This bill mandates that TRICARE reimbursement rates be adjusted based on the specific location of care and requires the Secretary of Defense to utilize the lowest authorized payment rate.
Rich McCormick
Representative
GA-7
This bill updates the TRICARE reimbursement system to ensure that payment rates for medical services are adjusted based on the specific type and location of the facility where care is provided. It mandates that the Secretary of Defense utilize the lowest authorized rate when multiple options are available and requires providers to include location-specific identifiers on all claims. These changes are scheduled to take effect on January 1, 2026.
TRICARE Overhaul Mandates Lowest Payment Rates for Healthcare Services Starting in 2026
This bill fundamentally changes how the Department of Defense pays for healthcare for military members and their families. Effective January 1, 2026, the Secretary of Defense is required to pay the lowest authorized rate whenever multiple reimbursement options are available for the same service. Additionally, the bill moves away from a one-size-fits-all payment model by requiring specific reimbursement rates based on where the care happens—whether it’s a major hospital, an off-campus clinic, or a local doctor's office. To make this work, every provider must use a unique, location-specific identifier code on their claims to prove exactly where the service was delivered.
The "Site-Neutral" Shift
Under current rules, getting a procedure at a hospital outpatient department often costs more than getting that same procedure at a private doctor's office, even if the service is identical. This bill targets that price gap by establishing location-specific rates for five distinct categories: inpatient hospitals, on-campus outpatient departments, off-campus outpatient departments, ambulatory surgical centers, and physician offices. For a TRICARE beneficiary, this could mean that the program will no longer pay a premium just because a clinic is owned by a hospital. By forcing the Secretary to choose the "lowest authorized rate" under Section 1097b(a), the bill essentially prioritizes government cost-cutting over existing higher-tier payment structures.
Administrative Hurdles for Local Clinics
While the goal is to save taxpayer money, the bill introduces a significant technical requirement for your local healthcare providers. Every claim submitted must include a geographically specific national provider identifier code. For a physician who split their time between a private practice and a hospital-affiliated clinic, this means their billing department must be meticulous about which code they use for which location. If a small clinic or an off-campus outpatient center finds that the new "lowest rate" doesn't cover their overhead, they might face the tough choice of whether to continue accepting TRICARE patients or limit their services, potentially affecting access for military families in certain areas.
Long-Term Impact on Care Access
By mandating the lowest possible payment, the bill creates a clear path for the Department of Defense to reduce its healthcare spending. However, the real-world impact depends on how these "lowest rates" are calculated. If the rates for off-campus departments or surgical centers are slashed significantly to match the lowest available office rates, these facilities may see a drop in revenue. For the busy TRICARE member, this might not change your co-pay immediately, but it could change where you go for care. If specialized outpatient centers find the new rates unsustainable, you might find yourself redirected to larger, more crowded hospital campuses where the reimbursement structures are more stable.