2 Alaska health care providers sue feds over millions in unpaid costs

a hospital
The Yukon-Kuskokwim Delta Regional Hospital in Bethel. (Elyssa Loughlin/KYUK)

Two major Alaska tribal health care providers have filed suit against the federal government, saying it owes them tens of millions of dollars in unreimbursed funds.

The suits from the Southeast Alaska Regional Health Consortium and the Yukon-Kuskokwim Health Corp. were filed Thursday and Friday respectively in Alaska’s U.S. District Court. Both name the U.S. Department of Health and Human Services and its secretary, Xavier Becerra, as defendants.

In the YKHC complaint, the corporation’s legal counsel says Becerra and his department owe nearly $26 million in unpaid contract support costs dating back to fiscal year 2016. According to the complaint, those costs may include things like indirect administrative or overhead costs, and costs associated with financial management or other recurring expenses like worker’s compensation insurance.

The SEARHC lawsuit, filed on the last day the consortium could litigate its eight-year-old dispute, seeks $8 million in unpaid costs from DHHS. The expenses were incurred by both tribal health care providers for billing third-party private insurance, Medicare and Medicaid.

In the suit, SEARHC argues that DHHS’s Indian Health Service failed to account for the indirect costs of managing “third-party revenues” — the payments SEARHC receives from those parties — when it reimbursed for expenses in 2016. Although SEARHC is primarily funded by the health service under an agreement called the Alaska Tribal Health Compact, the lawsuit argues that the federal government is obligated to pay “full contract support costs,” including the expenses in billing third parties.

SEARHC’s brief cites a number of U.S. Supreme Court rulings as justification for its claim, but DHHS sees things differently. In a letter to SEARHC CEO Charles Clement in 2023 rejecting the claim, the department wrote that IHS paid SEARHC almost $59 million in 2016, including over $3 million for contract support costs and $17 million for indirect contract support costs. It states: “Nothing in the parties’ compact or Funding Agreement includes an agreement that Contract Support Costs include any expenditures other than the amount identified in the compact.”

The department goes on to say that SEARHC supplied no evidence or documentation that it is owed an additional $8 million for the costs it incurred for billing third parties.

SEARHC and YKHC are represented by the Anchorage law firm of Sonosky, Chambers, Sachse, Miller & Monkman. Becerra has 60 days to reply to both suits.

Robert Woolsey is the news director at KCAW in Sitka.

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