Children’s Hospital Colorado (Children’s Colorado) has filed a legal challenge to the Defense Health Agency’s (DHA) planned federal reimbursement changes to TRICARE, the health care insurance program for uniformed service members, veterans and their families. Those changes were scheduled to take effect Oct. 1, 2023.

This is an unprecedented action in Children’s Colorado’s history.

The new federal DHA rules significantly lower the amount that Children’s Colorado is reimbursed for outpatient health care services. Due to the high percentage of TRICARE patients cared for at Children’s Hospital Colorado, Colorado Springs, these new rules will disproportionally impact Southern Region operations and threaten our ability to maintain our current level of care for the entire Colorado Springs community, including military and non-military patients and families alike.

“When we made the decision to bring this level of specialty pediatric care to the Colorado Springs community, we knew our hospital would be a safety-net facility that operated on slim financial margins,” said Greg Raymond, Southern Region President at Children’s Hospital Colorado, Colorado Springs. “However, DHA’s arbitrary reimbursement reductions will have a negative impact that will make it impossible to sustain our current pediatric health care services and programs that are available to our entire community.”

Children’s Colorado in Colorado Springs has cared for more than 15,000 children of military families insured by TRICARE every year since opening in 2019. The DHA’s planned reimbursement changes to TRICARE are an almost 40% reduction in outpatient reimbursement and will prevent Children’s Colorado from sustaining that care.

Families have come to rely on the Colorado Springs hospital through the COVID-19 pandemic that severely impacted some children with MIS-C and a historic pediatric respiratory surge. Thousands of families have needed the Level III Neonatal Intensive Care Unit available for infants born as early as 22 weeks of pregnancy and those with complex medical conditions and benefitted from the expansion of outpatient services closer to home.

Military families stationed at major bases in southern Colorado rely on the hospital in Colorado Springs for a full spectrum of pediatric specialty care delivered through services such as outpatient surgeries, mental health therapy and cancer treatment. Our Colorado Springs hospital is a key contributing factor to ensuring that the military installations in southern Colorado remain designated Exceptional Family Member locations.

“This is not just a reimbursement issue; this is an equity issue that will compromise the care available to all families – not just military families – in southern Colorado,” Raymond added.

As advocates for our military families and all families, Children’s Colorado’s priority remains preserving local access to care. Children’s Colorado has worked tirelessly since April, when the rule was published, with military leaders, as well as local and federal elected officials, to educate DHA officials about the dangerous consequences of this change and the implications for maintaining access to pediatric specialty care and preserving military readiness. Despite successful efforts working on the National Defense Authorization bill, which will require the military to report over time on the impacts of this change for military families, in the interest of preserving access to care, this legal action is an attempt to secure a solution from the courts.