Grow­ing con­tro­versy threat­ens to taint rep­u­ta­tions of prom­i­nent not-for-profit sys­tem clients

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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.

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: ag­gres­sive

Hos­pi­tals’ med­i­cal bill col­lec­tion ef­forts are again draw­ing scru­tiny from reg­u­la­tors and con­sumer groups.

An in­ves­ti­ga­tion by Min­nesota At­tor­ney Gen­eral Lori Swan­son found ex­am­ples of ag­gres­sive at­tempts to col­lect on

med­i­cal bills be­fore and dur­ing treat­ment.


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.

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