The Accretive Matter Is a Wake-Up Call for Hospitals: Examine Your Debt Collection and Revenue Cycle Practices ASAP

The Minnesota Attorney General is on a mission to eliminate over-aggressive debt collection behavior in the hospital industry. Her target is Accretive Health, Inc., a national company that provides support services to hospitals in Minnesota and other states on debt collection and revenue cycle management using sophisticated data analysis tools. Already other states have announced investigations, and federal investigations are likely to follow. The AG has also raised issues regarding the health system that used Accretive, Fairview Health Services, a nine-hospital system in Minnesota. Any hospital that outsources collections, revenue cycle management and related financial activities, or even performs them in-house, should closely review its compliance with best practices, including the AHA’s Statement on Hospital Billing and Collection Practices, agreed to in writing by many hospitals some years ago.

Accretive’s troubles began with the theft of a laptop that contained information on over 23,000 individuals. On January 19, 2012, the AG brought an action in federal court against Accretive, alleging HIPAA violations as well as violations of federal and state debt collection laws. On April 24, she issued a six-volume, 150 page corpus, billed as a compliance review, that with much hyperbole described Accretive’s conduct and included specific examples of alleged unlawful behavior. Her allegations described numerous calls to patients with outstanding balances using scripts that falsely threatened follow-up actions; demands that patients make co-pay and deductible payments prior to receiving services; and heavy-handed requests for payment information at bedside and in the ER. She claimed that her authority to investigate Accretive, a third party vendor to hospitals, derived from non-profit, charitable trust, and charitable solicitation laws governing non-profit hospitals. She also discussed at length Fairview’s alleged failure to oversee Accretive and to ensure that Fairview’s debt collection and other activities supported the system’s charitable purpose.

Although Accretive agreed to cease operations in Minnesota and also filed a motion to dismiss the AG’s complaint, the damage has been done. Accretive’s stock has fallen over 50% since the AG issued the results of her compliance review. Fairview terminated its contract with Accretive and other hospitals are reviewing their arrangements with the company. Fairview’s reputation has also suffered significant damage, and the complaints from patients over debt collection practices at the system keep coming. While hospitals struggle in these economic times to manage revenues, debt and collections, it is imperative to ensure that collections and related practices stay focused on the consumer.