Health hack will burden US with hundreds of millions in costs

Insurance executives and US health officials believe the worst effects of the Change Healthcare hack are easing and that the industry is in the last mile of the crisis.

A US official said on a call with health insurers on Monday that the Feb 21 cyberattack on the UnitedHealth Group Inc subsidiary is expected to cost the health-care system hundreds of millions of dollars, according to people familiar with the discussion. The hack halted billions of dollars in medical payments and left many providers under financial duress.

Insurers are handling about 95% of the claims that they had before the ransomware attack took Change’s networks offline, senior officials from the Department of Health and Human Services said on a call with reporters. Health officials and insurers are now trying to figure out how to reach small, independent practices that have had the most difficulty finding workarounds. US officials and insurers said they haven’t seen any disruption to patient care from the attack.

The US hasn’t conducted a formal analysis of the expected cost of the hack, and advance payments to medical providers aren’t expected to lead to additional financial expense for government health programs, officials said on the call with reporters.

The meeting with Health and Human Services Secretary Xavier Becerra and other administration officials included top executives from several insurance companies, including UnitedHealth chief executive officer Andrew Witty, as well as leaders of several trade groups.

Insurers, doctors, hospitals and pharmacies have been racing for the past month to fix the fallout after the cyberattack severed crucial connections that move money and data across the health-care system. Delayed payments have created a growing cash crunch for some medical providers even as they absorb the costs of trying to replace damaged systems with alternatives.

While UnitedHealth has restored some services and others are expected to come back online starting this week, there’s no timeline for when backlogs will be cleared and transactions return to normal.

Earlier on Monday, UnitedHealth said it advanced more than US$2bil (RM9.45bil) so far to medical providers following the Change hack. A company representative didn’t have an estimate for the total amount of claims disrupted by the attack.

UnitedHealth and its rivals have faced growing calls from politicians and medical providers to escalate relief efforts for hospitals and doctors facing cash-flow interruptions.

The disruption could hit the credit profiles of smaller medical providers that rely on Change, while publicly traded companies with stronger credit will have more leeway, Fitch Ratings said in a note Monday. Insurer representatives said they’ve made significant progress processing claims through competing networks and getting medical providers set up on workarounds.

UnitedHealth, which also operates the largest US health insurer, said it’s making progress bringing systems back online, with a payments platform restored as of March 15, according to a statement on the company’s website. It’s unclear how long a broader return will take. The company said it’s releasing new software to thousands of customers this week. – Bloomberg