Impact of Change Healthcare outage on employers

March 1, 2024

Change Healthcare, a division of United HealthCare’s Optum unit, connects pharmacies, hospitals and doctors with medical carriers and pharmacy benefit managers (PBMs) to communicate eligibility, obtain prior authorization, and initiate payments. The company was acquired by United HealthCare in 2022, after the US Department of Justice failed in its legal attempts to block the acquisition. Optum turned off Change Healthcare’s electronic systems on Wednesday, February 21 when it discovered that its system had been breached. This appears to be a ransomware attack.

This security breach could have large clinical and financial impacts on health care delivery.   Independent pharmacies scrambled to address cash flow concerns, as payments are delayed due to this outage. Many large retail pharmacy chains rerouted claims processing to Relay Health which is a back-up to Change Healthcare. Members that paid out of pocket for prescriptions can go back to their retail pharmacy to have the claims reprocessed through their insurance or submit a paper claim. Some hospitals reported delays in discharging patients to skilled nursing facilities, which were unable to assess whether insurance would cover their stays.

Change Healthcare was still down as of early Friday morning. Here is a link to Optum’s incident update page.

Employer implications:

-        Reports from PBMs and medical carriers on utilization and cost could be inaccurate for the coming months, as Change and the carriers and PBMs work down the backlog from this outage.

-        Employer sponsored plans could see an uptick in appeals and member complaints based on failure to authorize services during the outage.

-        This highlights the importance of data security, to avoid breaches that could leak health care information, and to facilitate the continuous availability of health care transaction systems without which health care payment and delivery can be seriously interrupted.

Thanks for reading.  You can find previous posts in the Employer Coverage archive

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