Insight into Change Cyberattack Expenses: UnitedHealth’s First-Quarter Report

UnitedHealth Group is going to talk about how they’re doing in the first three months of this year. It’s the first time they’ll talk publicly since a computer attack in February on their Change Healthcare part, which handles billing and payments. This attack caused big problems in U.S. health care, like what we saw with Covid.

People usually pay attention to what UnitedHealth says because they’re a big deal in health care. But this time might be different, says Lisa Gill, who looks at health care for JPMorgan.

The attack on Change Healthcare meant they had to stop their service that handles billing and payments. While they’ve fixed things for pharmacies, it’s still causing issues for healthcare providers everywhere.

Medicare Advantage insurers report higher-than-expected senior medical utilization, complicating real-time cost tracking.

Change Healthcare is part of a big section of UnitedHealth called Optum. Optum has a bunch of doctors and one of the biggest pharmacy benefits managers, OptumRx.

People watching UnitedHealth’s report will want to know how much money they’re losing because of the cyberattack and how it’s affecting Optum’s other businesses.

“We want to know how much money they’re losing and how they’re dealing with it,” says Scott Fidel, who looks at health care for Stephens.

Delayed outlook on medical costs complicates 2025 Medicare Plan bids, with lower government payment rates. (Credits: iStock)

UnitedHealth says they’ve given $4.7 billion in loans to healthcare providers, but the American Medical Association says many doctors are using their own money to keep things going.

One doctor, James Allred, had to take out loans to keep his dermatology practice running because he couldn’t get paid by health insurers. He had to cancel plans to expand his practice because of this mess.

“It’s crazy that one computer attack can mess up the whole healthcare system,” Allred says.

Bigger companies, like Option Care Health, are also worried the attack will hurt their profits this quarter.

Challenges and Opportunities in the Wake of Cyberattacks

The cyberattack on Change Healthcare has made things uncertain for UnitedHealthcare and other health insurance companies like Humana, Aetna, and Elevance. They’re all reporting their earnings this week.

Elevated cost trends and competitive markets pose profit challenges for health insurers, requiring strategic solutions. (Credits: Change Healthcare)

Last year, all the companies that offer Medicare Advantage plans noticed that seniors were using more medical services than expected.

Because the cyberattack happened in the middle of this quarter, it’s harder for insurance companies to keep track of how much they’re spending on medical care in real-time. Lisa Gill from JPMorgan thinks most companies will have to guess or adjust their numbers when they report their earnings.

“We’ll probably have to wait until next quarter to know how much United and other companies are spending on medical care,” Gill said.

This delay in knowing medical costs is a big deal for health insurance companies because they’re getting ready to bid on Medicare plans for 2025. They have to submit their bids by early June. This comes after the government announced that they won’t be increasing payments to insurers as much as expected for 2025, which means less profit for them.

“We’re seeing higher costs, and the market is still pretty competitive,” Gill said. “So, they have to figure out how to deal with that.”

Jackson Kelley
Jackson Kelley
Jackson is a political activist and market expert. He covers the impact of politics on the market and global economy.
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