Children’s Colorado is suing the Department of Defense over new health insurance reimbursement rates for service members

Children's Hospital Colorado is suing the federal Department of Defense over changes in the amount of money military health insurance reimburses for care of service members.

The shifts in reimbursements for outpatient services provided to those using the military’s Tricare insurance will largely be felt by the hospital’s Colorado Springs location, which opened in 2019. In the lawsuit, the hospital said its own internal forecast predicts the Springs location will lose about $13 million annually from the new Tricare rates, which went into effect October 1st. It says the main Anschutz hospital will lose nearly $4.5 million annually.   

“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, the President of the Colorado Springs location, in a statement.

 “(The Defense Health Agency’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,” Raymond said.

Children’s filed a preliminary injunction with their lawsuit Thursday asking the court to stop implementation of the new rates until the case is decided. That injunction has yet to be ruled upon. 

The hospital said it has been working with military, local and federal officials since the new rates were initially published in April.The organization said the lawsuit  is unprecedented in the hospital’s history.

“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 said.