Healthcare Business News
Marcia Newton of Corcoran, MInn., says she was asked to pay for care for her son, Maxx, before he received it at a Fairview facility.
Marcia Newton of Corcoran, MInn., says she was asked to pay for care for her son, Maxx, before he received it at a Fairview facility.

Pushing the limit

Minnesota probe of Accretive's collection practices raises new questions on hospital billing policies

By Melanie Evans
Posted: April 28, 2012 - 12:01 am ET

An inquiry into hospital billing company Accretive Health brought into sharp focus the industry's increasing efforts to collect cash from patients.

Chicago-based Accretive may have violated state and federal laws that protect consumers and safeguard patient privacy with policies that pushed patients to pay bills as they sought medical care, even in the emergency room, according to a report released last week by Lori Swanson, Minnesota's attorney general.

When patients balked, bill collectors were instructed by Accretive to press for payment, urging patients to draw on unemployment aid or borrow from relatives if necessary, the six-volume report said. Collectors were told to warn uncooperative patients of a possible credit-score hit. Patients' private medical records were also used in collection efforts, the report said.

U.S. hospitals in recent years have increasingly employed financial screening strategies to determine how much patients owe even before they receive treatment. That trend has been aided by the growth of companies, including Accretive, that market services to identify how much patients owe or whether they are likely to pay (Aug. 17, 2009, p. 28).

The Minnesota report once again brought hospital billing into the national spotlight. Hospitals faced criticism during the past decade over prices charged to uninsured patients and aggressive efforts to collect bills. More than 4,200 hospitals have signed on to the American Hospital Association's principles and guidelines for hospital billing and collection practices, which were developed following earlier scrutiny of the industry's practices.

“None of the collection practices listed in the attorney general's report are consistent with the AHA guidelines, and we don't condone them or excuse them,” Marie Watteau, an AHA spokeswoman, said of last week's report.

Accretive, a publicly traded company based in Chicago, saw its stock slide last week by 50%, according to Yahoo Finance. The Minnesota report also prompted one additional state inquiry and a call for a federal agency to do the same.

Illinois Attorney General Lisa Madigan said she would launch an investigation of Accretive. And Rep. Pete Stark (D-Calif.), in letters to HHS' inspector general's office and the CMS, urged officials to look into possible violations of federal law by the company. Stark also asked for a report on enforcement measures and a notice to hospitals paid by Medicare if violations are found.

Accretive CEO Mary Tolan responded briefly to the scrutiny last week. “I think that our growth going forward is going to continue to be a function of the good work that we're doing with our customers, who are really very supportive of us,” Tolan was quoted as saying in Crain's Chicago Business, a Modern Healthcare sister publication. “That is what's going to carry the day, not this current media blitz.”

Meanwhile, Fairview Health Services, the seven-hospital Minneapolis-based system where Accretive's collection efforts prompted the attorney general's probe, said it ended its billing contract with the company last month.

Swanson's report raised questions about whether Accretive violated charity-care policies at Fairview that prohibit collection efforts for low-income patients as they seek financial aid.

Accretive used incentives to promote collection efforts, even after Fairview said such tactics violate the health system's policy, the report said. One Accretive memo instructs collectors to push patients for payment from unemployment or welfare assistance or to borrow from relatives but does not mention Fairview's legal obligation to provide a financial aid policy.

“We take the concerns raised by Minnesota Attorney General Lori Swanson very seriously,” Fairview said a written statement. “We have been in consultation with her on these issues for several months. We share many of her concerns and have already taken actions to address them.”

Hospital executives and billing companies said that early financial screening helps patients, who may find out quickly if they qualify for financial aid or will avoid being surprised later by a large bill. And providers must try to collect larger amounts from patients as insurance increasingly shifts healthcare costs to households in the form of larger deductibles or co-insurance, they said.

“We're looking to establish an expectation” that patients with a deductible “pay all or some at the time they're here,” said Steven Hall, senior vice president and chief financial officer at Pekin (Ill.) Hospital, where such efforts have expanded since 2008.

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The hospital contracts with Passport Health Communications, a billing company, to identify patients' medical bills. Katherine Murphy, vice president of revenue cycle consulting at Passport, said she believed pre-treatment price estimates would become common as high deductibles drive patients to comparison shop for treatment.

Baptist Health System, based in Birmingham, Ala., began three years ago to collect from patients prior to treatment, though the practice is limited to elective or nonemergency patients. “What we saw was a lack of understanding among patients about their healthcare insurance coverage, in particular the patient's responsibility with copays and deductibles,” said Baptist spokesman Ross Mitchell. The system will contact a physician to reschedule elective procedures for patients who are unable to reach a payment agreement, but the decision ultimately rests with the doctor, he said.

Two major healthcare associations, the AHA and Healthcare Financial Management Association, generally endorse efforts to notify patients about their bill as soon as possible.

Patients and hospital staff can quickly identify patients who qualify for financial aid, said Melinda Hatton, the AHA's general counsel. Those who don't qualify can then make an informed decision about payment options or whether it's possible to delay elective care, said Rick Gundling, vice president of healthcare financial practice for the HFMA.

The exception is emergency room patients, Gundling said. Federal law prohibits talk of payment before an emergency room patient is medically screened and stabilized.

According to Swanson's report, a Fairview emergency room employee reported that collection efforts could begin before treatment was finished under Accretive's management. A script for emergency room collectors advises patients that workers “will be happy to wait for you” to fetch a checkbook from the car, if needed, and that if “you want to make a call we will accept credit card over the phone.”

Medical debt hidden on credit cards can swamp household budgets, said Jessica Curtis, project director for the hospital accountability project at Community Catalyst, a patient advocacy group. Credit card companies lack the motivation that hospitals have to maintain good relationships with patients by negotiating a payment plan, she said.

Accretive's collection practices drew complaints from doctors who said the efforts had prompted some patients to forgo treatment.

The New York Times reported Swanson said she was in talks with state and federal regulators about Accretive's practices.

A Michigan attorney general's office spokeswoman said she could not confirm or deny any inquiry in that state, where Accretive has contracts with Henry Ford Health System and Beaumont Health System, according to its financial records. Officials with the Henry Ford Health System in Detroit are aware of the Minnesota inquiry and had no comment, a spokesman said.

An e-mail from a spokesman for Royal Oak, Mich.-based Beaumont said, “Beaumont has a management services agreement with Accretive Health where they recommend revenue-cycle process improvements. Under this agreement, Beaumont maintains administrative oversight of its revenue cycle staff, decisionmaking and policies, including collections.”

Accretive continues to count other prominent health systems among its customers. The company alerted investors last week that it gained a new customer, Catholic Health East, which ranks among the nation's largest Catholic health systems, with 23 hospitals across nine states. But that boost follows the loss of Fairview, which was projected to slash the company's revenue by $62 million to $68 million, or 6% of its 2012 projected revenue, and sent the company scrambling to find new business.

Ascension Health, the nation's largest not-for-profit health system, was Accretive's first customer and remains its largest, according to the billing company's most recent annual report. Ascension Health's venture-capital arm was an early investor in Accretive and continues to hold a 7% stake in the company. A managing partner for Oak Hill Capital Partners, a joint-venture partner with Ascension, is also a member of the Accretive governing board. Oak Hill holds an 8.2% stake in Accretive.

“Ascension Health has policies regarding patient accounts that reflect our commitment to recognize the human dignity of our patients and treat them with respect and compassion,” a spokeswoman for the St. Louis-based health system said in a statement.

Some Ascension hospitals have contracts for billing operations with Accretive. “As part of these contractual agreements, Accretive Health is required to provide these services in compliance with Ascension Health policies,” she said.

In Salt Lake City, a spokesman for Intermountain Healthcare said results of the Minnesota attorney general's report “are not consistent with our experience.”

Daron Cowley said the system has shown respect for patients and the system's policies and values. He described Accretive as “especially helpful” enrolling patients in subsidized health plans. “We constantly monitor our contractual relationships to ensure all activity is in accordance with our mission and values.”

TAKEAWAY: Hospitals' aggressive medical bill collection efforts are again drawing scrutiny from regulators and consumer groups.

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