4/24/2018

Indian Health Care

Improvement Fund
Workgroup Update
2018 TRIBAL SELF-GOVERNANCE ANNUAL CONFERENCE
APRIL 24, 2018

IHCIF and LNF

IHCIF = Indian Health Care Improvement Fund
• §1621, Indian Health Care Improvement Act
• Purpose is to eliminate deficiencies in health status and health resources of all
Indian Tribes
LNF = Level of Need Funded
LNF is the basis of the allocation methodology for the IHCIF

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Level of Need Funded – What is it?

Calculates resource needs compared to cost of insuring the IHS user
population with Federal employee health insurance*
Calculated for IHS as a whole, for IHS areas, and individually for each
local service delivery area
2 primary purposes:
◦ A benchmark to help justify IHS budget requests
◦ Use to assist in allocation of certain IHCIF funding to local level
service delivery areas

LNF basic formula

Funds Needed – Funds Available = Funds Deficiency
◦ Factors to calculate Need: Population, Costs, Health, Local
◦ Factors for Funds Available: IHS, Federal, state, private

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Conceptual Framework
LNF Calculations IHCIF Allocation Formula

Local
Service
Delivery
Units

Area Office identifies local IHS leadership decisions:

users & funds Medicaid Expansion
Qualifying Threshold`

Summary
1. The benchmark per capita cost is adjusted for coverage differences (scope of FEHP benefits compared to IHS
benefits), out-of-pocket costs, AIAN demographic characteristics, less 25% for insurance coverage* (Medicare,
Medicaid, and private insurance) of AIANs.
2. Next, the average net cost is individualized to IHS and Tribal sites considering conditions that vary among the sites
including size, remoteness, prevailing medical costs, and some variations in health status of AIAN users.
3. Next, IHS funding at each site is adjusted to exclude spending on public health services which are not included in
FEHP coverage. Each site's IHS funding is divided by the number of unduplicated users yielding a site-specific IHS
funding per capita.
4. Finally, each site's per capita (step 3) is expressed as a percentage of the site's forecast cost (step 2). This ratio is
known as the LNF. The lower the percentage, the greater the funding disparity compared to the benchmark.
Following guidelines in law, the IHS uses LNF results to allocate IHCIF appropriations to IHS and tribal sites. The IHCIF
formula is designed to reduce inequitable funding variations among sites by allocating more funds to sites with the
lowest LNF ratio (greatest funding disparity).