Aurora-based Children's Hospital Colorado cautioned that it may close the cancer treatment center at its Colorado Springs hospitals and make other cuts because of Tricare reimbursement changes, the Denver Post reported May 29.
The health system filed a lawsuit in September after the U.S. Department of Defense issued a new rule to change Tricare reimbursement rates to align with Medicare reimbursement as required by law. The system alleged that the department ignored how the rule is "completely impracticable" for children's hospitals.
In April, a federal judge ruled against the health system. U.S. District Court Judge Nina Wang found that the Department of Defense did not exceed its authority and it did not act arbitrarily in moving to the new reimbursement, according to the report. She said in her ruling that Children's Colorado essentially was asking her to rule that the government could never lower its payments to children's facilities.
Children's Colorado estimated that it has lost about $2.1 million per month since October, compared to how Tricare previously paid, according to the report. The system sees a bigger effect at its Colorado Springs facilities than at its Aurora facilities because of the large military presence in that region.
When the health system filed its lawsuit in September, it warned that the reimbursement change could lead to the closing of its Center for Cancer and Blood Disorders and infusion center, according to the report. The system said it could also lead to treating fewer babies in the neonatal intensive care unit, no longer operating a level two trauma center and making unspecified cuts to the emergency department.
A Children's Colorado spokesperson told the Post those cuts are still on the table if nothing changes. The system has yet to release a timeline or specify whether it will phase the cuts or make them all at once.
The Children's Hospital Association sent a letter to House and Senate's Armed Services Committee members asking them to work with affected hospitals on a solution, according to the report. The legislators have not ordered the Department of Defense to make a change but did include a provision in the defense reauthorization bill to study the effects of the reimbursement change.