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UnitedHealth unit will start processing $14 billion medical claims backlog after hack

FILE PHOTO: The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California

By Leroy Leo

(Reuters) -UnitedHealth Group said on Friday its Change Healthcare unit will start to process the medical claims backlog of more than $14 billion as it resumes some software services disrupted by a cyberattack last month.

The company has been scrambling to resume services at the technology unit that was hit by a cyberattack on Feb. 21, disrupting payments to U.S. doctors and healthcare facilities and forcing the U.S. government to launch a probe.

Community health centers that serve more than 30 million poor and uninsured patients have been especially hit.

The company has advanced payments of more than $2.5 billion so far to provide assistance to healthcare providers financially affected by the disruption, an increase from the over $2 billion it had disclosed on Monday.

UnitedHealth also extended the repayment period for providers, who will now have 45 business days to return the relief funds.

Change Healthcare is a key player in the U.S. healthcare system that depends heavily on insurance, processing about 50% of medical claims for around 900,000 physicians, 33,000 pharmacies, 5,500 hospitals and 600 laboratories.

The unit was breached by a hacking group called ALPHV, also known as "BlackCat", creating a knock-on effect that the largest U.S. health insurer is expected to take several months from which to fully recover.

The health insurer said its software for preparing medical claims Assurance went online on Monday, while its largest clearinghouse Relay Exchange will resume on the weekend of March 23.

A clearinghouse acts as a middleman between a healthcare provider and a health plan that checks claims to ensure they do not contain errors before forwarding them for payment.

The insurer said it will work with payers to ensure there are a maximum number of available locations for claims and is actively coordinating with other clearinghouses to make sure there are no capacity issues.

UnitedHealth had suspended paperwork required to get approval for insurance coverage for most outpatient services, as well as review of inpatient admissions for government-backed Medicare Advantage plans to help those impacted.

UnitedHealth also expects to engage all those who submitted claims during the week of March 25.

The company's other products that handle eligibility of claims such as Clearance and Coverage Insight as well as pharmacy claims submission software MedRx and Reimbursement Manager are expected to go online next week.

Several more products are likely to go online over the weeks of April 1 and April 8, the company said.

Some products, however, were not listed in Friday's update as it does not yet have clarity of when they will be restored, the company said, adding it will provide updated information as those timelines become clear.

(Reporting by Mariam Sunny and Leroy Leo in Bengaluru; Editing by Krishna Chandra Eluri)