Lawmakers target mergers in first hearing on Change Healthcare hack
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During the first congressional hearing on the Change Healthcare hack Tuesday, lawmakers appeared to zero in on the risks of massive consolidation in health care.
Why it matters: There was some bipartisan agreement among lawmakers that the bulking up of health care giants like Change parent company UnitedHealth Group has left the system and patients worse off.
What they're saying: "This just another another thing that's happened with the massive vertical integration in our system that I believe personally is not in the best interest of the American people," said Rep. Larry Bucshon (R-Ind.) during a hearing of the House Energy and Commerce health subcommittee.
- "I'm concerned that there are fewer redundancies in our system and more vulnerability to the entire system if entities like UnitedHealth Group are compromised," said Rep. Frank Pallone (D-N.J.).
Catch up quick: The late February attack against Change Healthcare, the country's largest medical claims processor, rippled across the industry, halting payments and crippling operations at some hospitals and clinics.
- The stunning reach of the attack caught the industry by surprise, forcing providers to search for workarounds. In some cases, Change Healthcare contracts made it difficult for providers to connect with insurers through other clearinghouses.
The big picture: Though Congress is still in the early stages of figuring out a possible response, lawmakers' comments suggested support for cracking down on vertical mergers that have allowed companies to expand their reach in the health care system.
- The Department of Justice sued to block UnitedHealth's purchase of Change Healthcare in 2022, but a federal judge allowed it to move forward.
- The Federal Trade Commission issued new merger guidelines last December that lowered the threshold for proving a merger may be anticompetitive.
- Experts who testified Tuesday suggested regulators also consider whether health care deals would create new vulnerabilities in the event of a cyberattack.
The other side: UnitedHealth CEO Andrew Witty on Tuesday told investors that the company's size was an asset in its response to the attack.
- "Without UnitedHealth Group owning Change Healthcare, this attack would likely still have happened and it would have left Change Healthcare, I think, extremely challenged to come back," Witty said during the company's earnings call.
- UnitedHealth group posted a $1.4 billion loss in the first quarter. The cost of the attack reached $872 million in the first quarter and could eventually reach up to $1.6 billion.
Between the lines: Several lawmakers expressed frustration that UnitedHealth didn't send a representative to the hearing and hasn't provided answers to key questions.
- In a letter to Witty this week, committee members sought information about the true impact of the attack, such as how much is still owed to providers, what data was compromised and the steps it's taken to shore up its systems against future attack.
- "There are still many unanswered questions and lessons to be learned from this attack," said Chairwoman Cathy McMorris Rodgers (R-Wash.).
What's next: Witty is expected to testify soon before the Senate Finance Committee.
Go deeper: Hackers start leaking stolen Change Healthcare data
