Indian Self-Determination Contracting: Effects of Individual Community
Contracting for Health Services in Alaska (Letter Report, 06/01/98,
GAO/HEHS-98-134).

Pursuant to a legislative requirement, GAO reviewed the impact of
individual Indian Health Service (IHS) contracts, focusing on the: (1)
extent to which Alaska Native communities contract directly with IHS to
manage their own health care services; and (2) effects these contracts
are having on costs and the availability of services.

GAO noted that: (1) relatively few Alaska Native communities have
contracted directly with IHS, and those that have done so generally
contracted for a limited range of health services and thus continue to
receive many services through a regional health organization (RHO); (2)
fifteen percent of the 227 Alaska Native communities have some form of
direct contract with IHS; (3) the dollar amount of these direct
contracts represents about 6.5 percent of all IHS contracts in Alaska
under the Indian Self-Determination Act; (4) GAO found that communities
with their own contracts have higher administrative costs than RHOs; (5)
IHS works with each contractor to determine the amount of administrative
costs needed to manage the contracts; (6) indirect costs--the major
component of the administrative costs--include such expenses as
financial and personnel management, utilities and housekeeping, and
insurance and legal services; (7) community contracts need about twice
the amount of indirect costs that a RHO would need to manage the same
programs; (8) when a community chooses the contract directly with IHS
for services previously provided by a RHO, it also has a need for
one-time start-up costs that increase the administrative cost
differences between community contracts and RHOs; (9) determining the
effects of individual community contracts on service availability proved
difficult because contracts involving a switch from RHOs to local
communities are relatively few in number, cover few services, and some
have been in effect for a short time; (10) the limited comparisons that
can be made show that service levels have not been greatly affected by
the switches thus far; (11) however, under current IHS funding
limitations, new contractors are receiving only part of their funding
needs for administrative costs and may have to wait several years to
receive full funding; (12) if communities decide to contract for service
programs but do not receive full funding for administrative costs and do
not have other resources from which to pay for these costs, they face
the risk of having to divert funds from services to cover their unfunded
administrative costs; (13) while funding shortfalls have not yet
resulted in widespread adverse effects on health services availability
in Alaska, the long-term picture raises cause for concern; and (14) in
choosing to operate their health services without waiting for sufficient
administrative funding, Alaska Native communities may have little option
but to accept a potential for reduced services as a trade-off for
managing elements of their health care systems.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-98-134
     TITLE:  Indian Self-Determination Contracting: Effects of 
             Individual Community Contracting for Health Services in
             Alaska
      DATE:  06/01/98
   SUBJECT:  Health care services
             Native Americans
             Service contracts
             Administrative costs
             Health services administration
             Comparative analysis
             Health care programs
IDENTIFIER:  Alaska
             
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Cover
================================================================ COVER


Report to Congressional Committees

June 1998

INDIAN SELF-DETERMINATION
CONTRACTING - EFFECTS OF
INDIVIDUAL COMMUNITY CONTRACTING
FOR HEALTH SERVICES IN ALASKA

GAO/HEHS-98-134

Alaska Native Community Contracting

(108352)


Abbreviations
=============================================================== ABBREV

  ANCSA - Alaska Native Claims Settlement Act
  BIA - Bureau of Indian Affairs
  CATG - Council of Athabascan Tribal Governments
  CSC - contract support cost
  FTE - full-time equivalent
  IHS - Indian Health Service
  KIC - Ketchikan Indian Corporation
  RHO - regional health organization
  SEARHC - Southeast Alaska Regional Health Consortium

Letter
=============================================================== LETTER


B-279160

June 1, 1998

The Honorable Ted Stevens, Chairman
The Honorable Robert C.  Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate

The Honorable Bob Livingston, Chairman
The Honorable David R.  Obey
Ranking Minority Member
Committee on Appropriations
House of Representatives

In Alaska, the Indian Health Service (IHS) funds health services for
more than 100,000 Alaska Natives--Eskimos, Aleuts, Athabascans, and
American Indians--most of whom live in small, isolated communities. 
Under provisions of the Indian Self-Determination Act, nearly all of
the health care programs traditionally administered by IHS have been
transferred to 13 Alaska Native regional health organizations (RHO)
with which IHS contracts to manage the programs for the Native
communities.\1 In recent years, however, some Native communities have
chosen to contract directly with IHS rather than go through an RHO to
manage their health care programs. 

Some of these individual community contracts have generated
controversy.  Critics contend that such contracts carry extra
administrative costs that can shift dollars out of health care and
into overhead.  But supporters view the contracts as essential to
maintaining the sovereignty of Native communities and achieving the
Indian Self-Determination Act's goal of maximizing Native
participation in federal health care services.  The fiscal year 1998
appropriations act for the Department of the Interior placed a
moratorium on IHS' further contracting with Native communities in
Alaska in order to review these issues more closely. 

The appropriations act requires us to study the impact of these
individual contracts.  As agreed with the staffs of your offices, we
set the following objectives for our review: 

  -- Determine the extent to which Alaska Native communities contract
     directly with IHS to manage their own health care services. 

  -- Identify the effects these contracts are having on costs. 

  -- Identify the effects these contracts are having on the
     availability of services. 

Our review encompassed all IHS contracts currently in effect in
Alaska under the provisions of the Indian Self-Determination Act,
whether these contracts are with RHOs or with communities.  We
analyzed programs and services covered by each contract and compared
costs and service availability.  We conducted work on site at the IHS
Alaska area office and the Alaska Native Health Board office in
Anchorage and at IHS headquarters in Rockville, Maryland.  To gain a
better understanding of circumstances surrounding a recent IHS award
of a large individual community contract in Ketchikan, we also
conducted work there.  We supplemented this information through
interviews with officials from RHOs and Native communities.  Our work
was conducted from December 1997 through April 1998 in accordance
with generally accepted government auditing standards. 


--------------------
\1 The RHOs are nonprofit organizations designated by the Native
communities to contract with IHS in managing and delivering health
services for Native residents. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Relatively few Alaska Native communities have contracted directly
with IHS, and those that have done so generally contracted for a
limited range of health services and thus continue to receive many
services through an RHO.  Fifteen percent of the 227 Alaska Native
communities--which represents about 10 percent of the Alaska Native
population--have some form of direct contract with IHS.\2 Most
communities participating in such contracts are small, and the scope
of the contracts are limited.  The services they have most often
decided to manage on their own have included alcohol abuse and mental
health services; primary care services delivered by community health
aides and other nonphysician providers; and health education,
transportation, and other services provided by community health
representatives.  A notable exception to the limited scope of these
contracts is in Ketchikan, where a Native community recently assumed
management and operation of a comprehensive primary care health
center staffed with physicians and dentists.  The dollar amount of
these direct contracts represents about 6.5 percent of all IHS
contracts in Alaska under the Indian Self-Determination Act; the
contract with the Native community in Ketchikan accounts for about
one quarter of the 6.5 percent. 

We found that communities with their own contracts have higher
administrative costs than RHOs.  IHS works with each contractor to
determine the amount of administrative costs needed to manage the
contracts.  Indirect costs--the major component of the administrative
costs--include such expenses as financial and personnel management,
utilities and housekeeping, and insurance and legal services. 
Community contracts need about twice the amount of indirect costs
that an RHO would need to manage the same programs.  When a community
chooses to contract directly with IHS for services previously
provided by an RHO, it also has a need for one-time start-up costs
that increase the administrative cost differences between community
contracts and RHOs. 

Determining the effects of individual community contracts on service
availability proved difficult because contracts involving a switch
from RHOs to local communities are relatively few in number, cover
few services, and some have been in effect for a short time.  The
limited comparisons that can be made show that service levels have
not been greatly affected by the switches thus far.  However, under
current IHS funding limitations, new contractors are receiving only
part of their funding needs for administrative costs and may have to
wait several years to receive full funding.  If communities decide to
contract for service programs but do not receive full funding for
administrative costs and do not have other resources from which to
pay for these costs, they face the risk of having to divert funds
from services to cover their unfunded administrative costs.  While
funding shortfalls have not yet resulted in widespread adverse
effects on health services availability in Alaska, the long-term
picture raises cause for concern.  In choosing to operate their
health services without waiting for sufficient administrative
funding, Alaska Native communities may have little option but to
accept a potential for reduced services as a trade-off for managing
elements of their health care systems. 


--------------------
\2 Of the 227 Alaska Native communities, 224 are federally recognized
entities as determined by the Bureau of Indian Affairs.  The three
exceptions are Native communities recognized in Alaska for
self-determination contracting purposes:  Cook Inlet Region Natives,
Valdez Native Tribe, and Qutekcak (Seward area) Native Tribe. 


   BACKGROUND
------------------------------------------------------------ Letter :2

IHS, an agency within the Department of Health and Human Services, is
responsible for providing federal health services to an estimated 1.5
million American Indians and Alaska Natives.  In fiscal year 1998,
IHS received appropriations of about $1.8 billion to provide these
services, with about $291 million of this amount for Alaska.  To
provide care to Alaska's estimated 104,305 Natives, most of whom live
in small and isolated villages, a three-tiered health care delivery
system of local clinics, regional hospitals, and a comprehensive
medical center was developed.  (See table 1.)



                          Table 1
          
          Overview of Health Care Delivery System
                     for Alaska Natives

Service             Source of care
------------------  --------------------------------------
Routine health      Care is usually provided by community
maintenance and     health aides in 178 village clinics
emergency first     throughout the state. The community
aid                 health aide is usually a village
                    resident selected and trained to
                    deliver routine health services under
                    the long-distance telephone
                    supervision of a physician. In some
                    larger cities and towns, 17 health
                    centers and clinics provide care (8
                    staffed with a physician and 9 with a
                    midlevel provider, such as a physician
                    assistant or nurse practitioner).

Routine hospital    Care is usually provided in one of six
admissions          regional hospitals or, when
                    authorized, in a local private
                    hospital.

Treatment of        Care is generally provided by referral
serious illnesses   to the Alaska Native Medical Center in
and injuries        Anchorage, which is available to all
                    of Alaska's Natives. In some cases,
                    care is authorized to be provided by
                    private hospitals in Alaska or
                    elsewhere in the United States.
----------------------------------------------------------
IHS' mission is to provide a comprehensive health services system,
while at the same time providing opportunity for maximum tribal
involvement in developing and managing programs to meet their needs. 
The Indian Self-Determination Act gives Alaska Native communities, as
well as Indian tribes throughout the United States, the option of
replacing IHS as the manager and provider of health care services. 
To cover the costs of operating such systems on their own, the act
authorizes IHS to contract with any of the recognized Alaska Native
communities or other tribal organizations, such as regional or
village corporations.\3

In Alaska, IHS has established an order of precedence for recognizing
various Native entities for purposes of self-determination
contracting.\4 In this order of precedence, an individual Native
community has priority over an RHO in obtaining contract awards from
IHS.  If a contract is awarded to an organization that performs
services benefiting more than one community, the approval of each
community's governing body (a resolution of support) is a
prerequisite. 


--------------------
\3 The Indian Self-Determination Act as amended in 1992 also
authorizes IHS to negotiate self-governance compacts with Indian
tribes that allow them greater flexibility in the operation of health
programs.  For purposes of this report, both self-determination
contracts and self-governance compacts are referred to as
"contracts."

\4 In establishing the order of precedence, IHS' Alaska Area Circular
No.  82-10 states that Alaska Native villages, as the smallest tribal
units under the Alaska Native Claims Settlement Act (ANCSA), must
approve contracts that will benefit their members.  IHS will
recognize as the village governing body the following entities in
order of precedence:  (1) Indian Reorganization Act Councils, which
provide governmental functions for the village; (2) traditional
village councils; (3) village for-profit Native corporations; and (4)
regional for-profit Native corporations.  This order of precedence
has withstood several court challenges. 


   RELATIVELY FEW ALASKA NATIVE
   COMMUNITIES CONTRACT DIRECTLY
   WITH IHS TO MANAGE HEALTH
   SERVICES
------------------------------------------------------------ Letter :3

Alaska Native communities that contract directly with IHS manage a
relatively small share of health care services in Alaska. 
Thirty-four of Alaska's 227 Native communities (15 percent)--which
represents about 10 percent of the total Alaska Native
population--have obtained funding in direct contracts from IHS to
provide some of the health services they receive.  (See table 2.)
These 34 communities comprise two main groups--25 communities that
decided at some point to separate from their RHO to obtain certain
services, and 9 communities, mostly in the Cook Inlet area near
Anchorage, that generally have not participated in an RHO.  Because
some communities have banded together for contracting purposes, the
34 communities are involved in a total of 21 contracts, which account
for 6.5 percent of IHS' total contract funding in Alaska under the
Indian Self-Determination Act. 



                                         Table 2
                         
                              Indian Self-Determination Act
                         Contracting in Alaska, Fiscal Year 1998

                            Communities served    People served       Contract funding
                            ------------------  ------------------  --------------------
                    Number
Type of entity          of
contracting with  contract             Percent             Percent  Amount (in   Percent
IHS                      s    Number  of total    Number  of total   millions)  of total
----------------  --------  --------  --------  --------  --------  ----------  --------
RHO                     13     193\a       85%  94,326\a     90.4%      $185.0     93.5%

Native communities
----------------------------------------------------------------------------------------
Community               12        25        11     6,974       6.7         8.7       4.4
 contractors
 that separated
 from an RHO
Community                9         9         4     3,005       2.9         4.1       2.1
 contractors
 that did not
 participate in
 an RHO
========================================================================================
Total                   34       227      100%   104,305      100%      $197.8      100%
----------------------------------------------------------------------------------------
Note:  Number and percent of people served are estimates for fiscal
year 1998 prepared by IHS on the basis of 1990 U.S.  Census Bureau
data. 

\a This figure does not include the communities or people served by
community contractors, although in many cases, RHOs continue to
provide some services to residents in these communities and are
funded by IHS to do so. 


      RHOS DELIVER MOST HEALTH
      SERVICES TO ALASKA NATIVES
---------------------------------------------------------- Letter :3.1

Of those entities contracting with IHS, the 13 RHOs have the greatest
capacity to deliver comprehensive inpatient and outpatient services. 
The RHOs vary considerably in size.  The largest serves more than
20,000 Natives and has a budget of nearly $40 million; the four
smallest serve fewer than 2,000 Natives each and have budgets of $2
million to $4 million.  (See app.  I for details on the 13 RHOs.) Six
of the RHOs operate regional hospitals, and all 13 provide community
health services to some outlying communities in their areas. 
Community health services usually include training and placement of
community health aides, long-distance physician supervision for the
village-based community health aides, itinerant physician and dental
coverage, mental health and alcohol abuse programs, and a wide range
of other health and social services. 


      SOME COMMUNITIES CONTRACT
      DIRECTLY TO MANAGE SERVICES
      FORMERLY OBTAINED THROUGH
      RHOS
---------------------------------------------------------- Letter :3.2

Historically, IHS has contracted with RHOs in Alaska because the RHOs
were well established when the Indian Self-Determination Act became
law in 1975\5 and because they were able to obtain resolutions of
support from the Native communities they represented.  However, a
Native community has the option of withdrawing its resolution from an
RHO and contracting directly with IHS to manage all or part of the
health services that previously were provided by the RHO. 
Communities have pursued this option for a variety of reasons,
including the belief that local control will improve the delivery of
health services and help them attain self-determination goals.  Under
the Self-Determination Act, IHS' authority to decline such community
contract proposals is very limited.\6

Twenty-five communities have decided to stop obtaining some services
through RHOs and to contract directly with IHS.  In total, there are
12 contractors that separated from RHOs because some contracts cover
more than one community.  These contracts are generally for a limited
number of services--most often alcohol and mental health services,
community health aides, community health representatives, and other
community-based services.  Ten of the contracts, for example, involve
management of village community health aide clinics, often in
conjunction with alcohol education, prevention, and counseling
activities.  The Native populations served by the 12 contracts range
in size from fewer than 30 people to nearly 2,000, and contract
awards range from about $100,000 to more than $3 million.  (See app. 
II.)

Although these communities, through direct contracting, manage some
of their own health services, they most often remain part of the RHO
network for other services, such as community health aide supervision
and training, physician and dentist services, inpatient care, and
management of referrals for specialty services obtained from private
providers (known as contract health care). 

One contractor that separated from an RHO--Ketchikan Indian
Corporation (KIC)--has assumed the management of a much broader scope
of services.  KIC is the largest Native community contractor, serving
a Native population of nearly 2,000 and with nearly $3.4 million in
fiscal year 1998 funding--one quarter of the 6.5 percent share of
Alaska self-determination contract funding received by community
contractors.  KIC manages a comprehensive primary care health center
with a permanent staff of physicians, dentists, nurses, and a wide
range of ancillary services, such as laboratory, X-ray, and pharmacy. 
KIC officials told us that the community decided to manage the health
center itself because it was dissatisfied that the RHO did not
provide information that it had agreed to provide, such as quarterly
financial statements; did not attend KIC tribal council meetings; and
had planned to replace the existing health center with a new one in
the neighboring village of Saxman rather than on KIC property in
Ketchikan.  Nonetheless, Ketchikan continues to participate in the
RHO and use the RHO's hospital in Sitka for some inpatient care. 


--------------------
\5 Between 1930 and 1960, Alaska Natives established local
organizations in many parts of the state to assist Native communities
and advocate on their behalf.  When ANCSA was passed in 1971, these
organizations were in place and became the designated nonprofit
service corporations to work with the for-profit ANCSA corporations
in managing programs for Native residents.  Thus, the majority of
today's RHOs were in existence before 1975. 

\6 IHS can only decline a contract proposal on the basis of one or
more of the five specific reasons listed in the Indian
Self-Determination Act:  (1) the service to be rendered or function
to be contracted will not be provided in a satisfactory manner; (2)
adequate protection of trust resources is not ensured; (3) the
proposed project or function cannot be properly completed or
maintained by the proposed contract; (4) the amount of funds proposed
is in excess of the applicable funding level for the contract; and
(5) the program, function, service, or activity proposed is beyond
the scope covered under the act.  In cases where IHS cannot approve a
contract proposal fully, it is required to approve any severable
portion of it and to provide technical assistance to help tribes
overcome other obstacles to successful contracting.  In addition, the
burden of proof for declination rests with IHS. 


      SOME COMMUNITIES HAVE NOT
      BEEN PART OF A REGIONAL
      NETWORK
---------------------------------------------------------- Letter :3.3

Nine of the communities that contract directly with IHS present a
somewhat different picture than the 25 communities that separated
from an RHO in that they did not previously obtain the contracted
services from an RHO.  Most of these communities are located in the
Cook Inlet (Anchorage) area, where they have access to the extensive
resources of the Alaska Native Medical Center.\7

Eight of these nine contractors serve one small Native community
each, with populations ranging from 11 to 392.  (See app.  III.) The
ninth contractor, Kenaitze, is exceptionally large, serving a
resident population of more than 1,400 Alaska Natives on the Kenai
Peninsula south of Anchorage.  Kenaitze has administered a health
services contract since 1983; its current contract--which is over
$1.1 million--provides for a midlevel practitioner clinic with a
dentist, a community health representative, and alcohol and mental
health services.  In addition to the Kenaitze clinic, two other
contractors manage clinics with midlevel practitioners, and two
manage community health aide clinics with some additional services. 

Two of the contracts, which were initiated in 1997, are especially
limited:  Chickaloon Village, which serves 11 Natives with $46,327 in
fiscal year 1998 contract funding, and Knik Tribal Council, which
serves 39 Natives with $53,079 in fiscal year 1998 contract funding. 
The Chickaloon and Knik contracts illustrate the extent to which IHS
is bound to support village self-determination decisions.  When IHS
identified funding to open a new midlevel clinic in the
Matanuska-Susitna Valley northeast of Anchorage, three Native
organizations in that area submitted proposals to manage the clinic: 
Southcentral Foundation (an RHO), Chickaloon, and Knik.  IHS approved
Southcentral's proposal to manage the clinic; in addition, IHS--under
rules requiring IHS to approve any severable portion of a
self-determination proposal--negotiated with Chickaloon and Knik
regarding what services they could provide with their limited
per-capita-based shares of the clinic funding.  IHS and the villages
agreed on transportation for village residents who need services in
Anchorage, plus management of contract health care for Knik. 


--------------------
\7 For self-determination contracting purposes, the Southcentral
Foundation is viewed as a "one-tribe" RHO representing the Cook Inlet
area.  According to an IHS official, however, under IHS policy,
Southcentral Foundation represents only those Natives who reside in
geographic locations in the Cook Inlet area that are not represented
by a tribal government.  A number of tribal governments in the area
have chosen not to give resolutions of support to Southcentral
Foundation to act as their RHO. 


   INDIVIDUAL COMMUNITY CONTRACTS
   HAVE HIGHER ADMINISTRATIVE
   COSTS
------------------------------------------------------------ Letter :4

Administrative costs are higher under individual community contracts
than under contracts with RHOs.  Under either contracting
arrangement, the Native organization receives the same amount of
funding for direct program costs, but IHS has determined that
individual communities need more funding for administrative
expenses--both to start up the contract and to administer it on an
ongoing basis.  The higher administrative costs generally reflect
lost economies of scale that result from the smaller scope of most
individual contracts. 


      IHS DETERMINES FUNDING NEEDS
      WITH NATIVE ORGANIZATIONS
---------------------------------------------------------- Letter :4.1

Under the Indian Self-Determination Act, an Indian tribe or Alaska
Native community that chooses to contract with IHS is entitled to
funding for both direct program costs and contract support costs
(CSC) to cover administrative functions.  In Alaska, these provisions
apply both to contracts between IHS and RHOs and to contracts between
IHS and individual Native communities.  Direct program funding is the
amount that IHS would have spent to operate the programs that were
transferred to the contractors.  CSC funding generally is an
additional amount, not normally spent by IHS, that is needed to cover
reasonable costs incurred by Native organizations to ensure
compliance with the terms of the contracts and prudent management of
the programs.  Direct program costs are the same regardless of who
manages the contracts--communities or RHOs.  In contrast, CSC amounts
may differ considerably. 

Determination of CSC needs is based on three cost categories: 
start-up costs, indirect costs, and direct costs.  (See table 3.) The
largest cost category is indirect costs, which include most ongoing
overhead expenses.  For most contracts, indirect costs account for
over 80 percent of the recurring CSC funding needs. 



                          Table 3
          
          Categories and Types of Contract Support
                           Costs

CSC category  Description
------------  --------------------------------------------
Start-up      One-time costs incurred in planning and
costs         assuming management of the programs.
              Examples include buying computers and
              training staff.

Indirect      Ongoing overhead expenses, which are often
costs         divided into three groups--management and
              administration, facilities and equipment,
              and general services and expenses.
              Management and administration includes
              financial and personnel management,
              procurement, property and records
              management, data processing, and office
              services. Facility and equipment includes
              building, utilities, housekeeping, repair
              and maintenance, and equipment. General
              services includes insurance and legal
              services, audit, general expenses, interest,
              and depreciation.

Direct costs  This category covers such costs as
              unemployment taxes and workers' compensation
              insurance for direct program salaries.
----------------------------------------------------------
Our analysis of cost differences between RHO contracts and individual
community contracts focused on the first two types of contract
support costs--start-up and indirect costs.\8 To provide a consistent
comparison, we examined the fiscal year 1998 funding needs of each
contractor for these costs as determined by IHS. 


--------------------
\8 We excluded direct costs from the analysis because it is a small
component of contract support costs and because, unlike the two other
cost categories, it consists mainly of costs that tend not to be
affected by who is doing the contracting. 


         START-UP COSTS
-------------------------------------------------------- Letter :4.1.1

New and expanded contracts are eligible for start-up CSC funding.  If
an individual Native community decides to contract separately for
services formerly obtained through an RHO, its funding needs for
start-up costs represent an increased, one-time cost for the program. 
IHS records show that the 12 community contracts involving services
formerly provided by RHOs received IHS approval for at least $452,000
in start-up CSC needs--ranging from about $22,500 to $140,000 per
contract--which were generally based on program size.\9


--------------------
\9 IHS has data on start-up costs for only 9 of the 12 community
contracts that cover services formerly obtained through an RHO. 


         INDIRECT COSTS
-------------------------------------------------------- Letter :4.1.2

On average, individual community contractors have considerably higher
indirect costs than RHOs would have to manage the same programs.  For
fiscal year 1998, IHS determined indirect cost needs of slightly more
than $3 million for the 12 individual community contracts that
separated from RHOs.\10 The IHS official responsible for negotiating
these contracts told us that to estimate what the indirect costs
would have been if the services provided under the 12 contracts had
instead been provided through RHOs, he would use the indirect cost
rates in place for the RHOs during fiscal year 1998.  Using these
rates that he provided, we determined the indirect costs for the RHOs
to be about $1.3 million--or less than half of the indirect costs for
the community contractors.  (See app.  IV for a contract-by-contract
comparison of indirect cost needs of the Native communities and
RHOs.)

IHS officials said the main reason individual community contracts had
higher indirect costs was that the small size of these contracts
resulted in the loss of administrative economies of scale.  Because
RHOs have an administrative structure in place to support other
contracts and services, they can spread the overhead expenses among
their programs.  Small communities, however, generally have to build
the administrative structure for these services alone. 

We did not compare the indirect costs of the other nine community
contracts with those of RHOs because the programs managed by these
contracts were not formerly a part of an RHO.  However, we found that
indirect costs as a proportion of total funding needs that IHS
determined for these contracts were similar to those of the 12
community contracts that cover services formerly obtained through an
RHO.  This would indicate that these contracts also are likely to
have higher indirect costs than RHOs. 


--------------------
\10 IHS determines CSC funding needs with each contractor on an
annual basis.  For large Native organizations that have negotiated
their indirect cost rates with another federal agency--such as the
Bureau of Indian Affairs (BIA)--for other contracts, IHS will apply
those rates to the program costs to determine the amount of indirect
costs.  For organizations without an existing rate, IHS negotiates
the amount of indirect costs by identifying and calculating overhead
cost items. 


   AVAILABILITY OF SERVICES NOT
   GREATLY AFFECTED, BUT RISK FOR
   ADVERSE EFFECTS EXISTS
------------------------------------------------------------ Letter :5

To date, IHS contracting with Native communities rather than RHOs
does not appear to have had a significant impact on the level of
services available to Alaska Natives, although we did identify a few
temporary service disruptions.  The small number of these contracts;
their generally restricted scope; and in some cases, their recent
implementation have likely been key factors in limiting the effects
on Native communities or RHOs.  However, a shortfall in available CSC
funding may jeopardize the continuation of this level of service. 
Native communities that are not in a financial position to absorb
unfunded contract support costs may face the risk of having to divert
funds from health services to cover their unfunded contract support
needs.  We found one instance, in Fort Yukon, where this may already
have occurred. 


      TO DATE, SERVICE
      AVAILABILITY HAS NOT BEEN
      GREATLY AFFECTED
---------------------------------------------------------- Letter :5.1

When individual Alaska Native communities have contracted directly
with IHS to provide some of their own health services, they generally
have assumed management responsibility for existing, defined service
programs being operated by IHS or an RHO.  Because these contracts
essentially enable program transfers, the types of services provided
do not change initially.  In addition, the community contractors
generally continue to employ the same staff and use the same
facilities. 

Generally, we did not find that a community's takeover of services
from an RHO in itself had a substantial effect on the types of
services provided or service utilization.  The service disruptions
that we did find in some communities, such as in Ketchikan, and in
some clinics staffed by community health aides tended to be
transitory in nature. 

  -- In Ketchikan, when KIC took over the contract from the RHO in
     October 1997, the health center's resources, staff, and patient
     population were split and two separate facilities were
     established.  KIC's health center initially had a gap in dental
     services because the RHO retained both dentists when staffing
     was split.  This gap has been partly remedied, and we observed
     no other gaps in services at the time of our review.  However,
     due to uncertainty surrounding the future of this contract, the
     staffing situation at both the KIC and RHO clinics was not
     stable.\11

  -- A review of clinics staffed by community health aides that now
     are managed by community contractors revealed sharp variations
     in some communities over past years in the numbers of patient
     encounters provided.  However, these variations did not appear
     to be related to community contracting because they occurred
     whether a community or an RHO was managing the services.  The
     variations most likely reflect temporary losses of staff because
     in small, remote Alaska communities, it takes time and training
     to replace community health aides. 


--------------------
\11 Because of concerns about cost inefficiencies in this case, the
Congress enacted P.L.  105-143 in December 1997, which requires IHS
to make only one contract award in the Ketchikan area beginning in
fiscal year 1999.  As of April 1998, IHS had not decided whether KIC
or the RHO would receive the renewal contract award. 


      SHORTFALL IN CSC FUNDING
      POSES RISKS TO SERVICE
      AVAILABILITY
---------------------------------------------------------- Letter :5.2

The 1988 and 1994 amendments to the Indian Self-Determination Act
clarified that CSC funding should be made available to provide Indian
tribes and Alaska Native communities with additional resources to
develop the capability and expertise to manage services on their own. 
The Senate report accompanying the 1994 amendments expressed concern
that without this additional support, Indian tribes would be
compelled to divert funds from health services to contract support
costs. 

IHS has established two separate pools of CSC funding--one for the
recurring CSC needs of ongoing contracts and the other for additional
CSC needs of new or expanded contracts.  IHS-wide, CSC funding for
ongoing contracts has increased from about $100.6 million in fiscal
year 1993 to $168.7 million in fiscal year 1998; and since 1994, the
Congress has appropriated $7.5 million per year specifically for the
CSC needs of new or expanded contracts.  However, the demand for CSC
funding has greatly exceeded these appropriations.  As a result,
while IHS has agreed with each contractor on the amount of their CSC
funding needs, it has not been able to fully fund those needs.  The
contractors have the option of delaying or going ahead without full
CSC funding, and most of them have chosen to begin implementing their
contracts without full funding.  Since 1995, IHS has reported a
shortfall in CSC funding each year, largely because of the rapid
increase in tribal assumption of IHS programs nationwide.  For fiscal
year 1997, the shortfall totaled $82 million nationwide, over $12
million of it in Alaska.\12

As a mechanism for allocating available CSC funds among contractors,
IHS maintains a waiting list for new contractors that have chosen to
operate without full CSC funding.  Available funding is allocated on
a first-come, first-served basis, and a new contractor's waiting time
for full CSC funding may be at least several years.  For example,
contractors that entered into contracts in 1994 are now at the top of
the waiting list and expect to be funded in fiscal year 1998, a 3- to
4-year wait.\13

IHS reports that a continued lack of sufficient CSC funds could, by
necessity, result in tribes funding administrative functions with
moneys that otherwise would have been used to provide direct health
care services.\14 This condition could occur if tribes are unable to
realize efficiency gains or do not have other resources to help
offset their CSC funding shortfalls. 

This risk is present in Alaska.  Fourteen of the 21 direct community
contractors were operating with CSC shortfalls in fiscal year 1998,
and 7 of these shortfalls represented between 30 to 74 percent of the
contract's total recurring CSC funding needs.  (See app.  V for
details on the CSC shortfalls by contractor.) Shortfalls of this
magnitude could make it difficult for tribes to continue to maintain
the same level of health services.  The risk is less for RHOs, which
also may have CSC shortfalls but generally are in a better financial
position than community contractors to manage these shortfalls
because they manage large multimillion-dollar operations that can
benefit from economies of scale and have multiple sources of revenue
that can generate positive cash flow.  The varying effects of
substantial CSC shortfalls on communities that contract directly with
IHS can be seen in Ketchikan and Fort Yukon--which are served by the
two largest direct community contractors. 


--------------------
\12 Based on IHS' fiscal year 1997 report to the Congress, about $33
million of this shortfall was for ongoing contracts and $49 million
was for new or expanded awards.  IHS maintains a waiting list for the
CSC funding needed for new or expanded contracts.  When a contract on
the waiting list receives CSC funding, that amount is treated as
recurring costs and is funded from ongoing CSC funding in subsequent
years. 

\13 The wait could be significantly longer or shorter for contractors
at the bottom of the waiting list, depending on the amount of CSC
funding appropriated in future years. 

\14 The Indian Self-Determination Act allows tribes the flexibility
to rebudget funds between program and administrative functions as
needed to perform the contract. 


      IN KETCHIKAN, OTHER
      RESOURCES WERE INITIALLY
      AVAILABLE TO MANAGE THE CSC
      SHORTFALL
---------------------------------------------------------- Letter :5.3

In Ketchikan, the large CSC shortfall of over $500,000 a year has not
had a negative impact on overall services to the communities involved
because both the community contractor, KIC, and the RHO, Southeast
Alaska Regional Health Consortium (SEARHC), were able--at least
temporarily--to provide additional resources to make up for the
funding gap. 

Prior to October 1997, SEARHC was managing the Ketchikan Indian
health center to serve six Native communities--Ketchikan, Saxman, and
four outlying communities on Prince of Wales Island.  When the health
center contract was split, KIC received 58 percent of the funding to
serve Ketchikan Natives and SEARHC retained the remainder to serve
Saxman and the other communities.  Loss of economies of scale
occurred in two ways.  First, additional clinic space was leased to
operate two separate clinics.  Second, additional staff were needed
to deliver the same level of services in two facilities.  For
example, the total number of clinical and administrative staff for
the clinic before the split was 59.5 full time equivalents (FTE). 
After the split, the two clinics had a combined total of 68 FTEs. 
Most of the increase was for duplicated administrative functions,
such as the need to have two clinic directors, two business office
directors, and two computer programmers.  Both SEARHC and KIC had the
additional resources to initially absorb the additional costs. 

  -- SEARHC is a large RHO that manages many federal and state health
     programs and services for the benefit of Alaska Natives in
     Southeast Alaska.  At the end of fiscal year 1996, its annual
     budget was over $50 million and it had over $23 million in net
     assets.  Although the Ketchikan clinic had 2 years remaining on
     its lease, SEARHC decided to lease a new facility nearby for its
     own clinic to serve Saxman and the outlying communities,
     asserting that it was not practical to share the original
     building with KIC.  SEARHC spent almost an additional $1 million
     of its own resources on this new clinic.  With the new clinic
     and additional staff, clinic waiting times for the Saxman Native
     community were reduced. 

  -- KIC assumed management of the original clinic with a contract
     award of nearly $3.4 million and a CSC shortfall of over
     $500,000.  Although it is too soon to determine the long-term
     impact of this shortfall, KIC has been able to use its tribal
     government resources--especially management staff from other
     programs--to reduce the additional administrative need.  A large
     tribe by Alaska standards, Ketchikan has a well-established
     tribal government with a staff of more than 70 that administers
     BIA and other federal and state-funded programs totaling at
     least $2.5 million in addition to the IHS contract. 


      IN FORT YUKON, OTHER
      RESOURCES WERE NOT AVAILABLE
      TO MANAGE THE CSC SHORTFALL
---------------------------------------------------------- Letter :5.4

CSC shortfalls have created significant difficulties for the Council
of Athabascan Tribal Governments (CATG) in managing the small Fort
Yukon clinic and community health aide services in the Yukon Flats
area northeast of Fairbanks.  CATG, which is a consortium of eight
small Native communities, has been operating its $1.8 million
contract with an annual CSC shortfall of about $500,000.  This
shortfall represents almost 53 percent of CATG's total recurring CSC
funding needs.  According to its most recent audit report, CATG did
not have any additional resources to compensate for a shortfall of
this size.  The official responsible for CATG operations told us that
because CATG did not have resources to cover the CSC funding gap, it
had no option but to use some program funds to support administrative
functions. 

There were some indications that CATG's financial strain may have
contributed to other operational problems.  In 1997, for example,
there was considerable turnover in the Fort Yukon clinic's physician
assistant staff, resulting in vacancies that were not immediately
filled.  Although the number of outpatient visits at the clinic did
not decline substantially, the Native Village of Fort Yukon was so
dissatisfied with CATG's failure to fill the clinic vacancies and
with other matters that the village considered asking IHS or the RHO
to resume management of the clinic or contracting directly with IHS. 
In the end, however, no action was taken; and as of April 1998, the
Native Village of Fort Yukon remained a member of CATG and was
receiving health services through its contract. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

Through the Indian Self-Determination Act, the Congress has clearly
expressed support for Alaska Native communities to exercise their
preferences for managing health care resources, such as through an
RHO or on their own.  Many Native communities view the option to
contract directly with IHS as fundamental to their ability to achieve
self-determination and self-governance objectives, and about 15
percent of Native communities in Alaska have chosen to do so. 

However, funds have been available to only partially support the
additional administrative costs created by lost economies of scale
when Native communities contract directly with IHS.  These funding
shortfalls appear not to have greatly affected the availability of
health services in Alaska at this time, but maintaining the
availability of services in the future could pose challenges to some
Native community contractors.  To the extent that Native communities
assume management of a greater portion of their health services in a
time of increasing CSC funding shortfalls, the risk for adverse
impacts on health services delivery also increases. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We provided a draft of this report to IHS officials, who concurred
with the report's findings.  In addition, they provided some
technical comments, which we incorporated as appropriate.  Appendix
VI contains the full text of IHS' comments. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report to the Secretary of Health and
Human Services, the Director of Indian Health Service, the Director
of the Office of Management and Budget, and other interested parties. 
We will also make copies available to others upon request. 

The information contained in this report was developed by Frank
Pasquier, Assistant Director; Sophia Ku; and Ellen M.  Smith.  Please
contact me at (202) 512-6543 or Frank Pasquier at (206) 287-4861 if
you or your staff have any questions. 

Bernice Steinhardt
Director, Health Services Quality
 and Public Health Issues


ALASKA NATIVE RHO CONTRACTORS
=========================================================== Appendix I

This appendix presents data to describe the 13 Alaska Native RHOs in
terms of the amount of their fiscal year 1998 contract awards,
numbers of Alaska Natives and Native communities served in 1998, and
types of facilities operated.  Six of the RHOs operate regional
hospitals, and all 13 use the Alaska Native Medical Center in
Anchorage for treatment of serious illnesses and injuries. 
Outpatient medical care is provided at three types of facilities: 
(1) health centers staffed with physicians and dentists; (2) midlevel
clinics staffed with physician assistants or nurse practitioners; and
(3) village-based clinics that rely on community health aides--who
usually are village residents with special training--to provide first
aid in emergencies, primary care, and preventive health services
under telephone supervision by physicians. 



                                        Table I.1
                         
                         Key Characteristics of Alaska Native RHO
                                       Contractors

                                           Number of
                                              Alaska
                                              Native
                   FY 1998   1998 Census  communitie
RHO           award amount  population\a         s\b  Facilities
------------  ------------  ------------  ----------  -----------------------------------
Aleutian/       $2,336,138         1,189           7  St. Paul midlevel clinic
 Pribilof
 Islands
 Association
 , Inc.
Arctic Slope     4,764,444         4,216           7  Samuel Simmonds Hospital, Barrow
 Native
 Association
Bristol Bay     19,018,994         6,069          32  Kanakanak Hospital, Dillingham;
 Area Health                                           midlevel clinics at Chignik and
 Corporation                                           Togiak
Chugachmiut      3,722,339         1,769           7  Seward midlevel clinic
Copper River     2,013,338           669           8  Community health aide clinics only
 Native
 Association
Kodiak Area      5,633,895         2,465           9  Kodiak physician and dentist health
 Native                                                center
 Association
Maniilaq        21,763,548         7,017          12  Maniilaq Hospital, Kotzebue
 Association
Metlakatla       2,310,839         1,398           1  Metlakatla physician and dentist
 Indian                                                health center
 Community
Norton Sound    18,501,941         7,386          20  Norton Sound Hospital, Nome
 Health
 Corporation
Southcentral     9,264,759        21,374           1  Patient Care Center, Anchorage;
 Foundation                                            physician and dentist health
                                                       center
Southeast       32,800,865        13,693          17  Mt. Edgecumbe Hospital, Sitka;
 Alaska                                                physician and dentist health
 Regional                                              centers at Juneau, Ketchikan, and
 Health                                                Klawock
 Consortium
Tanana          23,299,626        11,993          34  Fairbanks physician and dentist
 Chiefs                                                health center; McGrath midlevel
 Conference,                                           clinic
 Inc.
Yukon-          39,521,229        21,364          58  Yukon-Kuskokwim Hospital, Bethel;
 Kuskokwim                                             Aniak midlevel clinic
 Health
 Corporation
Other\c                            3,703          14
=========================================================================================
Total         $184,951,955       104,305         227
-----------------------------------------------------------------------------------------
Note:  We included as RHOs those specified in section 325 of the
Department of the Interior's appropriations act for fiscal year 1998. 

\a These are Census-based population estimates for 1998 developed by
IHS.  Populations include Alaska Natives served by community
contractors within the RHOs' areas because the RHOs generally
continue to provide some services, such as inpatient care, to
contractor populations.  Alaska Natives living in "unspecified" areas
or in other communities in RHO or contractor areas are included in
counts for those areas. 

\b Numbers of Alaska Native communities include federally recognized
tribes and villages as determined by BIA, with the following
exceptions that are recognized for self-determination contracting
purposes:  Cook Inlet Region Natives represented by Southcentral
Foundation, Valdez Native Tribe, and Qutekcak (Seward area) Native
Tribe. 

\c Includes communities in the Anchorage and Cook Inlet areas that do
not participate in Southcentral Foundation. 


ALASKA NATIVE COMMUNITY
CONTRACTORS THAT SEPARATED FROM AN
RHO
========================================================== Appendix II

This appendix describes the 12 community contractors that separated
from an RHO, listing the facilities operated and some of the services
provided under each contract.  Some of the services are somewhat
unique to Alaska, and they may vary from one contractor to another,
but they generally can be considered as follows: 

  -- Community health aides usually are village residents trained to
     give first aid in emergencies, examine the ill, report symptoms
     by telephone to a supervising physician, and carry out
     recommended treatments, including dispensing prescription drugs. 
     They also provide preventive health services, such as fluoride
     treatments, and health education. 

  -- Community health representatives differ from community health
     aides by focusing more on social and support services than on
     health care, although there may be overlap in some areas. 
     Community health representatives may provide general health
     care, including home health care visits to the elderly and new
     mothers, along with health education and outreach. 

  -- Midlevel clinics most often are staffed by nurse practitioners
     and physician assistants. 

  -- Contract health care programs purchase services for Alaska
     Natives from private providers when the services are not
     available from IHS or tribally operated programs. 

  -- Alcohol, substance abuse, and mental health programs at the
     village level often are provided by local residents trained as
     behavioral counselors, supported by regional professionals. 
     Many program elements are intended to prevent alcoholism,
     especially in youth, including Alcoholics Anonymous meetings,
     activities to promote sobriety, and home visits. 

  -- Emergency medical services at the community level generally
     focus on safety training and injury prevention, such as swimming
     and bicycle safety and first aid and CPR (cardiopulmonary
     resuscitation) training.  Some programs provide and monitor fire
     extinguishers and smoke alarms in the homes. 

  -- Patient transportation programs generally help coordinate
     patient travel for necessary health services with local and
     outside health providers. 



                                        Table II.1
                         
                           Key Characteristics of Alaska Native
                           Community Contractors That Separated
                                       From an RHO

                                           Number of
                                              Alaska
                                              Native
                   FY 1998   1998 Census  communitie
Contractor    award amount  population\a         s\b  Facilities and services
------------  ------------  ------------  ----------  -----------------------------------
Akiachak          $287,560           562           1  1 community health aide clinic;
 Native                                                community health representatives;
 Community                                             alcohol and mental health services
Chitina            206,709            26           1  1 community health aide clinic;
 Traditional                                           patient transportation services
 Village
 Council
Council of       1,777,668         1,271           8  Midlevel clinic; dentist; 6
 Athabascan                                            community health aide clinics;
 Tribal                                                community health representatives;
 Governments                                           alcohol and mental health services
Native             109,691           201           1  1 community health aide clinic;
 Village of                                            alcohol and mental health services
 Diomede
Eastern          1,240,785         1,160           6  5 community health aide clinics;
 Aleutian                                              community health representatives;
 Tribes                                                alcohol and mental health and
                                                       emergency medical services
Hoonah             248,845           649           1  1 community health aide clinic
 Indian                                                (with a state-funded midlevel
 Association                                           provider); community health
                                                       representatives; alcohol and
                                                       mental health services
Karluk             165,043            75           1  1 community health aide clinic;
 Tribal                                                community health representatives;
 Council                                               alcohol and mental health services
Ketchikan        3,368,612         1,915           1  Health center with physicians;
 Indian                                                dentists; ancillary services;
 Corporation                                           contract health care program;
                                                       alcohol and mental health services
Native             327,933           578           1  1 community health aide clinic;
 Village of                                            alcohol and mental health services
 Kwinhagak
Mt. Sanford        666,118           125           2  2 community health aide clinics;
 Tribal                                                community health representatives;
 Consortium                                            contract health care program;
                                                       alcohol and mental health,
                                                       emergency medical, and patient
                                                       transportation services
St. George         153,188           145           1  1 community health aide clinic
 Traditional
 Council
Valdez             157,463           267           1  Community health representatives;
 Native                                                contract health care program
 Tribe
=========================================================================================
Total           $8,709,615         6,974          25
-----------------------------------------------------------------------------------------
\a These are Census-based population estimates for 1998 developed by
IHS.  Alaska Natives living in "unspecified" areas and other
communities in contractor areas are included in these counts. 

\b Numbers of Alaska Native communities include federally recognized
tribes and villages as determined by BIA, with the exception of
Valdez Native Tribe, which is recognized for self-determination
contracting purposes. 


OTHER COMMUNITY CONTRACTORS
========================================================= Appendix III

This appendix describes the nine community contractors that did not
separate services from an RHO.  (See app.  II for definitions of the
types of services and facilities these contractors operate.)



                                       Table III.1
                         
                          Key Characteristics of Other Community
                                       Contractors

                                           Number of
                                              Alaska
                                              Native
                   FY 1998   1998 Census  communitie
Contractor    award amount  population\a         s\b  Facilities and services
------------  ------------  ------------  ----------  -----------------------------------
Chickaloon         $46,327            11           1  Patient transportation services
 Village
Native             135,611            63           1  Community health representatives;
 Village of                                            alcohol and mental health and
 Eklutna                                               emergency medical services
Kenaitze         1,142,154         1,428           1  Midlevel clinic; dentist; community
 Indian                                                health representatives; contract
 Tribe                                                 health care program; alcohol and
                                                       mental health services
Knik Tribal         53,079            39           1  Contract health care program;
 Council                                               patient transportation services
Ninilchik          558,411           266           1  1 community health aide clinic;
 Traditional                                           contract health care program;
 Council                                               alcohol and mental health and
                                                       emergency medical services
Seldovia           807,305           392           1  Community health representatives;
 Village                                               contract health care program;
 Tribe                                                 alcohol and mental health and
                                                       emergency medical services
Tanana             861,622           297           1  Midlevel clinic; alcohol and mental
 Tribal                                                health and emergency medical
 Council                                               services
Native             214,648           185           1  1 community health aide clinic;
 Village of                                            community health representatives;
 Tyonek                                                contract health care program;
                                                       alcohol and mental health and
                                                       emergency medical services
Yakutat            276,704           324           1  1 community health aide clinic
 Tlingit                                               (with a city-funded midlevel
 Tribe                                                 provider); community health
                                                       representatives
=========================================================================================
Total           $4,095,861         3,005           9
-----------------------------------------------------------------------------------------
\a These are Census-based population estimates for 1998 developed by
IHS.  Alaska Natives living in "unspecified" areas and other
communities in the contractor areas are included in these counts. 

\b Numbers of Alaska Native communities include federally recognized
tribes and villages as determined by BIA. 


COMPARISON OF IHS-DETERMINED
FUNDING NEEDS FOR COMMUNITY AND
RHO CONTRACTORS
========================================================== Appendix IV

This appendix compares the recurring funding needs of the 12
community contractors that separated from RHOs with the funding needs
of the RHOs for managing the same programs.  The total funding needs
include direct program costs and direct and indirect contract support
costs.  A comparison of indirect cost needs is also provided since
this is the major cost category that can vary depending on who
manages the contract.  The indirect cost need for each affiliated RHO
is estimated by applying the RHO's indirect cost rates to the
community contractor's program costs; it represents what the indirect
costs would have been if the services provided by the community
contractor had instead been managed by the RHO. 



                                        Table IV.1
                         
                             IHS-Determined Funding Needs for
                          Community and RHO Contractors, Fiscal
                                        Year 1998

                                                                      Indirect costs as
                                                                     percentage of total
                         Total funding needs   Indirect cost needs      funding needs
                         --------------------  --------------------  --------------------
Community   Affiliated
contractor  RHO           Community       RHO   Community       RHO   Community       RHO
----------  -----------  ----------  --------  ----------  --------  ----------  --------
Akiachak    Yukon-         $289,504  $284,274     $62,085   $56,855         21%       20%
 Native      Kuskokwim
 Community   Health
             Corporatio
             n
Chitina     Copper          218,891   159,310      92,471    32,890          42        21
 Tradition   River
 al          Native
 Village     Associatio
 Council     n
Council of  Tanana        2,290,874  1,436,40     974,280   119,810          43         8
 Athabascan  Chiefs                         4
 Tribal      Conference
 Governmen   , Inc.
 ts
Native      Norton          165,831   119,198      63,780    17,147          38        14
 Village     Sound
 of          Health
 Diomede     Corporatio
             n
Eastern     Aleutian/     1,482,830  1,344,58     381,729   243,481          26        18
 Aleutian    Pribilof                       2
 Tribes      Islands
             Associatio
             n, Inc.
Hoonah      Southeast       334,630   279,956      97,000    42,326          29        15
 Indian      Alaska
 Associati   Regional
 on          Health
             Consortium
Karluk      Kodiak Area     165,043   112,950      68,600    16,507          42        15
 Tribal      Native
 Council     Associatio
             n
Ketchikan   Southeast     3,879,901  3,446,89     955,878   522,870          25        15
 Indian      Alaska                         3
 Corporati   Regional
 on          Health
             Consortium
Native      Yukon-          327,933   265,639     114,026    51,732          35        19
 Village     Kuskokwim
 of          Health
 Kwinhagak   Corporatio
             n
Mt.         Copper          682,175   617,344     198,363   133,532          29        22
 Sanford     River
 Tribal      Native
 Consortiu   Associatio
 m           n
St. George  Aleutian/       153,188   151,478      28,778    27,068          19        18
 Tradition   Pribilof
 al          Islands
 Council     Associatio
             n, Inc.
Valdez      Chugachmiut     148,521   122,236      50,810    24,525          34        20
 Native
 Tribe
=========================================================================================
Total                    $10,139,32  $8,340,2  $3,087,800  $1,288,7         30%       15%
                                  1        64                    43
-----------------------------------------------------------------------------------------

COMMUNITY CONTRACTORS' CONTRACT
SUPPORT COST SHORTFALLS
=========================================================== Appendix V

This appendix details the amount and the magnitude of CSC shortfalls
for each of the 21 community contractors.  The amount of CSC
shortfall is computed by subtracting each contract's CSC funding from
its recurring CSC needs.  The magnitude of each contractor's CSC
shortfall is shown by the percent of its recurring CSC needs that is
represented by the shortfall. 



                                        Table V.1
                         
                         CSC Shortfalls of Community Contractors,
                                     Fiscal Year 1998

                                                                                Shortfall
                                                                                       as
                                                                               percentage
                        Total      Direct   Recurring         CSC                      of
                      funding     program         CSC     funding         CSC   recurring
Contractor              needs     funding     needs\a    received  shortfalls   CSC needs
-----------------  ----------  ----------  ----------  ----------  ----------  ----------
Akiachak Native      $289,504    $227,419     $62,085     $60,141      $1,944          3%
 Community
Chitina               218,891     119,167      99,724      87,542      12,182          12
 Traditional
 Village Council
Council of          2,290,874   1,316,594     974,280     461,074     513,206          53
 Athabascan
 Tribal
 Governments
Native Village of     165,831      90,248      75,583      19,443      56,140          74
 Diomede
Eastern Aleutian    1,482,830   1,031,701     451,129     209,084     242,045          54
 Tribes
Hoonah Indian         334,630     207,480     127,150      41,365      85,785          67
 Association
Karluk Tribal         165,043      88,748      76,295      76,295           0           0
 Council
Ketchikan Indian    3,879,901   2,563,087   1,316,814     805,525     511,289          39
 Corporation
Native Village of     327,933     206,929     121,004     121,004           0           0
 Kwinhagak
Mt. Sanford           682,175     483,812     198,363     182,306      16,057           8
 Tribal
 Consortium
St. George            153,188     114,694      38,494      38,494           0           0
 Traditional
 Council
Valdez Native         148,521      97,711      50,810      59,752         0\b           0
 Tribe
Chickaloon             46,327      30,727      15,600      15,600           0           0
 Village
Native Village of     162,008     111,517      50,491      24,094      26,397          52
 Eklutna
Kenaitze Indian     1,142,243     929,636     212,607     212,518          89           0
 Tribe
Knik Tribal            53,079      36,122      16,957      16,957           0           0
 Council
Ninilchik             582,673     301,325     281,348     257,086      24,262           9
 Traditional
 Council
Seldovia Village      893,911     606,061     287,850     201,244      86,606          30
 Tribe
Tanana Tribal         898,816     679,648     219,168     181,974      37,194          17
 Council
Native Village of     214,648     159,911      54,737      54,737           0           0
 Tyonek
Yakutat Tlingit       282,562     186,817      95,745      89,887       5,858           6
 Tribe
=========================================================================================
Total              $14,415,58  $9,589,354  $4,826,234  $3,216,122  $1,610,112         33%
                            8                                              \b
-----------------------------------------------------------------------------------------
\a Recurring CSC funding needs do not include start-up costs. 

\b Valdez Native Tribe had a CSC surplus of $8,942, which reduced the
total CSC shortfall from $1,619,054 to $1,610,112. 




(See figure in printed edition.)Appendix VI
COMMENTS FROM THE INDIAN HEALTH
SERVICE
=========================================================== Appendix V



(See figure in printed edition.)


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