Kaine, Colleagues Push for DOD to Provide Increased Transparency for Children’s Hospitals Serving Defense Communities

WASHINGTON, D.C. – U.S. Senator Tim Kaine (D-VA), a member of the Senate Armed Services Committee, joined 19 of his Senate and House colleagues in sending a letter to Secretary of Defense Lloyd Austin urging the Defense Health Agency (DHA) to provide clarity on the implementation of a change in reimbursements for children’s hospitals that provide care to military families covered by TRICARE, the government health care program for active duty servicemembers 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 the lawmakers. “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 families’ choices by increasing burdens placed on families who already have to travel outside of their own state for medical services.”

DHA previously exempted children’s hospitals from the Medicare outpatient reimbursement model because the reimbursement rate did not adequately reflect the specialized care provided at children’s hospitals. Over 2.4 million children obtain care from children’s hospitals through TRICARE each year, and the change has created some challenges for children’s hospitals in major defense communities like Virginia. Children’s hospitals that serve many servicemembers’ children, such as The Children’s Hospital of the King’s Daughters in Norfolk, are seeking increased transparency on how these changes will be implemented. This clarity is crucial to ensuring the continuity of services and care that military families need.

The Children’s Hospital Association (CHA) sent letters to the Department of Defense in 2020 and 2023 expressing their concerns about the proposed rule. In their letter, 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?

The full text of the letter is available here.

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