Crain’s HP article re: CHANGE Health

March 4, 2024

The NYS Council continues to educate state leaders, key decision makers (and journalists) re: the myriad problems mental health and addiction providers are facing as the CHANGE Health outage continues.   The good news is OMH and OASAS sent surveys to the field.  But a survey isn’t going to do it.  We need an ’emergency fund’ for providers that will soon face a fiscal cliff. 

This week we will continue to press for meaningful assistance while also reminding state leaders that this situation is yet another reason why our outpatient services should be returned to a fee-for-service reimbursement model.

Thanks are due to NYS Council member agency CEO Ann Marie Foster from Phoenix House for sharing her concerns in the article (below).

Mental health, addiction agencies voice payroll concerns as payment platform outage persists


Community-based mental health and substance-use providers say they fear they won’t be able to pay their bills in the coming weeks because of a persisting outage that has disrupted their ability to get paid by insurance companies.

Change Healthcare, a Nashville-based tech company that facilitates transactions between medical providers and insurance plans, was hit by a cyberattack Feb. 21 that forced it to shut down its systems. The company acts as a pipeline that transmits bills for services between health facilities and insurance companies. Though it’s unclear exactly how many New York-based providers and insurers work with Change Healthcare, experts say the company handles the bulk of medical claims nationally. The source of the cyberattack was a ransomware group.

Since the start of the outage, pharmacies have deployed workarounds to fill prescriptions, and some hospitals are monitoring whether their current cash flows can sustain operations.

But more than a week into the outage, community-based behavioral health agencies told Crain’s they are fearful about what will happen if Change’s systems don’t get back up and running soon. An executive from Minnesota-based UnitedHealth, which owns Change Healthcare, said that the outage could persist for weeks, according to a report in STAT last Thursday.

“It’s just beginning to sort of dawn on people that this is a huge problem,” said Allegra Schorr, president of the Coalition of Medication-Assisted Treatment Providers and Advocates, which represents members who offer substance-use disorder care.

“For small providers in particular, it’s ‘How are we going to pay our people next week?’” Schorr said.

Change Healthcare opened up a backup pharmacy system on Friday afternoon to facilitate prescription transactions, the company said in a statement. UnitedHealth also launched a loan program for health care providers experiencing payment interruptions. 

“We understand the urgency of resuming payment operations and continuing the flow of payments through the health care ecosystem,” United said in a statement on its website. “For provider organizations impacted by that payer system outage, we’ve established a temporary funding assistance program to help with short-term cash flow needs.”

UnitedHealth’s physician network arm, Optum, merged with Change Healthcare in 2022. 

Before the merger, Change Healthcare processed one-fourth of all U.S. patient records, according to federal documents. The clearinghouse served around 6,000 hospitals and health systems, 39,000 pharmacies, 2,400 payers and 1 million physicians.

Healthfirst, which provides Medicaid and Medicare plans to New Yorkers downstate, uses Change Healthcare. Providers who serve a large population of people covered by Healthfirst or other insurers that use Change’s services may face particularly severe payment disruptions, said Lauri Cole, executive director of the New York State Council for Community Behavioral Healthcare.

Cole said the short-term impacts on payroll are concerning. But she cautioned that the fallout of the attack could be much longer term.

“Providers’ entire revenue cycle is impacted by this, and will be for months and months,” Cole told Crain’s. “These are providers who don’t have significant reserves.”

Some providers are already starting to see claims pile up. Phoenix House, a Long Island City-based nonprofit that provides mental health and substance-use services, had roughly 2,700 claims waiting to be processed as of the end of last week, said Ann-Marie Foster, president and CEO of the organization. That equates to around $560,000 in billable services, she added.

“We need this to be rectified sooner rather than later,” Foster said. “Because in a very short window, we could have some serious cash flow issues, and that means being able to pay our vendors and meet payroll.”

Erin Clary, a spokeswoman for the Department of Health, said “at the direction of Gov. Hochul, the Departments of Health and Financial Services are working closely with pharmacies, health facilities, insurers and all impacted entities to ensure continuity of care for all New Yorkers.”

The Health Department told providers it is monitoring the outage and released a survey last week to determine how many were affected. Clary did not respond to a question from Crain’s about potential regulatory changes that could result from the outage, such as a potential requirement for health plans to offer advance payment options to providers.

The Office of Mental Health and the Office of Addiction Services and Supports sent out surveys late Friday afternoon to assess how the Change Healthcare outage has impacted behavioral health agencies. But Cole said more urgent action is needed.

“There is a lack of an immediate response from state leaders and regulators,” Cole said. “We are very concerned about this.”