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Change Healthcare cyberattack outages cause financial ‘mess’ for doctors

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Small private practices and healthcare providers face growing financial pressures as crucial reimbursement systems remain down for the ninth day, following the cyberattack on Change Healthcare.

Change Healthcare offers payment and revenue cycle management tools that facilitate transactions between providers and most major insurance companies. Its parent company UnitedHealth Group discovered that a cyberthreat actor had breached part of the unit’s computer network on Feb. 21, according to a filing with the U.S. Securities and Exchange Commission.

As a result, the company isolated and disconnected affected systems “immediately upon detection” of the threat, the filing states.

The fallout caused widespread disruption to the U.S. healthcare system.

Doctors told CNBC that the outage prevented them from verifying patients’ eligibility for treatment or filling prescriptions electronically, creating more administrative responsibilities for workers already overwhelmed by office work. Perhaps most importantly, providers have been unable to receive reimbursements from insurers, effectively halting the revenue cycles of many health systems.

Small and mid-sized practices that rely on reimbursement cash flow to operate must make difficult decisions about how to stay afloat. If the outage continues for too long, experts believe that some practices could have to close their doors permanently.

Dr. Purvi Parikh, an allergist and immunologist in private practice in New York, told CNBC that the breach had been a “mess” and a “big stressor.” Like many others, she said her practice was unable to receive reimbursements from insurers for patient visits, making it difficult for the practice to pay operational expenses such as payroll and medical supplies.

Switching to a new platform could take weeks, Parikh said, so there are no immediate workarounds available. As of Thursday, Change Healthcare did not share any updates on when it expects its systems to be back online.

“The most frustrating thing is that no one has any answers or solutions,” Parikh said. “We’re kind of stuck.”

Change Healthcare said Thursday that the Blackcat ransomware group was behind the attack. Blackcat, also called Noberus and ALPHV, steals sensitive data from institutions and threatens to release it unless a ransom is paid, according to a December statement from the U.S. Department of Justice.

The company said it was working with law enforcement and third-party consultants like Mandiant, which is owned by Google, and cybersecurity software maker Palo Alto Networks to assess the breach.

“Patient care is our top priority and we have several solutions to ensure people have access to the medications and care they need,” Change Healthcare said in a statement to CNBC.

Dr. Kiranjit Khalsa, an allergist and immunologist who runs an independent practice in Scottsdale, Ariz., said his staff is working longer hours to try to keep up with the extra work resulting from the breach, as well as manually calling in prescriptions.

She said reimbursement issues are the “biggest burden” as she worries about how she can continue to support her patients and employees. Khalsa plans to reduce staff hours and even close the clinic for a few days.

“I worry about being able to provide for them,” Khalsa told CNBC in an interview. “I also worry: where will I find this money if it doesn’t arrive? Do I need to take out a loan to keep the clinic afloat?

Even when Change Healthcare’s systems come back online, many unanswered questions remain about what happens next, according to Dr. Dan Inder Sraow, an interventional cardiologist who has a private practice around Phoenix, Arizona. He said it was unclear whether Change Healthcare would take responsibility for processing all claims or whether it would have to hire additional staff to help.

“I don’t think people realize that the people who are providing the services are not able to make money from them,” Dr. Sraow told CNBC. “We don’t know how long this is going to last, and it’s such a dangerous, dangerous thing.”

Dr. Jesse Ehrenfeld, president of the American Medical Association, said he spent days fielding calls from worried colleagues.

He said he spoke with a doctor who runs an oncology practice and has only two weeks’ worth of cash. If the outage continues, the practice will not be able to purchase the chemotherapy its patients depend on for their treatment.

Since many providers operate on razor-thin margins, Ehrenfeld said it’s possible some will go out of business.

“We have so many practices that are on the fringes, especially smaller practices, where they’re just getting by,” Ehrenfeld told CNBC in an interview. “Any aberration in the system that says, ‘Oh, you don’t get checks for two weeks,’ is obviously a situation that puts practices at risk.”

In 2022, Change Healthcare merged with provider Optum, which serves more than 100 million patients in the United States and is owned by UnitedHealth, the nation’s largest healthcare company by market capitalization.

The American Medical Association strongly opposed the merger, writing in a letter to the DOJ that the union could stifle competition, give UnitedHealth access to large stores of data and potentially disrupt patient care.

The merger ultimately went through, but the DOJ recently launched an antitrust investigation into UnitedHealth, according to a Wall Street Journal report published Tuesday.

“It’s kind of like a perfect storm of regulatory issues (and) lack of competition – and unfortunately the people who are really going to suffer are the patients and the individuals who work in the healthcare system,” Dr. Ravi said Parikh, retina specialist. specialist who owns and operates a practice in New York.

The cyberattack left Parikh’s clinic without a way to receive reimbursement for the expensive medications it administers. He said he is considering contingency plans, such as researching cheaper medications and asking some patients to pay up front, but his goal is to provide the best care possible.

“The healthcare system could eventually grind to a halt as many clinics and pharmacies may not be viable,” Parikh said.

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