American Indians & Medicare
What is Purchased/Referred Care and how does Medicare affect it?
Last reviewed: · Big Sioux Benefits Data Desk
Purchased/Referred Care (PRC) is the Indian Health Service program that pays outside, non-IHS providers for medically necessary care a local IHS or tribal facility cannot deliver itself, and Medicare affects it directly, because IHS names Medicare as an alternate resource you are required to apply for when you reasonably qualify. The Indian Health Manual states that "refusal to apply for alternate resources when there is a reasonable possibility that one exists, or refusal to use an alternate resource, requires the denial of eligibility for PRC", and Medicare Part A and Part B are on the alternate-resource list.
The qualifier: PRC is not an entitlement and not unlimited. IHS says plainly that "the Indian Health Service is not an entitlement program, and therefore funding for PRC is not guaranteed by the Federal government." PRC operates on a fixed budget, ranks requests by medical priority, and has residency and notification requirements, so in practice it concentrates on the care that matters most: the specialist visits, surgeries, and advanced imaging that happen outside the I/T/U system. That is exactly where Medicare pays first. Federal law makes Indian health programs the payer of last resort (25 U.S.C. § 1623(b)), so when you have Medicare, the outside provider bills Medicare first and PRC considers what remains, stretching the PRC budget further for everyone in your community.
How PRC and Medicare fit together
| Situation | What happens |
|---|---|
| Referred out, with Medicare | Medicare pays first; PRC can cover remaining eligible amounts, subject to its rules and budget |
| Referred out, refused to apply for Medicare | The Indian Health Manual requires denial of PRC eligibility when a reasonably available alternate resource is refused |
| Care inside your IHS/tribal facility | PRC is not involved: direct care, with Medicare billed by the facility if you are enrolled |
| Emergency care outside | Notify PRC within its deadline (commonly 72 hours; longer for elders in some units). Ask your PRC office for your unit's rule |
The practical takeaway: declining Medicare Part B is not a neutral choice. It can put at risk the exact benefit you need on the day you are referred out for surgery, and it builds a permanent Part B late penalty besides (see Do I need Medicare if I have IHS coverage?). PRC rules are applied by each service unit, and programs differ by tribe and facility, so ask your local PRC office or benefits coordinator how your unit handles alternate resources before you decide. The full picture is in American Indians and Medicare in South Dakota.
Sources
- IHS — Purchased/Referred Care, frequently asked questions — accessed 2026-07-19
- Indian Health Manual, Part 2, Chapter 3 — Purchased/Referred Care — accessed 2026-07-19
- IHS — Purchased/Referred Care, alternate resource requirements — accessed 2026-07-19
- 25 U.S.C. § 1623(b) — Indian health programs as payer of last resort — accessed 2026-07-19
Related questions
Does PRC pay for any care I get outside IHS?
No. PRC pays only for authorized, medically necessary care within its rules, residency in the service unit's delivery area, medical-priority ranking, prior authorization or timely notification for emergencies, and within its annual budget. It is not open-ended coverage, which is a core reason IHS expects eligible patients to carry Medicare or other alternate resources.
If Medicare pays first, what does PRC still do for me?
PRC can pick up eligible amounts Medicare leaves behind for authorized referrals, and it remains the payment path for authorized outside care. Using Medicare first also conserves the PRC budget your whole community draws on, the design Congress wrote into the payer-of-last-resort statute.
Talking it through beats guessing: book a free, no-pressure conversation, see the guide to American Indians and Medicare in South Dakota, or browse all answers.
Big Sioux Benefits is a licensed insurance agency, not affiliated with or endorsed by the U.S. government or the federal Medicare program. We do not offer every plan available in your area. Contact Medicare.gov, 1-800-MEDICARE, or SHIINE (South Dakota's SHIP) for all of your options. We are also not affiliated with, and do not speak for, the Indian Health Service, any tribal health program, or any tribal government — program rules can differ by tribe and facility, so confirm with your benefits coordinator or PRC office.