TRICARE cuts have led a Colorado hospital to file a legal challenge with the federal government, claiming slashed reimbursement rates will undermine the hospital’s ability to serve military families.

Rate cuts, including a nearly 40% cut to outpatient care rates, mean TRICARE reimbursement does not always cover the cost of care provided to military kids, according to Children’s Hospital Colorado. MOAA and fellow members of the TRICARE for Kids (TFK) Coalition raised concerns about the cuts at a Defense Health Agency (DHA) Pediatric Advocacy Forum on Aug. 9; simply put, the new rates threaten access for military kids who rely on civilian children’s hospitals for care.

TRICARE recently aligned certain children’s hospital reimbursements with Medicare, similar to the approach for many adult health care services. This doesn’t work for children’s hospitals, which have a much different cost structure – consider the variety of supplies needed to treat preemies to full-grown teens, for example.

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Children’s Colorado will feel these cuts more than most civilian hospitals. It serves a concentrated TRICARE population, and the Colorado Springs area has become an Exceptional Family Member Program hub for military families with special needs due to expanded availability of pediatric specialty care provided by the hospital.

The Challenge of Finding Care

Specialty care for children isn’t universally available. Children’s hospitals and pediatric specialists are concentrated in metro areas because the demand for pediatric specialty care isn’t high enough to support practices in smaller communities. Many children from small towns and rural areas must travel across state lines to access the care they need. This also explains why many military installations located in rural or remote communities can’t support families with special medical needs.

Children’s hospitals serve as indispensable regional providers of pediatric specialty care and treat the most complex pediatric cases. In addition, many children’s hospitals team with military graduate medical education training programs to provide rotations and training for hundreds of uniformed military physicians in pediatric and pediatric specialty care.

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The TFK Coalition has also been working this issue on Capitol Hill. TFK achieved language in the House report for the FY 2024 National Defense Authorization Act for a report to assess the impact of this reimbursement change on children’s hospitals. This information will guide future advocacy efforts on the issue.

The bottom line: Our military health system’s approach of integrating direct care from military hospitals and clinics with civilian care from TRICARE network providers only works if the providers are willing to accept TRICARE patients. TRICARE must reimburse children’s hospitals fairly to ensure their continued participation in the TRICARE network and access to pediatric specialty care for military kids.