Indiana hospitals feel the pinch as Change Healthcare cyberattack causes payment delays

The cyberattack on the health technology company, Change Healthcare, last month is still impacting Indiana hospitals as many experience a major backlog in claims payments, according to the Indiana Hospital Association.

Change Healthcare is part of Optum and owned by UnitedHealth Group. It is the largest clearinghouse for insurance billing and payments in the U.S.

Change Healthcare also plays a vital role in eligibility checks and pharmacy operations across the country. According to its website, the company processes around 15 billion transactions a year and touches 1 in every 3 patient records. 

The American Hospital Association has described this cyberattack, which happened on Feb. 21, as “the most significant and consequential cyberattack on the U.S. health care system in American history.” 

In a survey of 1,000 members, the AHA found that 74% of hospitals and health systems reported direct patient care impact, including delays in authorizations for medically necessary care. The vast majority of hospitals also reported that the cyberattack has been impacting them financially.

In Indiana, the hospital association points to similar trends. A new IHA survey reflecting around a third of its members found that 60% of hospitals have seen a direct impact on patient care and nearly all of them have taken a financial hit. 

“In short, all of our revenue, about $447 million, is impacted in some way,” said Grant Byers, chief financial officer at Columbus Regional Health in Indiana.

“We are working to rebuild an alternate clearinghouse, but from a timing perspective, we may have a delay of $50-$60 million dollars before we start getting cash again.” 

Columbus Regional relies on Change Healthcare to process around 70% of payments for services provided to patients on Medicaid and Medicare, according to public relations coordinator Kelsey DeClue. The health system is currently relying on its reserves, DeClue said. But she added that they have not seen any direct impact on patient care.

IHA’s survey found that most hospitals have been able to implement temporary workarounds.

“Emergencies like this are why hospital reserves are so critical,” said Natalie Russell, IHA communications manager. 

“When emergencies like this arise, hospitals must continue to serve patients, but without reimbursement for care provided, hospitals are forced to make difficult financial decisions that could jeopardize access. Having reserves on hand ensure(s) a hospital can weather the storm and sustain the needs of its patients and community.”

What’s next?

Change Healthcare said on Wednesday that all of its major pharmacy and payment systems were back online, according to the Associated Press. Last week, the company said it expects to start reestablishing connections to its claims network and software on March 18.

But in a letter to the U.S. Senate Finance Committee leaders on March 13, the AHA said the impact of this cyberattack will still reverberate.

“Even after Change Healthcare’s technology is restored, it will be weeks — if not months — before hospitals and other health care providers will be made whole as the entire system — payers and providers — work through the backlog of previously unprocessed and rejected claims,” the AHA letter said.

In response to the disruptions, the Centers for Medicaid and Medicare Services announced an accelerated payments program for certain eligible providers and suppliers. 

But the AHA said these interventions would not do enough to ameliorate the impact on hospitals.

“We are concerned that this program is limited in its impact due to certain statutory constraints, including the repayment timeline and interest rate on AAPs (accelerated and advance payments),” the AHA letter said. 

The letter added that the hospitals are concerned about insurance denials of claims that were filed late or services provided without being able to obtain prior authorization due to the outage. “In short, providers still need certainty that they will not face billions in denials for technical reasons beyond their control as a result of the Change Healthcare outage,” the letter added.