Mandatory Contract Support Costs and 105(l) Lease Payments

The Indian Self-Determination and Education Assistance Act (ISDEAA) requires 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 annually impact the overall Interior budget caps reducing funds available for critical services to our People and 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%. IHS overall, increased by 0.05%. This meant, cuts to facilities and services. It is not sustainable under discretionary appropriations.

Appropriations Committees have cited this issue for nearly a decade and call on 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, we are doing more with less.

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. Resources and tools are available below.

Resources

• 2024 Tribal Org Letter FY25 Mandatory Proposal for CSC105(l)
• 2023 Tribal Org Letter FY24 Mandatory Proposal for Tribal Sovereignty Payments
• Supreme Court Opinion in Becerra v. San Carlos Apache Tribe
• NIHB Amicus Brief in Bacerra v. San Carlos Apache Tribe
• Legislative Language for Mandatory CSC and 105(l) Leases from Senate FY 2023 Draft Interior Bill (S. 4686 -117th Congress)
• Reclassify CSC and 105(l) Hill One Pager
• Suggested Talking Points on CSC 105(l) to Mandatory (Downloadable Word document)
• Tribal Template Letter – FY25 Mandatory Proposal for CSC 105(l)(Downloadable Word document)