Understanding the Purchased/Referred Care (PRC) Program

What is Purchased/Referred Care?

When Indian Health Services (IHS) is unable to provide certain types of healthcare services directly in it's hospitals and clinics, they may refer patients to receive services in the private sector. These referrals are paid for by the PRC program appropriations to IHS. However, the PRC budget does not have enough funding to pay for all referrals that IHS healthcare providers make and tribal members need.

The PRC budget is currently $922.5 million for FY2018. That sounds like a lot, but the additional need for CHS referrals beyond what the budget pays for is an estimated additional $423.6 million.

Eligibility for Purchased/Referred Care

In general, American Indians and Alaska Natives who are members or descendants of federally-recognized Tribes are eligible for IHS direct services, which are services provided at IHS clinics and hospitals. However, the eligibility for the Purchased/Referred Care (PRC) Program (referrals to the private sector) is different. Years ago, Tribes wanted the limited budget of the PRC Program to benefit the patients who lived nearest to the clinical or hospital first. Therefore, PRC Program eligibility is based on IHS eligibility plus residence in the area around the clinic or hospital that is designated as eligible for PRC (also called the PRC Delivery Area, or PRCDA). That is why referrals are generally not approved for Tribal members who don't live on the reservation or Tribal lands associated with the hospital or clinic. Patients are upset that they lose their PRC eligibility if they move away from the reservation or Tribal lands and reside outside of the PRCDA. Again, this eligibility rule was put in place to make sure that the limited PRC funds benefit those who live closest to the clinic or hospital. It has been suggested that the PRC eligibility be made the same as IHS eligibility - that would mean more patients would be eligible. However, that would not mean that more patients would get referrals approved for payment because IHS still would have the same amount of funding in the PRC budget to use for more patients. And it could mean that individuals could travel to the clinic from another state, get PRC referrals paid for, and then travel back to the other state, potentially leaving no funding for patients who live in the Tribal community. Without additional funding, changing eligibility for PRC is a challenge.

Referral Approval Requirements

Tribal members often wonder why even though their doctor made a referral for them to see a specialist or have a surgical procedure, it is not authorized for payment by the PRC Program. IHS has regulations and policies that govern how to determine whether to pay for a referral or service in the private sector for their patients. If IHS had unlimited funding, they could pay for all referrals. However, since their PRC budget is limited, they must follow the regulations and the law to determine which referrals can be authorized for payment. In the simplest terms, the regulations tell them how to make sure the limited funding goes to those that need it the most. As previously stated, PRC eligibility is based on residence near the facility. There are also other considerations when funding is not available for all referrals, including timely notification of emergency room visits, prior approval and authorization for payment for referrals, the need to identify if patients are eligible for other healthcare coverage such as private insurance, Medicare or Medicaid, because by law they pay first before IHS, and whether funding is available to pay for the referral based on medical priorities. Here is a diagram that helps understand the steps that occur to determine if IHS can pay for a referral or outside healthcare services.

When an IHS healthcare provider makes a referral for a Tribal member to receive services outside the IHS facility, the referral is reviewed to determine its relative medical priority. IHS regulations require that when funding is limited, referrals should be approved based on available funding and their medical priority. The PRC medical priorities are determined by a local committee that includes IHS healthcare providers and administrators and it meets weekly to make decisions based on the medical reason for the referral. In the past, due to funding limitations, IHS has in general only had enough funds to pay for the highest medical priority – Priority 1, or life or limb conditions. Tribal members who have referrals that rank below Priority 1 in general have not gotten their referrals authorized for payment due to limited funding. However, the increase in PRC funding received in the last several years has helped some Tribal members with referrals in the category of Priority 2 get their referrals authorized for payment.  Some Tribal members think IHS doesn’t want to pay for referrals; however, they would gladly pay for all referrals if they had enough funding to pay for them since they know that all referrals are medically needed. However, IHS must use the medical priority system to make sure that the limited funding is used for those most in need.

    Priorities of Care

1. Emergent or Acutely Urgent Care Services
2. Preventive Care Services
3. Primary and Secondary Care Services
4. Chronic Tertiary Care Services
5. Excluded Services