Hospitals increasingly ask patients to pay a medical bill when they arrive or before they leave. Here's a look at how one Minnesota hospital went too far to collect bills and violated Medicare rules and a law that safeguards access to emergency medical care, regardless of ability to pay.
The University of Minnesota Medical Center, one of seven hospitals owned by Fairview Health Services, is facing a full audit of its compliance with Medicare rules and a follow-up inspection of how well it adheres to the Emergency Medical Treatment and Labor Act, which says hospitals must hold off any talk of payment until a patient has been examined and stabilized.
Collection efforts at Fairview hospitals came under public scrutiny this year after an inquiry by Minnesota's attorney general into Accretive Health, the healthcare billing and collection company Fairview hired. Accretive, based in Chicago, reached a settlement with the attorney general in July that barred the company from Minnesota for at least two years. Accretive denied any wrongdoing.
Nonetheless, an investigation into the University of Minnesota Medical Center found that hospital bill collectors harassed patients and violated EMTALA.
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How much does a swing cost? For Accretive Health, the price it paid was $9.2 million.
Accretive Health may have swiftly settled a lawsuit with Minnesota's attorney general, but it cost the company, a new securities filing shows.
“Due to lost operating margin and stranded personnel costs arising from the Minnesota litigation and resulting contract terminations and associated legal defense and crisis management costs which together aggregated $14.6 million, the company had a net loss of $0.6 million as compared with a net income of $8.6 million in the second quarter of 2011,” the filing said.
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The uproar in Minnesota and Congress caused by an inquiry into Accretive Health's business practices apparently did not totally unnerve the company's first and largest customer.
Ascension Health, the nation's largest not-for-profit health system, accounted for nearly 41% of Accretive's revenue at the end of March. Ascension Health also owns 7% of the Chicago-based billing and collection company.
Accretive—which settled a lawsuit last week with Minnesota's attorney general by promising to stay out of the state for two years—disclosed in a filing with the Securities and Exchange Commission that Ascension has renewed its contract for another five years.
Accretive admitted no wrongdoing and continued to reject allegations that it violated patient privacy, debt collection and consumer protection laws.
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Fairview Health Services saw its credit rating from Moody's Investors Service drop one notch, and analysts said the outlook for the system is negative, in part because of the exit of its chief executive officer and turmoil over the health system's contracts with Accretive Health.
Moody's lowered Fairview's credit to an A3, a relatively strong rating, from A2. The Minneapolis-based system, which includes seven hospitals, saw its operating margin for 2011 (0.5%) squeezed by a new children's hospital and information technology installation, the rating agency said. Cash reserves declined last year. And its debt portfolio includes swaps that have strained finances across the sector since the credit crisis.
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