UnitedHealth is making struggling doctors repay loans issued after last year’s cyberattack
UnitedHealth CEO Andrew Witty testifies before the Senate Finance Committee on Capitol Hill in Washington, May 1, 2024.
Kent Nishimura | Getty Images
Following the massive cyberattack on UnitedHealth Group’s Change Healthcare unit last year, the company launched a temporary funding assistance program to help medical practices with their short-term cash flow needs, offering no-interest loans with no added fees.
A little over a year later, UnitedHealth is aggressively going after borrowers, demanding they “immediately repay” their outstanding balances, according to documents viewed by CNBC and providers who received funding. Some groups have been asked to repay hundreds of thousands of dollars in a matter of days.
Optum, UnitedHealth’s financial, pharmacy and care services arm, is telling borrowers that it reserves the right to “begin offsetting claims payable” to the practices, meaning the company will withhold separate funds until it recoups the loan.
It’s a significant change in posture for the company, which suffered a cyberattack in February 2024 that compromised data from around 190 million Americans, the largest reported health-care breach in U.S. history. The ensuing disruption caused severe fallout across the health-care system, leaving many providers temporarily unable to get paid for their services. Some dipped into their personal savings to keep their practices afloat.
During a Senate hearing about the attack in May, UnitedHealth CEO Andrew Witty said providers would only be required to repay the loans when “they, not me, but they confirm that their cash flow is normalized.”
Several doctors who took advantage of the financing told CNBC that they can’t meet the company’s new demands. Dr. Christine Meyer, an internist who started a practice in Exton, Pennsylvania, received a letter from Optum earlier this month telling her to immediately submit her organization’s payment.
“We are not in any position to start repaying this loan,” Meyer, who started her practice about 20 years ago, told CNBC. She has been a vocal critic of UnitedHealth following the breach.
“I’m just looking at all my legal options at this point,” Meyer said. “But repaying them $750,000 in five days is obviously not going to happen.”
UnitedHealth didn’t comment on specific cases, but a spokesperson for Change Healthcare confirmed that the company has started recouping the loans.
“Now, more than one year post the event and with services restored, we have begun the process of recouping the interest-free funding we provided to providers,” the spokesperson said in a statement.
The company said the U.S. Department of Health and Human Services took the same approach last year “under its own cyber-attack lending program.” HHS launched a separate funding assistance program through the Centers for Medicare & Medicaid Services last March. CMS said it would automatically recoup payments from Medicare claims, and providers could accrue interest, according to a release.
“We continue to work with providers on repayment and other options, and continue to reach out to those providers that have not been responsive to previous calls or email requests for more information,” the Change Healthcare spokesperson said.
Providers were told that UnitedHealth reserved the right to withhold future payments when they signed up for the funding assistance program, the company added. CNBC independently reviewed a copy of a loan agreement for the program and confirmed this statement.
Change Healthcare, which offers payment and revenue cycle management tools, was acquired by Optum in 2022.
After discovering the breach last year, UnitedHealth said it isolated and disconnected the impacted systems. The company paid out more than $9 billion to providers in 2024, and more than $4.5 billion has already been repaid, according to the company’s fourth-quarter earnings report in January. UnitedHealth said providers would receive an invoice once standard payment operations resumed, and that they would be subject to a repayment period of 45 business days.
“Change Healthcare will notify the recipient that the funding amount is due after claims processing or payment processing services have resumed and payments impacted during the service disruption period are processed,” the website says.
Dwindling deposits, lost revenue
While the vast majority of Change Healthcare’s services have been restored over the course of the last year, three products are still listed as “partial service available,” according to UnitedHealth’s cyberattack response website.
And doctors are still reeling.
Meyer said that when the breach took place, she watched her practice’s daily deposits shrivel from the range of $60,000 to $80,000 to about $150 “overnight.” She applied for Optum’s temporary funding assistance program, and after some difficulty and back and forth with the company, she ultimately received a total of $756,900 in financial assistance.
Former Senator Bob Casey Jr., D-Pa., shared Meyer’s story during the congressional hearing in May. He asked Witty about the company’s approach to the repayment process.
“I’d like to absolutely confirm to you and Dr. Meyer that we have no intention of asking for loan repayment until after she determines that her business is back to normal,” Witty told lawmakers. “Even then, we would not look for repayment until 45 business days – 60 calendar days – after that and there would be no interest and no fee associated with that loan.”
“So it would be a determination she makes?” Casey asked.
“That’s absolutely right,” Witty said.
Meyer said that’s not what happened.
UnitedHealth Group Inc. headquarters stands in Minnetonka, Minnesota, U.S.
Mike Bradley | Bloomberg | Getty Images
She received a notice from Optum on Jan. 24, which was viewed by CNBC, that requested repayment since “the service disruption has ended for most clients.” Meyer said she called and told the company she was “not in any position to pay.”
Meyer claims that her practice lost more than $1 million in revenue due to the Change Healthcare cyberattack. She told CNBC the figure was based on a forensic financial analysis her practice carried out by comparing its charges against payments over recent years. The $1.2 million figure accounts for losses across all its insurers, not just UnitedHealthcare, Meyer said.
On April 1, Meyer received another notice requesting immediate repayment within five business days. The letter was addressed to Meyer. But the name of the practice on the letter, Insight Counseling, as well as the total amount due, $925,200, were incorrect.
Meyer said she called Optum again and was told the company made a mistake, but that she had five days to repay her actual total of $750,000. At that point, the company would start withholding her UnitedHealthcare payments, which she described as a “shakedown.”
Meyer said her practice typically receives annual claims payments of about $150,000 to $200,000 from UnitedHealthcare.
“I guess I’ll just let them take those payments back for the next three years until they get their money back,” she told CNBC.
In a post on LinkedIn on Thursday, Meyer wrote that she and her team “made a plan to leave the least amount of money in the account set up to receive payments from UnitedHealthcare. If it isn’t there, they can’t get it.”
‘Very frustrating experience’
Dr. Purvi Parikh, an allergist and immunologist with a private practice in New York, shared a similar story.
Parikh’s practice received about $440,000 in funding assistance after the breach. She said she started getting repayment notices late last year, and that Optum was threatening to offset claims payable to the practice.
“We were already hit very hard by the Change Healthcare hack,” Parikh said in an interview. “Now on top of that, they’re asking for all of this money back or they’re going to hold future payments ransom. It’s just been a very frustrating experience dealing with Optum.”
Parikh’s practice requested a one-month extension on its final payment of $101,650 in January to try and keep UnitedHealth from withholding other payments. In the email request, Parikh’s colleague wrote that “it has been quite difficult to recover financially.”
Optum granted Parikh’s practice the extension.
“People don’t just have that amount of money just sitting around,” Parikh said. “We’ve paid everything back, but it wasn’t without hardship.”
A physician who runs a pediatric practice in New Jersey said UnitedHealth has already started withholding payments from the organization. The practice received more than $500,000 in funding assistance following the Change Healthcare breach.
The doctor, who asked not to be named due to the sensitive nature of the situation, said the practice began receiving phone calls and emails from Optum requesting repayment beginning late last year. The group indicated that it didn’t have the money, but would set up a payment plan and had begun the process.
But the doctor said its billing department noticed that UnitedHealth had already started holding back claims payments. In its explanation of benefits, which details what an insurer will cover, the doctor said the company has a line that reads, “UnitedHealthcare is withholding payment for Optum.”
WATCH: Health and Human Services Department opens probe into hack at UnitedHealth’s Change Healthcare
Technology
Global tech stocks climb as Nvidia results spark relief rally soothing AI bubble concerns
Global tech stocks rallied Thursday as investors piled back into AI-related names, buoyed by Nvidia earnings.
Nvidia topped forecasts for revenue, which jumped 62% to $57.01 billion year-on-year, and issued stronger-than-expected fourth-quarter sales guidance, giving investors the confidence they were looking for to continue placing bets on the AI industry. Shares were 5% higher in premarket trade.
In Europe, Dutch semiconductor firms BESI and ASMI moved up over 3% and 2% in the first hours of trading, respectively. ASML, which makes critical equipment for semiconductors, gained 2.1%.
Asia-listed stocks Samsung Electronics and Hon Hai Precision Industry, also known as Foxconn, climbed 3.5% and 3.3% higher, respectively.
Stateside, investors flocked to tech stocks in premarket trade: AMD rose 5%, Arm gained almost 4%, Micron Technology advanced 2.7%, Marvell Technology added 3.3%, Broadcom was last seen 3.1% up and Intel moved 2% higher.
‘Phenomenal growth’
Dan Hanbury, global equity portfolio manager at Ninety One, which holds Nvidia as its second-largest holding in its global strategic equity fund, cautiously welcomed Nvidia’s share price jump in Thursday’s premarket trade.
“As a holder, it’s great to see an early positive reaction but of course as we know those reactions can reverse further into the day,” Hanbury told CNBC’s “Squawk Box Europe.”
“Our reading of the numbers is they are very strong. Clearly, we can get caught up in the quarterly noise of a company like this but if we just put those [numbers] in context … only three years ago they were delivering $15 billion of data center revenue, we’re now looking at consensus forecasts into next year of $280 billion,” Hanbury said. “That is phenomenal growth that these guys are delivering.”
Karen McCormick, chief investment officer at London-based venture capital company Beringea, spoke with CNBC’s “Squawk Box Europe” about some of the recent moves to bulk-up on AI and scale, particularly following Nvidia and Microsoft‘s recent push to invest up to $15 billion in OpenAI rival Anthropic.
“It’s always a little bit intimidating to contradict Jensen Huang right after he has made phenomenal earnings results but in terms of the almost incestuousness of the valley and the AI companies, it is more than we have seen in the past,” McCormick said.
“I mean, if you think about traditionally, we might have called something like this vendor financing, where your vendor is helping to support the business,” McCormick said. “In this case we are just doing it with hundreds of billions of dollars and the ecosystem itself is now so intertwined that it’s almost a little bit nerve-wracking because if we are in a bubble and if any of that bubble bursts, what is going to happen to all of the related businesses?”
‘Nowhere near as bad as 1999’
The culmination of circular dealmaking, debt issuances and high valuations added pressure to the market ahead of Nvidia’s much-anticipated results, despite other Big Tech firms posting solid quarterly earnings.
“The flip side to that is that each of them has incredibly robust balance sheets and incredibly robust investors, who may not let them fail either way,” McCormick said.
Quilter Cheviot’s global head of technology research and investment strategist Ben Barringer, added that Nvidia’s valuation isn’t “particularly excessive.”
Valuations aren’t that streteched when you look at the core big tech companies, he told CNBC’s “Europe Early Edition” on Thursday.
In terms of debt that’s also at the peripheral, he said. While Meta and Amazon have raised debt, “they’re still net cash positioned,” Barringer added.
“I think it’s more about them managing their treasury position and managing their balance sheet, as it were. Yes, it’s not great that they are doing some of this capex from debt, but it’s nowhere near as bad as 1999 where these were very heavily levered telecom companies doing a lot of this capex.”
However, Gil Luria, head of technology research at D.A. Davidson, told CNBC on Thursday that Nvidia is not a bubble barometer. “The concern is about companies raising a lot of debt to build data centers,” he said.
“Any concerns about Nvidia were certainly laid to rest [with Nvidia’s earnings], but that doesn’t mean that we don’t need to keep an eye on companies lending or borrowing to build data centers,” Luria added.
— CNBC’S Sam Meredith contributed to this report
Technology
‘Robotaxi has reached a tipping point’: Baidu, Nvidia leaders see momentum as competition rises
Chinese tech company Baidu announced Monday it can sell some robotaxi rides without any human staff in the vehicles.
Baidu
BEIJING — Chinese robotaxi companies are expanding abroad at a faster clip than U.S. rivals Waymo and Tesla — at a time when industry leaders say autonomous driving is finally near an inflection point.
“I think robotaxi has reached a tipping point, both here in China and in the U.S.,” Baidu CEO Robin Li said Tuesday on an earnings call, according to a FactSet transcript.
“There are enough people who have [had the] chance to experience driverless rides, and the word of mouth has created positive social media feedback,” he said, noting that the wider public exposure could speed up regulatory approval.
His comments echoed similar notes of optimism in the last few weeks from Nvidia CEO Jensen Huang and Xpeng Co-President Brian Gu — who reversed his previously cautious stance after faster-than-anticipated tech advances. Xpeng is launching robotaxis in the southern Chinese city of Guangzhou next year.
It’s a global market with significant growth potential, likely worth more than $25 billion by 2030, according to Goldman Sachs’ estimates in May.
To seize that opportunity, Chinese companies are aggressively expanding overseas and claim they are close to making robotaxis a viable business, rather than simply burning cash to grab market share.
In the last 18 months, Baidu, Pony.ai and WeRide landed partnerships with Uber that allow users of the ride-hailing app to order a robotaxi in specific locations, starting in the Middle East.
Such tie-ups “will be critical to success” as they enable robotaxi companies to operate more efficiently and reach profitability more quickly, said Counterpoint Senior Analyst Murtuza Ali.
Once we can generate profit for every single car in a second-tier city [like Wuhan] in mainland China, we can generate profits in lots of cities across the world.
Halton Niu
General manager for Apollo Go’s overseas business
Expanding on experience at home
Baidu says that since late last year, its Apollo Go robotaxi unit has reached per-vehicle profitability in Wuhan, where the company has operated over 1,000 vehicles in its largest deployment in China.
That means ridership is enough to offset a Wuhan taxi fare that’s 30% cheaper than in Beijing or Shanghai, and far below prices in the U.S. or Europe. Besides developing autonomous driving systems, Baidu has also produced electrically-powered robotaxi vehicles — without relying on a third-party manufacturer — that are 50% cheaper.
“Once we can generate profit for every single car in a second-tier city [like Wuhan] in mainland China, we can generate profits in lots of cities across the world,” Halton Niu, general manager for Apollo Go’s overseas business, told CNBC.
“Scale matters,” he said. “If you only deploy, for example, 100 to 200 cars in a single city, if you only cover a small area of the city, you can never become profitable.”
How U.S. rivals stack up
Scale remains the dividing line. In the U.S., Alphabet-owned Waymo operates more than 2,500 vehicles and is expanding rapidly from major cities in California to Texas and Florida, with plans to enter London next year, following its first overseas venture in Tokyo.
Tesla sells its electric cars in China, and reportedly showed off its Cybercab in Shanghai this month. But it began testing its robotaxis in Texas only in June, and this week obtained a permit to operate in Arizona.
Amazon’s Zoox is also ramping up its expansion in the U.S., but has not released overseas plans.
The three companies have not disclosed plans to break even on their robotaxis.
Baidu Apollo Go’s Niu did not rule out an expansion into the U.S. But for now, the robotaxi operator plans to enter Europe with trials in parts of Switzerland next month, following their expansion in the Middle East this year.
Abu Dhabi last week gave Apollo Go a permit to charge fares to the public for fully driverless robotaxi rides, which are operated locally under the AutoGo brand, eight months after local trials began in parts of the city.
But Chinese startup WeRide said it received a similar permit on Oct. 31 to charge fares for its fully driverless robotaxi rides in Abu Dhabi, and claimed that removing human staff from the cars would allow it to make a profit on each vehicle.
That puts Pony.ai furthest from profitability among the three major Chinese robotaxi operators. Its CFO Leo Haojun Wang told The Wall Street Journal in mid-September that the company aimed to make a profit on each car by the end of this year or early next year.
Pony.ai plans to launch a fully autonomous commercial robotaxi business in Dubai in 2026, after receiving a testing permit in late September. The company plans to roll out in Europe in the coming months and has also outlined an expansion into Singapore.
Pony.ai and WeRide are set to release quarterly earnings early next week.
“Currently, companies like Waymo, Baidu, WeRide and Pony.ai are leading in terms of fleet size, which positions them advantageously in the race for profitability,” said Yuqian Ding, head of China Autos Research at HSBC.
Scale and safety
Fleet size is becoming a competitive marker. Pony.ai reportedly said it plans to release 1,000 robotaxis in the Middle East by 2028, while WeRide aims to operate a fleet of 1,000 robotaxis in the region by the end of next year.
Niu said Apollo Go operates around 100 robotaxis in Abu Dhabi and Dubai, and plans to double its vehicle fleet in the next few months.
“Apollo Go has had a head start with significantly more test rides than the other two,” Kai Wang, Asia equity market strategist at Morningstar, said in an email. “The more testing and data you can collect from trips taken, the more likely the AI sensors are able to recognize the objects on the road, which means better safety as well.”
He cautioned that despite some initial progress, the robotaxi race remains uncertain as “no one has truly had mass adoption for their vehicles.”
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Coverage remains limited. Even in China, robotaxis are only allowed to operate in selected zones, though Pony.ai recently became the first to win regulatory approval to operate its robotaxis across all of Shenzhen, dubbed China’s Silicon Valley. In Beijing, self-driving taxis are mostly limited to a suburb called Yizhuang.
Anecdotally, CNBC tests have found Pony.ai offered a smoother ride than Apollo Go, which was prone to hard braking.
As for safety — which is critical for regulatory approval — none of the six operators has reported fatalities or major injuries caused by the robotaxis so far. But Apollo Go and Waymo have begun advertising low airbag deployment rates.
Even if that’s not enough to convince regulators worldwide, Beijing is expected to ramp up support at home.
HSBC’s Ding predicts the number of robotaxis on China’s roads could multiply from a few thousand to tens of thousands between the end of this year and 2026, a shift that would give operators more proof that their model works.
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