Children’s Hospital Colorado signed an agreement this week with TriWest Healthcare Alliance to remain in network with Tricare, which will ensure that Children’s medical services for uniformed service members, retirees and their families in Colorado don’t lapse.

The new arrangement, which begins on Jan. 1, comes as Tricare switches third-party companies — from Health Net to TriWest — to administer its healthcare plans. Tricare is overseen by the Defense Health Agency, which is part of the U.S. Department of Defense.

In a press release, Children’s Hospital Colorado said the new deal supplants a plan that would have moved it to a non-network participation status with Tricare. Children’s said Tricare reimbursement for children’s hospitals remains “well below the cost of providing care.”

This past spring, Children’s warned that it would have to make cuts to key departments this year because of a change in how Tricare pays for care. The insurer tied the payments to what Medicare would pay for the same services, as Tricare does for services to adults at civilian hospitals.

The U.S. Department of Defense said the change, which was implemented in October 2023, would save the military up to $45 million in taxpayer funds annually, according to the Military Times.

Children’s Hospital Colorado estimated it had lost about $2.1 million a month since the reimbursement change was put in place compared to how Tricare used to pay. The system estimated about 16,000 kids insured by Tricare receive care at Children’s Hospital Colorado facilities, and about one in five children who receive care at the Colorado Springs hospital and clinics have military coverage.

Children’s this week said it will continue conferring with the Department of Defense, and elected officials, to ensure it can maintain high-quality, specialty pediatric care for all kids in Colorado.

“We are grateful for all the individuals and families who have joined us in our efforts over the past 18 months to address these TRICARE cuts,” the hospital said in a statement. “We will continue to share opportunities where your advocacy can help us preserve critical access to healthcare services for military families like yours at Children’s Colorado.”

Sign up for our weekly newsletter to get health news sent straight to your inbox.