Some hospitals risk 'running out of cash' amid Change outage: Moody's

The February cyberattack on UnitedHealth Group's Change Healthcare will affect hospital finance and credit ratings as providers search for alternative claims filing methods, according to a Moody's Investor Service report, released March 8.

UnitedHealth took Change's systems offline when the attack was identified Feb. 21, and said the claims system should be back online by the end of the March 18 week. Further delays to system restoration would disrupt hospital and physician practice revenue cycles since providers haven't been able to file claims on Change's system since the attack occurred.

"The ultimate credit impact on providers will largely depend on the effect of payment delays on cash flow needed to meet expenses," the report states. "Added expenses can include labor to handle processing claims through slower, event manual methods. Other factors that could affect credit quality include a provider's liquidity profile – providers with weak liquidity heading into the event have a much higher risk of running out of cash if the outage continues."

Providers without a reliable alternative to Change for claims processing will also feel the pinch. Large systems can "weather cash flow difficulties," the report states, and Moody's expects the institutions it rates to manage the short-term disruption well. Some hospitals have switched from Change during the outage, but many have decided to stick with Change because switching is "cumbersome and time-consuming," according to the report.

Both UnitedHealth and CMS have unveiled plans to help hospitals financially struggling due to the outage, but the American Hospital Association says the incident will have far reaching ramifications for healthcare providers.

"Even after Change Healthcare’s technology is restored, it will be weeks — if not months — before our hospitals and other healthcare providers will be made whole. The AHA will continue to work with the Department of Health and Human Services, Congress, UnitedHealth Group and other payers to ensure that all options for assistance are explored so that the healthcare field can continue to care for patients and communities," said Rick Pollack, president and CEO of the AHA, in a March 8 statement.

In some cases, patient care is being delayed because clinicians haven't received prior authorization. UnitedHealth has temporarily suspended prior authorizations for outpatient services for Medicare Advantage beneficiaries.

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