Trickle-down effect: Tricare rates nosedive

‘We hope this will wake some people up,’ AAH’s Williard says
Friday, August 26, 2016

YARMOUTH, Maine – HME providers were caught off-guard when Tricare, the healthcare program for uniformed services members and their families, began ratcheting down its reimbursement rates to below Medicare’s new reduced rates.

“Tricare has typically been one of the better payers, so to see the rates fall as drastically as they have put a shock to us,” said Chris Smythe, vice president at Tycon Medical, which has locations in Norfolk and Portsmouth, Va., which has a large military community. “They didn’t announce this and so far we aren’t able to get in touch with anyone at Tricare that knows anything.”

Medicare reduced its rates on Jan. 1 and July 1 in non-bid areas, and also on July 1 in Round 2 bid areas.

Depending on the region, providers report cuts from Tricare ranging from 10% to 55% below Medicare’s new reduced rates, according to AAHomecare.

“We are in-network with Tricare and they are our largest revenue source,” said Kim Wonsick, vice president of compliance for J & B Medical in Niceville, Fla., in a recent HME NewPoll. “Our contract with them is such that we take a 20% reduction to the Medicare allowable, so our agreed allowable with them is only 80% of the Medicare allowable on most items. Clearly this began impacting us in January of this year. We are in talks with them now about how we can change to out-of-network provider status so we do not take this additional reduction.”

Laura Williard, senior director of payer relations for AAHomecare,says her phone has been “blowing up” with reports of Tricare and other payers reducing their rates as of July 1. She has been reaching out to the regional offices that manage Tricare to educate them on the bidding program and the access problems such low rates create.

“We have been talking with people about the trickle-down effect for some time,” she said. “This is a big hit for the military and we hope this will wake some people up.”

Smythe said he’s already reached out to his congressmen to express his concerns.

“If military servicemen and women cannot get equipment because there is no one to service them, that might get the public’s attention,” he said. “This is just wrong.” 


Re-imbursement is based on your TriCare contract and are a percentage of Medicare.  Individual contracts can range from 60% - 90% of Medicare.  We have been in contact with TriCare on this and have been having discussions as to whether we can possible continue to be a contracted provider.  You can be non-contracted but, will no longer receive direct referrals - question is if you are not making any money do you want the referral????

Enough is enough ! 

Basing a reimbursement on another another systems fee schedule makes it so easy  to reduse reimbursement.  Just throw in a percentage (any percentage will do) then decrease reimbursement by that amount.  It’s so easy when you are paying for a procedure code rather than  a specific item. Stupid concept to begin with !   

TriCare  may have done us all a favor.  Let the chips fall where they may.  Our company was satisfied  accepting Tricare’s reimbursement because we were helping service men and women.  For Tricare to cut rates they way they have, is just insulting.

As of September 8, 2016 we can no longer provide Equipment, Service and Supplies to TriCare beneficiaries. 

Time for the patients to contact TriCare and/or Congressmen. 

Jack Lentz

Clinical Director

Respirator Therapy Services of PA, Inc.