Contract Support Costs (CSC)

Mandatory Contract Support Costs and 105(l) Lease Payments

The Indian Self-Determination and Education Assistance Act (ISDEAA) requires the Indian Health Service (IHS) to compensate Tribes for Contract Support Costs (CSC) and Section 105(l) Payments for Tribal Leases. CSC are the necessary and reasonable costs associated with administering the contracts and compacts through which Tribes assume direct responsibility for IHS programs and services. A 105(l) lease is the compensation to Tribes for reasonable operating costs associated with facilities leased or owned by Tribes and Tribal organizations to carry out health programs under the ISDEAA. These accounts are mandatory spending, but Congress currently includes them in the discretionary budget.

These costs impact the overall Department of the Interior, Environment and Related Agencies Appropriations bill budget caps, reducing funds available for critical services to our People. These costs also impact other areas of the Interior Appropriations bill like the EPA, Fish and Wildlife Service, National Parks, etc. In FY 2024, CSC increased by 8% and 105(l) leases increased by 34%, while the IHS budget increased by 0.05% overall. This means IHS was forced to make cuts to the facilities and services budgets. This is not a sustainable solution under discretionary appropriations.

Funding Challenges for Indian Healthcare: A Call for Reclassification

Appropriations Committees have cited this issue for nearly a decade and called for a solution, including reclassification of these accounts as mandatory. The President’s budget request supports this approach as well. Keeping these costs as discretionary in practice, though they are mandatory in reality, has only kept the IHS and BIA budgets flat, despite significant medical inflation and population growth over the last decade. This means Indian Healthcare is forced to do more with less.

Supreme Court Ruling: Funding Impact on IHS

On June 6, 2024, the Supreme Court of the United States issued its opinion in Becerra v. San Carlos Apache Tribe (23-250). The question of the case was whether the IHS must pay CSC on 3rd party revenues collected from Medicare, Medicaid, and other private insurance. The Supreme Court ruled in favor of Tribes in a 5-4 decision. The federal government estimated that this will cost up to an additional $2 billion annually within the Interior budget.

The decision in favor of the Tribes in the San Carlos case will have major funding implications that will require a significant increase in the amount of funds provided for CSC by Congress. To meet this, Congress will either need to cut funding from IHS services or facilities budgets or appropriate additional funding to the IHS to make up the difference.

To avoid a reduction in other areas of the IHS budget, CSC and 105(l) leases need to be transitioned to “mandatory” spending to avoid disruptions to other IHS accounts. This approach has also been consistently supported by the Biden Administration.

Educating and advocating to Congress can help us finally move CSC and 105(l) lease funding to mandatory. This is a vital first step to moving all IHS funding in this direction.

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President Trump’s recent Executive Orders on federal funding could have serious implications for Tribal health. NIHB is actively advocating for Tribal Nations and providing key updates—click to learn more and access resources.