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Frustrations mount as Change Healthcare grapples with cyberattack

The breach is delaying hundreds of millions of dollars in payments to hospitals, medical providers, and pharmacies unable to file insurance claims.
Frustrations mount as Change Healthcare grapples with cyberattack
Posted at 7:35 PM, Mar 14, 2024

The nation’s largest clearinghouse is struggling to recover from a cyberattack reported more than three weeks ago, leaving hospitals and medical providers across the country cash-strapped and frustrated.  

The hack on Change Healthcare, which is owned by UnitedHealth Group, was reported on Feb. 21. The breach is delaying hundreds of millions of dollars in payments to hospitals, medical providers, and pharmacies unable to file insurance claims or access patient information for care provided.  

The hack is now under investigation by the Office for Civil Rights, where federal civil rights investigators will determine if patient privacy was properly protected as required by law.  

A spokesperson with UnitedHealth Group released a statement to Scripps News on the ongoing investigation, saying, "We will cooperate with the Office of Civil Rights (OCR) investigation. Our immediate focus is to restore our systems, protect data and support those whose data may have been impacted. We are working with law enforcement to investigate the extent of impacted data." 

As the investigation into the attack on the major billing and payment company continues, medical providers and pharmacies are scrambling to submit workarounds, and some companies have been forced to borrow money or dip into their savings to make payroll.  

Randle House, the owner of Metier Pharmacy in Phoenix, said his cash flow gap is now a couple hundred thousand dollars.  

“In the 25 years I've been in the industry, and before that working in my dad's pharmacy, there was never anything like this,” House said.  

He said the hack triggered issues with prescription copays, driving up the cost of medications between $15 and $200 or more for select clients, forcing some to delay their medications until Change Healthcare resolves the issue.  

“I mean these are life-altering medications,” House said. 

He said they’ve been seeking a workaround to help clients, but adds that it’s a time-consuming process.  

“We're not getting paid for a lot of major drugs that have copay cards, we go after those for patients to help save them money, and it's a big revenue stream that we're missing out on,” House said.  

Brad Larsen, a psychologist and the co-owner of Portland Mental Health & Wellness said the money from previous claims has dried up.  

“We have an existing line of credit that we typically do not use, and we've had to use almost all of the $300,000 available to us to make payroll last week,” Larsen said. “We'll have another payroll in next week and we're looking at the likelihood of the owners having to put in a bunch of our personal money to be able to make payroll.”  

Kodiak Solutions gathered data from 1,850 hospitals and 250,000 physicians and found the cyberattack is costing hospitals $2 billion a week in cash flow. The company took a look at the bigger picture and found $6.3 billion in delayed payments to hospitals between Feb. 21 and March 9.  

SEE MORE: Government pressures UnitedHealth to help providers after cyberattack

The financial impact is expected to be much higher once experts begin to factor in the smaller providers impacted.  

 “Not only will cash begin to dry up, but there's now a backlog of work being created because you have not been able to send claims for three weeks,” Kodiak Solutions revenue cycle team director Matt Szaflarski said.  

According to Kodiak Solutions, providers are already struggling to collect payments for medical services. The company found bad debt on commercial insurance claims reached 1.8%. 

Many hospitals also took a financial hit during the COVID-19 pandemic.  

“In fact, coming out of the COVID time, hospitals were in the worst financial position that they had been in history,” American Hospital Association Group vice president for Public Policy Molly Smith said. “We actually started this year with about half of hospitals operating either at a break even or with negative operating margins.” 

Smith said there are also concerns with patient care as some hospitals struggle to access insurance coverage for patients.  

“We did have a number of hospitals and health systems reporting that they couldn't get through to the payer to get authorization for care, so in some instances that meant that people were staying for example in a hospital longer,” Smith said. 

Over the weekend, the Centers for Medicare and Medicaid Services announced advanced payments for suppliers. The White House also urged insurance companies to make interim payments to impacted providers.  

UnitedHealth Group’s Optum also launched a temporary funding assistance program for providers. UnitedHealth Group released a timeline outlining when issues are expected to be resolved. On March 15, provider electronic payments are expected to be available for connection, and during the week of March 18 the company will begin to test the claims system.  

According to the company, experts are working diligently to restore operations and ensure a resolution to the recent disruption.  

House worries the cyberattack and the unexpected financial strain will significantly affect the viability of small independently owned pharmacies.  In a 2022 report in which the Journal of the American Pharmacist Association identified 61,175 pharmacies across the U.S., 61.5 % (37,954) were chains and 38.1% (23,521) were regional franchises or independently owned and 0.4% (240) were government pharmacies.   

Regional franchises or independently owned pharmacies made up 76.5% of pharmacies in rural areas.  


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