Undeterred by a federal court judge’s ruling in April that rejected a legal challenge to a Defense Health Agency regulatory change reducing its TRICARE insurance reimbursements, Children’s Hospital Colorado is appealing to state and Congressional lawmakers for assistance.

“We have secured bipartisan support among members of Congress, and while passing federal legislation is never easy, this legislative work will continue to play out through the course of this year,” said Greg Raymond, president of Children’s Hospital Colorado Southern Region. “We remain hopeful that our legislative advocacy efforts will be successful.”

From Colorado, U.S. Reps. Doug Lamborn, a Republican, and Jason Crow, a Democrat, and U.S. Sens. Michael Bennet and John Hickenlooper, both Democrats, have said they will push for policy change in this year’s National Defense Authorization Act.

A new rule that the U.S. Department of Defense adopted in April of 2023 could have widespread ramifications for not only military-related children but all pediatric patients, the Colorado Hospital Association warned in a letter sent on May 13 to members of the Armed Services Committee.

TRICARE, the government’s health insurance plan for active-duty military, retirees, dependents and others connected to the military, is being affected by a Defense Health Agency decision to reverse a longstanding exemption that gave military children timely access to specialty and sub-specialty outpatient care without imposing adult-focused Medicare policies on providers who serve children.

The Defense Department argues that removing the exemption refocuses insurance payments on actual costs rather than historic reimbursements.

The new rule took effect Oct. 1 and applies to 2.4 million children in military-connected families that children’s hospitals serve.

Raymond estimated the change will cost Children’s hospitals in Colorado Springs and Aurora up to $17 million a year, roughly half of the $35 million annual reduction in payments the Defense Department anticipates, with the department expecting a potential for $45 million in cost savings.

The Defense Department argued in the Children’s Hospital Colorado lawsuit that some children’s hospitals will see increases in reimbursements and that Children’s Hospital Colorado has been receiving reimbursements for certain services at a higher rate than other large children’s hospitals. That essentially meant TRICARE reimbursements were being provided in excess of costs and used to subsidize research, professional education and community health improvement.

But the TRICARE cuts “could lead to longer wait times, costly travel for families to seek care elsewhere, the closure of certain specialty programs and other hardships,” according to the hospital association’s letter.

Fourteen of the nation’s 20 largest children’s hospitals, which in Colorado include the Colorado Springs and Aurora locations that combined serve a half-dozen military installations, are disproportionately affected by the federal government’s decision, the letter said.

Raymond said the situation could force the Colorado Springs hospital to close specialty clinics, such as the cancer and blood center, as well as reduce services for behavioral health programs and have fewer emergency room openings.

However, no final decisions on consequences to the loss in revenue have been made, he said.

“It is too early to speculate the odds of which programs and services have a greater chance of being impacted than others or when changes would occur,” Raymond said. “We are focused on and awaiting the outcome of our legislative advocacy efforts prior to making any decisions.”

Meanwhile, it’s business as usual.

“It is crucial that our community knows that we remain committed to preserving access to care for our families,” Raymond said. “We built this hospital and expanded our services in this community to bring care closer to home for not just our military families but all southern Colorado families. We will continue to advocate and fight for those families.”