average savings for  Tribes using  Health West  was an additional 32.9%. Health West  will  also   perform  the  collection  and  recovery  for  the  plan  for  an  additional  fee.

We  develop   custom  networks   and   establish  discounts   for  non - MLR services  such  as  physicians,  labs  and  ancillary  care  in  order  to  provide best pricing for non-hospital providers. We customize and supplement the Medicare  Like  Rate  pricing with  your chosen providers  in order to assist with  directing  care  into  your   higher  quality   and  lower  cost  providers.

We  provide  MLR  pricing  services  based  on  a  % of savings,  a  per  claim cost and /  or a per employee per month cost and allow the tribal entity the ability  choose  based  on  their  needs.

Section 42 CF 136.30

Payment to Medicare-Participating Hospitals for Authorized Contract Health Services 

INDIAN   TRIBAL  

HEALTHCARE 

SOLUTIONS

Hospitals and MLR

The final ruling for Tribal entities Medicare Like Rates is found in “Section 506 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003—Limitation on Charges for services furnished by Medicare Participating Inpatient Hospitals to Individuals Eligible for Care Purchased by Indian Health Programs”

(72 FR 30706), includes all “IHS-Funded” health care programs whether operated by the IHS, Tribes, Tribal Organizations, or Urban Indian Organizations.”

The payment methodology applies to all levels of care furnished by a Medicare-participating hospital whether provided as inpatient, outpatient, skilled nursing facility care as other services of a department, subunit, distinct part or other component of a hospital. All hospitals that participate in Medicare, including any hospital clinics located off-site and Critical Access Hospitals. "Hospitals" may include:

  • Acute Care Hospitals
  • Distinct parts of inpatient hospitals (rehabilitation, psychiatric, etc.)
  • Hospital based clinics
  • Psychiatric Hospitals
  • Rehabilitation Hospitals,
  • Long Term Care Hospitals
  • Critical Access Hospitals (including rehab and psych units)
  • Children's Hospitals
  • Cancer Hospitals
  • SNFs & Swing Beds


The Medicare Like Rates regulations enable Indian health programs to use the resulting savings to increase services to their beneficiaries.

  1. The Tribe must be qualified and Individuals must be eligible for CHS coverage as defined by 42 CFR Part 136.
  2. Third Party funds can be added to CHS funds and Medicare Like Rates still apply.
  3. Tribes who have an IHCS 638 contract and a CHS program are also eligible.

Section 506  

Medicare Like Rates

Under the  Medicare  Modernization Act,  Indian Tribal Entities  are eligible to take advantage of Medicare

Like  Rate Pricing  or the  Contracted rate  for all  hospital and hospital owned entities.  Health West prices

claims for all tribal members and provides the best contracted rates for Tribal entities in order for them to

take  advantage  of  the   best   pricing  available.   We  separate  the  tribal  member  claims  from  the  other

members  and  provide  the  appropriate  pricing  levels.

  • Low fees
  • Keep your Third Party Administrator
  • Keep your Stop Loss Carrier
  • Keep your current Broker
  • No costly hardware or software to purchase
  • No additional employees to hire.
  • Average savings over current PPO network is 5-10%
  • Average savings with MLR rates is 35-40%  

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