California doctors struggle to make payroll 1 month after ransomware attack
Stay up-to-date with free briefings on topics that matter to all Californians. Subscribe to CalMatters today for nonprofit news in your inbox.
For a month now Sacramento dermatologist Dr. Margaret Parsons has been unable to submit insurance claims to get paid for services provided.
All of her private practice’s claims go through Change Healthcare, the country’s largest network for insurance billing and the subject of a Feb. 21 cyberattack that has yet to be fully resolved.
Change Healthcare, a subsidiary of UnitedHealth Group, processes roughly half of all medical claims nationwide. Four weeks since the cyberattack, some providers in California and elsewhere are still waiting to file claims and get reimbursed. In the meantime, they’re scrambling to pay bills and order medical supplies.
The cybersecurity breach interrupted payments and prescription drugs processing for tens of thousands of hospitals, physician groups, dentists and pharmacies. The American Hospital Association called it “the most significant cyberattack on the U.S. health care system in American history.”
The precise entry point for attackers is unknown but typically ransomware attacks involve someone clicking a malicious link in an email. It showed the vulnerability of the financial infrastructure underpinning the health care system. And, providers are learning, the fallout can be long-lasting.
Parsons’ four-doctor private practice sees about 100 to 125 patients a day. It’s a healthy business, but cash flow is drying up, she said. With electronic billing, she files her claims and is typically reimbursed within two weeks. Her office ran the numbers recently, and she expects her practice will be OK for at least a couple of weeks.
But it’s been a stressful month, she said. Until recently she was considering filing insurance claims the old-school way, through paper. She opted to wait that out because paper claims take twice as long and are more prone to data entry errors, she said. At one point she also questioned whether she’d need to borrow money to pay rent and her staff.
“You calculate the bank balance, the weekly bills, the payroll, and you start counting hard. You look at your line of credit and you decide if you’re calling your bank,” she said.
She said she recently got some peace of mind after her office contracted with an alternate insurance claims system, which she expects to be up soon. She also has applied to access advanced payments from Medicare via a temporary program set up to grant providers some relief. Medicare is the federal public insurance program for seniors and people with disabilities. That option gives her some breathing room and she’s optimistic that she will soon be able to submit claims again.
“At this point we’re hopeful for next week,” she said.
Change Healthcare carries out more than 100 health care system operations functions including payments and prescription drug processing.
On Monday, Change Healthcare said it plans to restore claims processing for thousands of physicians in the coming days, but like Parsons, some were still unable to process claims as of Tuesday.
“On March 15, the company restored Change Healthcare’s electronic payments platform and is proceeding with payer implementations,” the company said in an update shared with CalMatters. “On March 7, the company restored 99% of Change Healthcare pharmacy network services, and continues to work on remaining issues.”
Lingering cyberattack fallout
Dr. Abid Mogannam, a vascular surgeon who serves patients in Alameda and Contra Costa counties, said about 30% of his claims go through Change Healthcare. Mogannam said that means 30% of his practice’s pay will be delayed.
“It’s significant for us. If you happen to be the unlucky practice that contracts exclusively with payers that are affected by this, you may be having to make difficult decisions like closure, bankruptcy, closing offices temporarily and limiting access to patients,” he said.
This new financial pressure, he said, came on top of rising costs due to inflation and just as small practices are recovering from the COVID-19 pandemic. “It’s been a trying couple of years,” Mogannam said. Now with the Change Healthcare situation, “We won’t be made whole for months,” he said.
Last week, the California Department of Managed Health Care urged health insurance plans to accept paper claims and remove or relax claim filing timeline requirements. The U.S. Department of Health and Human Services issued guidance that Medicare providers should relax or remove claim filing requirements and encouraged state Medicaid providers to do the same, then the agency started extending loans to Medicare providers.
UPDATED: Please read and follow our commenting policy: