Study finds big hospitals overpaid, rural facilities overlooked in Change Healthcare relief
The emergency relief program put in place after the February 2024 ransomware attack on medical claims processor Change Healthcare was an “opt-in, one-size-fits-all” solution that researchers from University of Minnesota found created certain inequities. The details can be found in a study published by Health Affairs. [1]
The program, administered by the Centers for Medicare & Medicaid Services (CMS), was designed to keep hospitals, health systems and provider groups afloat while reimbursement was paused due to Change Healthcare’s network being down.
However, when looking into the details, a research team led by Hannah Neprash, PhD—who studies healthcare economics—found that some groups were overpaid, having received more money than they would have been owed in medical claims. At the same time, some facilities in need received little or nothing from CMS.
In total, there were 312 that were paid nothing, according to publicly available data on 8,538 different patient care entities. The hospitals that failed to apply tended to be smaller, not part of a network and located in rural areas.
According to the researchers, they were eligible to receive funds from the federal government but did not opt in, despite suffering financial losses during the first half of 2024. In fact, they suffered a roughly 66% drop in Medicare revenue collectively.
As for the reasons why the smaller facilities did not participate, the researchers didn’t speculate on a specific reason. However, the similarities between them signal that there could have been administrative burdens that larger facilities were more apt to handle. Further, it’s possible the nature of the funding did not meet the needs of rural hospitals, as what CMS was offering was 30 days of average Medicare revenue to all eligible healthcare entities that applied.
“Our findings also indicate the importance of provider outreach if CMS continues with an opt-in approach to relief payments,” Neprash, et al., wrote. “This approach is appealing because of its ability to target relief payments to providers attesting to their need, but we found strong evidence that many hospitals experiencing revenue disruptions during the Change Healthcare cyberattack did not receive [the emergency Medicare program] relief payments.”
Millions of dollars in overpayments
In total the federal government distributed some $3.3 billion. Hospitals nationwide received more than two-thirds of the money, with physicians earning 19%. The remainder went to other healthcare organizations that don’t fit neatly into those buckets but rely on Medicare funds.
When looking into the details, the researchers found that many of those hospitals—which tended to be part of large, for-profit systems—received more than they would have been owed in Medicare reimbursement, with the average surplus totaling roughly $314,000. Some facilities received over $1 million more than they faced in losses.
On the flip side, some locations received much less than owed. From Feb. 19 to March 31, 2024, a total of 476 acute care hospitals were paid less by CMS than they received in 2023, despite in some cases seeing an increase in patient volume.
The CMS program ended in July 2024, roughly 5 months after the data breach at Change Healthcare. It took the UnitedHealth subsidiary roughly 6 months to address the backlog of medical claims.
For more, read the full study in Health Affairs at the link below.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.