Hacking creates financial problems for public health centers
Hacking creates financial problems for public health centers

Community health centers and organizations that serve mostly low-income people have been disproportionately affected by the largest hack in health care history, which disrupted payments to thousands of health care providers a month ago.

The hack that crippled Change Healthcare, the clearinghouse for 30 percent of medical claims in the United States, has forced providers to find alternative sources of funding to stay afloat. For large providers, such as many health care systems, this comes in the form of reserves set aside for emergencies.

But for smaller providers, such as many community health centers, that can mean taking out lines of credit that can come with high interest rates, missing payments to providers and looking for support from insurers willing to make payments.

“It’s been very difficult for us,” said Robert Hilliard Jr., CEO of Houston-based Legacy Community Health.

Legacy, which has 57 clinics in Texas, processes about half of its claims through Change Healthcare. There are currently about eight figures in unpaid claims waiting to be processed, he said.

“We had to extend a line of credit with a bank because we didn’t have the funds” and negotiate with suppliers about missed payments, Hilliard said.

The debate surrounding the Change Healthcare hack has largely been dominated by the impact on large health systems that churn out billions of dollars a day in claims. Americans will spend $1.4 trillion on hospital care in 2022.

But in many cases, hospitals have more resources to handle emergencies like this. A KFF analysis of 274 not-for-profit hospitals and health systems found an average of 218 days of cash on hand.

Fewer resources

But that’s not the case for many community health centers, which see mostly Medicaid patients, rely on grants and have thin operating margins. The average length of cash in health centers for the country in 2016 was 64 days, according to the latest data available.

UnitedHealth Group, which owns Change Healthcare, began testing systems this week for submitting claims. But the timetable for when it will be fully operational again is unclear. And processing claims that are pending for a month will take time.

“My concern is that when the big health care organizations come back online, people will stop caring so much about the impact on everyone else,” said Julia Skapik, medical director of informatics at the National Association of Community Health Centers.

While the Biden administration this week asked insurers to target upfront payments to small, rural and sheltered health care providers facing cash flow problems, Skapik said that directive should have come sooner.

The federal government has been criticized for its slow response to the attack. While it has allowed providers to submit requests for advance fee-for-service payments to Medicare, it can only encourage the private sector to do the same. This includes Medicare Advantage plans, which cover half of Medicare beneficiaries, and Medicaid Managed Care plans, which cover about 90 percent of Medicaid beneficiaries.

It is not yet clear how successful the government’s request has been. Aside from UnitedHealth Group, which said it directed $2 billion to providers, insurers have not publicly released information on how much financial aid they have sent.

The Alliance of Community Health Plans, the Association for Community Affiliated Plans, America’s Health Insurance Plans and the Blue Cross Blue Shield Association wrote in a letter to Biden administration officials this week that they are committed to “providing targeted upfront payments to affected providers in need.” They also wrote that they will engage in “proactive and data-driven outreach” to remaining providers facing operational challenges with claims processing or reimbursement, and support providers transitioning to alternative services.

Blue Cross Blue Shield also told CQ Roll Call that it makes advance payments to in-network providers.

In a separate letter, Medicaid Health Plans of America, which are Medicaid managed care plans, also said their members are “committed to making targeted upfront payments.” But these payments will have to be paid out and are intended only to offset unpaid claims, not to cover costs related to the consequences of the hack, such as interest related to taking out loans.

“There’s no effort to talk about how to get us out of those costs,” Hilliard said.

Unpaid receivables

Providers also said that while they appreciate the help, the amount offered is small compared to what they experience with unpaid claims.

Hilliard said UnitedHealth Group has offered money, and while it has come quickly, it is less than 10 percent of what is currently held up in claims.

Peggy Anderson, president and CEO of Third Street Family Health Services, based in Mansfield, Ohio, said revenue dropped from an average of $650,000 a week to $180,000 a week.

“It’s a pretty significant loss for us as we don’t know when things will start working again,” she said.

Third Street Family Health Services was able to get approval for $100,000 in aid from Optum, $80,000 of which has arrived so far. The center was able to use some of its available cash and took out a line of credit.

“While $100,000 is great, we’re now close to a million dollars just sitting there, and that’s revenue we fully expected to get,” Anderson said. She hopes policymakers recognize the need for a “safety net” system that can support critical health care providers when emergencies like this happen in the future.

Some vendors have had better luck.

Berina Doggett, executive vice president of health and community resources for So Others Might Eat, which has two health clinics in Washington, D.C., said they have switched clearinghouses and received checks from Medicaid managed care plans in the past few weeks .

The problem arises if the insurers have not changed clearing houses. Also, the process can move slowly.

“It’s minimal. It’s not where we were,” Doggett said.

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