The fallout from the cyberattack on Change Healthcare continues to reach new corners of the national healthcare system, including workers' compensation.

A message from the City and County of San Francisco (CCSF), a public self-insured employer, alerts providers that payments for the treatment of CCSF’s injured workers may be delayed. According to CCSF, the attack impacted Change’s “ability to process medical payment files between them and the City and County of San Francisco.”

Providers are further advised that any applicable penalty and interest payments will be included when payments arrive late.

The leadership at CCSF is to be commended for taking responsibility, communicating with providers, and working proactively to ensure proper reimbursement. Not for the first time, CCSF has proven itself to be the gold standard for treating providers as true partners in the mission of workers’ comp.

Change Cyberattack: Impact on CCSF Payments

In a proactive move to address the anticipated friction following the Change cyberattack, CCSF addressed a letter to “City and County of San Francisco Workers’ Compensation Providers” warning of potential payment delays.

Payment delays have been one of the most crippling effects of the cyberattack, with independent practices facing potentially existential financial hardship while awaiting payments.

Change reportedly processes around half of all U.S. healthcare claims and is estimated by the federal government to have some involvement in a third of medical records nationally. The consequences of Change's inability to render payment have been dire for some providers, especially smaller practices that lack the financial runway to wait indefinitely for Change to return to normalcy.

The letter from CCSF to providers (below) explains that CCSF is “working actively with Change Healthcare (now owned by Optum) to resolve this issue as soon as possible.” Providers can also expect that “Any payments that are delayed past the statutory timeframes will be processed with applicable penalty and interest if due.”

Penalty & Interest in CA Workers’ Comp

As a reminder, penalty and interest payments apply to workers’ comp treatment bills as follows, per California Labor Code Section (LAB) 4603.2(b)(2):

• Penalties and interest apply to bills for non-government employers 45 days after receipt of the bill.
• Penalties and interest apply to bills for government employers (like CCSF) 60 days after receipt of the bill.
• Penalties are 15% of the total amount of the bill.
• Interest rates are 10% accrued interest per annum, retroactive to the date the claims administrator received the bill.

Tragically, laughably, the Division of Workers’ Compensation deems in its Medical Billing and Payment Guide that penalty and interest payments are “self-executing” — meaning providers cannot bill for these payments. They must instead trust the claims administrator to enforce the law on itself.

Fortunately, CCSF has an admirable track record of ensuring that providers are paid, tackling payment glitches, and taking responsibility for unintended complications. If any claims administrator can be trusted to “self-execute,” it’s CCSF.

Providers with questions regarding payment delays are encouraged to email CCSF’s Department of Human Resources Workers’ Compensation Finance Team at dhr.wcfinance@sfgov.org.

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