Spotlight: What is a ‘638 contract,’ anyway?

Health Services-JWS
The Southern Ute Indian Tribal Council is currently reviewing options and making plans for the future of the tribal health care system. To highlight the council’s efforts and increase awareness of the history and nature of the system as it exists today, and perhaps provide a look at where it might go, the Drum presents a package of stories on its past, present and future.
Jeremy Wade Shockley | The Southern Ute Drum

Editor’s note: For more stories from our Spotlight on Tribal Health series, click here.

The terms “self-determination” and “638 contract” are often used in Indian Country to describe tribal programs.

The source of these terms can be traced back to a 1970s-era federal law, the Indian Self-Determination Act, which marked the most recent of many abrupt changes in federal policy toward Indian tribes and tribal people.

Federal policies toward Indian tribes have comprised a roller-coaster ride, first trying to eradicate tribes, then trying to protect tribes, then trying to assimilate and terminate tribal cultures, and then finally protecting tribal rights to self-determination.

During the Treaty Period, tribes were a military threat to the government and the United States entered into treaties with tribes as equal sovereigns. Once the government obtained the military upper hand, tribes were confined to reservations and tribal governments were allowed to decay or were actively undermined by the United States.

During this time, tribal lands were allotted and non-Indian homesteads moved in to occupy the “surplus” lands. A significant percentage of the remaining tribal land base was lost and the condition of tribes further deteriorated.

In the 1920s, Congress investigated the conditions on Indian reservations. The Merriam Report documented the dismal economic, health and social status of tribal members that were the direct result of federal policies. This helped bring about the passage of the Indian Reorganization Act of 1934, which aimed to revitalize and strengthen tribal governments. The Southern Ute constitution is a result of the IRA.

Unfortunately, after World War II, federal policies toward tribes once again aimed to have tribes disappear from society. During the 1950s and ‘60s, the government established policies to terminate tribes as legal entities and pressed tribal members to relocate to large urban centers where they would be assimilated into white society.

Some tribes, such as the Menominee of Wisconsin, were actually terminated, and this resulted in considerable hardship for members of such tribes.

The Nixon Administration repudiated the termination and relocation policies in 1970. In addition, Congress passed the Indian Self-Determination Act, also known as P.L. 93-638, which had the goal of transferring all federal programs for tribes out of federal control and into tribal control. Congress believed that tribal communities should decide what direction these programs should take, thereby strengthening tribes.

Under the ISDA, a tribe can demand a contract — sometimes referred to as a “638 contract” because of the original act’s Public Law number — to operate any federal program, function, service or activity (known as “PFSAs”) provided to tribes. The government must give the tribe the same amount of money it spent itself on the PFSA. If the United States spent $1 million on a PFSA, then it must pay the tribe $1 million to operate that PFSA.

But that’s not all. Tribes must also be paid for certain administrative costs, called contract support costs. For example, a hospital operated by the U.S. Indian Health Service will not have a personnel department within the hospital; those personnel functions are handled by other federal agencies. In order to cover the cost of things like personnel administration, additional funds are added to the self-determination contract in the form of contract support costs.

When a tribe or tribal organization takes over a PFSA, such as a hospital or clinic, it is the tribe, not the Indian Health Service, who decides how the facility is to be run. If the tribe decides to expand its pharmacy program, it can just do so without having to ask IHS for permission. If the tribe wants to add specialist physicians to its staff, such as an obstetrician, it is the tribe that decides, not the IHS.

As Congress intended, the ISDA gives tribes tremendous power to decide their own destinies with regard to health care and any other program operated by the federal government for the tribe’s benefit.

Although federal policies toward tribes have varied wildly, the era of self-determination has secured for tribes the rights to assume additional responsibility and oversight of many services that had previously only been provided by the federal government.

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