Change Healthcare outage has ‘scary’ impact on HME industry 

YARMOUTH, Maine – The cyberattack that hit Change Healthcare in late February is making it difficult for HME software companies and their provider customers to process and bill claims, creating a dent in cash flows. 

Change Healthcare, which processes 15 billion transactions annually, detected the cyberattack on Feb. 21 by a threat actor named “ALPHV/Blackcat,” forcing it to disconnect its systems. 

“I’ve been in this industry for 25 years and I’ve never seen anything like this,” said Steve Cela, founder and president of Strategic Office Support (SOS), which provides intake and revenue cycle management services. “A clearinghouse like that is the Mastercard or Visa of our industry and it’s now become a single point of failure, because nearly everyone’s using Change Healthcare. Our clients saw a decrease in cash flow immediately.” 

Change Healthcare was acquired by UnitedHealth Group in 2022 for a reported $13 billion in a controversial deal that opponents feared would put too much power in the hands of one health care IT services company. 

‘It’s scary’ 

While Change Healthcare recommends that providers use a payer’s applicable portal or call its service line to check claim status, as well as complete eligibility verifications and prior authorizations, that's unrealistic on a large-scale basis, Cela says. 

“When we first heard about this, we just had an army of people keying in claims for us,” said Cela, who also owns Apnix Sleep Diagnostics and who appeared on a local TV station in Texas to talk about the impact of the outage. “We thought we could just do everything manually but in the portal, you have to key in 47 boxes. It’s not just the press of a button.” 

In the first few days following the outage, Apnix’s daily deposits were down by about one-third, Cela says. Change Healthcare says it’s making financial support available through Optum Financial, but every time Cela goes to Optum Pay, the website says, “We are currently experiencing technical difficulties,” he says. 

In the meantime, the outage is costing health care providers more than $100 million daily, according to an estimate from First Health Advisory. The American Medical Association even sent a letter to HHS Secretary Xavier Becerra asking him to use emergency funds and authorities to provide financial resources to physicians. CMS on March 5 did outline flexibilities, including the ability for hospitals to submit for accelerated payments. 

“It’s scary,” Cela said. “Every day (the outage) goes past 30 days, people are going to be in trouble, unless they have capital reserves or a line of credit with their bank.” 

‘I don’t think it was transparent’ 

Software company NikoHealth says it was able to get some of its provider clients billing again on Monday, March 4, after engaging an alternative clearinghouse called Avality. 

“When Change Healthcare first announced the outage, we invoked our risk assessment and incidence protocol pretty quickly and assessed the fact that there was no clear timeline on the outage and we needed to get our clients back to operational,” said Michael Kutsak, CEO. “We engaged an alternative clearinghouse and, essentially, allowed our customers to maintain the same workflow as before.” 

Going forward, NikoHealth plans to support multiple clearinghouses so there is an increased level of redundancy, Kutsak says. The changes in the wake of the outage will be wide reaching, he says. 

“I don’t think it was transparent across the health care ecosystem that not only were providers and pharmacies and hospital systems leveraging Change, but other clearinghouses and payers were also using Change as their exclusive gateway partner,” he said. “I think that part of the equation was a black box for most people.” 

‘Challenging period’ 

Following the outage, Brightree held webinars for its provider customers on Feb. 29 and March 1 and indicated, according to those who attended, that the company also planned to engage an alternative clearinghouse. Brightree provided the following statement to HME News: 

“As soon as we learned about Change Healthcare’s cybersecurity issue, we initiated our cybersecurity response protocols and blocked all traffic to and from the Change Healthcare network. To date, we have found no impact on Brightree’s systems. We remain focused on supporting our customers during this challenging period and will provide updates as new information becomes available.”