Bennet, Hickenlooper, Colleagues Urge Defense Secretary to Fix Rule Hurting Colorado Springs Children’s Hospitals

Denver - Colorado U.S. Senators Michael Bennet and John Hickenlooper and U.S. Representatives Doug Lamborn and Jason Crow, along with 16 of their Senate and House colleagues, sent a letter to U.S. Department of Defense (DoD) Secretary of Defense Lloyd Austin. The letter urges the Defense Health Agency (DHA) to address the financial burden caused by a change in the way children's hospitals are reimbursed for the care provided to military families covered by TRICARE, the government health care program for active duty service members and their families.

"We write to express our deep concerns about a 2023 Defense Health Agency (DHA) rule that catalyzed a major shift in the TRICARE reimbursement methodology for children's hospitals," wrote Bennet and the lawmakers. "Children's hospitals situated in defense communities in our home states are now grappling with the impacts of this change."

Each year over 2.4 million children obtain care from children's hospitals through TRICARE, and the change has placed an outsized burden on children's hospitals in major defense communities, like Colorado Springs. Specifically, Children's Hospital Colorado said one in five patients in their Colorado Springs facility pay with TRICARE. The DHA previously exempted children's hospitals from the adult Medicare reimbursement process because the program's policies weren't applicable to the care children typically need. The rule change is expected to cost the hospital over $25 million annually.

The Children's Hospital Association (CHA) sent letters to DoD in 2020 and 2023 expressing their concerns about the proposed rule. However, they did not receive a response before the DHA implemented the change in October 2023.

The lawmakers specifically asked the following questions:

• What dialogue has DHA had with the affected children's hospitals to understand how this new reimbursement methodology impacts operations and access to care?

• What data and sources informed the agency's analysis of the impact on children's hospitals that care for TRICARE patients?

• How did the agency account for the financial impacts of military families traveling for care in circumstances where local services are no longer available?

• How did the agency develop the contingency payment and why did the DHA set a lower contingency payment for pediatrics?

• Can the agency verify the number of children's hospitals that are expected to qualify for the contingency payment that is outlined in the rule?

In addition to Bennet, Hickenlooper, Lamborn and Crow, U.S. Senators … and X members of the U.S. House of Representatives also signed the letter.

The text of the letter is available HERE and below.

Dear Secretary Austin:

As members of Congress representing military-connected children, we write to express our deep concerns about a 2023 Defense Health Agency (DHA) rule that catalyzed a major shift in the TRICARE reimbursement methodology for children's hospitals. Specifically, we urge the Department of Defense (DOD) and DHA to expeditiously meet with the affected hospitals to discuss administrative policy options to preserve access to pediatric care for military dependents.

Collectively, we represent a significant number of the 2.4 million children who obtain care in children's hospitals through TRICARE each year. These hospitals provide specialized treatment for a spectrum of concerns, including minor health issues and complex, long-term health conditions. They play an essential role in the wellbeing of our nation's military families.

Until recently, since 2008, TRICARE exempted children's hospitals from the adult Medicare Outpatient Prospective Payment System (OPPS). This exemption made logical sense, as very few children who seek care in children's hospitals are covered by Medicare and the program policies do not adequately reflect children's health needs.

In 2019, however, DHA proposed a rule to eliminate this exemption. In response, children's hospitals with larger TRICARE volumes collectively submitted comments through the Children's Hospital Association (CHA), outlining a number of concerns and asking DHA to extend the comment and implementation timelines pending the provision of more information. Instead, DHA's final rule, TRICARE; Reimbursement of Ambulatory Surgery Centers and Outpatient Services Provided in Cancer and Children's Hospitals, was finalized without any response and took effect on October 1, 2023.

Children's hospitals situated in defense communities in our home states are now grappling with the impacts of this change, as well as the ripple effects that the ensuing financial challenges may have on the provision of care for military families. For states with large military populations and no specialty children's hospital, any reduction in access to care would further complicate military family's choices by increasing burdens placed on families who already have to travel outside of their own state for medical services. Given the significant concerns expressed by children's hospitals about how the rule may impact military families' access to timely health care, we request that you provide us with responses to the following questions:

1. Dialogue: What dialogue has DHA had with the affected children's hospitals to understand how this new reimbursement methodology impacts operations and access to care?
2. Financial Data: What data and sources informed the agency's analysis of the rule's impact on children's hospitals that care for TRICARE patients? How did the agency account for the financial impacts of military families traveling for care in circumstances where local services are no longer available?
3. Contingency Payment: How did the agency develop the contingency payment and why did the DHA set a lower contingency payment for pediatrics? Can the agency verify the number of children's hospitals that are expected to qualify for the contingency payment that is outlined in the rule?

Additionally, we request DoD and DHA officials schedule a meeting as soon as possible with the children's hospitals that support military families. We believe a dialogue between the department and the hospitals will help identify impactful policy adjustments that can protect access to care. As you know, a robust TRICARE network for pediatric care is critical to the sustainment of our armed forces-working together, we can achieve this.