Sen. Franken Hearing on Accretive: Five Takeaways Every Health Care Collection Professional Needs to Know

Yesterday’s hearing by Minnesota Senator Al Franken into collection practices by Accretive Health should serve as a cautionary tale for all health care organizations and their third-party revenue cycle and collections vendors.

[Senator Franken quoted from a piece insideARM.com wrote for Forbes.com: Why The Media 'Can't Handle the Truth' About Accretive Health. You can hear the soundbite here.]

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The hearing also may serve as a portent of future changes, as Franken, who has in the past sponsored legislation tightening restrictions on collections practices, has promised that the hearing represented only a beginning and that he would “look into whether we can do more to strengthen our federal laws” regarding patient debt and collections practices.

Less than one percent of Accretive’s activities are related to debt collection, according to Accretive Senior Vice President Greg Kazarian, who testified before the senator in yesterday’s field hearing held in state capitol. But that one percent is creating no end of troubles for the Chicago-based health care consulting company.

“Many of the allegations we’ve heard here this morning are deeply troubling,” Kazarian wrote in a prepared statement read at the hearing. “And if they are true, they would be flatly inconsistent with Accretive Health policies, our training and our values. To any patient who experienced any interaction with us or with Fairview employees that lacked compassion and professionalism, we apologize.” Kazarian also submitted a statement reiterating Accretive’s denials of much of the attorney general’s compliance review report.

The first witness was Minnesota Attorney General Lori Swanson, whose investigation has attracted heavy media scrutiny into Accretive’s relationship with Fairview Health. Swanson testified that Accretive “thought it was above the law,” that its contracts with Fairview “unduly incentivized the company to ignore the cultures, and mission and values of a charitable hospital organization,” and that “the hospital was unable to restrain Accretive.”

The Minnesota Attorney General repeated several times that her office oversees the conduct of not-for-profit organizations, yet Fairview has not been subject to sanctions or legal action as it had been in 2005, when after a compliance review, the attorney general’s office found that the hospital had been conducting overly aggressive collection practices. Following that review, the attorney general and Fairview entered into a court-ordered consent decree “to reform and modify it’s billing and collection practices.”

To date the attorney general has filed one lawsuit against Accretive after a company employee had a laptop stolen with patient data of 20,000 Minnesotans. At yesterday’s hearing, the attorney general indicated that her office found numerous violations of federal law, but not state laws – at least not state laws that the attorney general’s office prosecutes.

Collection agencies are regulated by the Minnesota Department of Commerce, which has entered into a cease and desist order with Accretive. This was only the first phase of its investigation, testified Michael Rothman, commissioner of state agency. “I want to make it clear that to the extent the evidence collected in our investigation substantiates these allegations, such allegations would represent a severe and troubling disregard of consumer rights and a clear violation of Minnesota law.”

Commissioner Rothman declined to go into details of the investigation because, under Minnesota law, such information is “classified” until the investigation is completed.

Accretive has denied wrongdoing, and with respect to HIPAA, Kazarian testified that the company was not in violation.

Yesterday’s hearing contained a multitude of takeaways and lessons learned that every health care organization and collections vendor should consider, among them:

1) Make certain all paperwork and filings are in order. The attorney general alleged that Accretive and another Minnesota client, North Memorial, did not have in place an “associates agreement” that details how data will be handled and protected between health care organizations and third-party vendors. The document is required by HIPAA, and according to the attorney general, once North Memorial discovered it had no such agreement with Accretive, the two parties allegedly created one and back dated it, and conducted the entire exchange in e-mail, according to the attorney general. Sen. Franken expressed keen interest is seeing the evidence the attorney general collected on this issue.

2) Speaking of e-mail, be professional in all business communications, and make certain your employees also adhere to that standard. Senator Franken read portions of an e-mail from an Accretive employee who referred to debtors in unflattering terms such as “deadbeats” and other offensive language. Accretive fired the employee, but only after discovering the e-mail in the course of responding to the attorney general’s investigation.

3) Be consistent in all internal and external messaging. Sen. Franken pointed out how Accretive presented its relationship with Fairview to its shareholders differed from how it was portrayed in the company’s written and verbal testimony to Sen. Franken.

“We work in a partnership model,” was how Kazarian explained it in his testimony. “At the end of the day, both practically and contractually, if there is any disagreement with any aspect of the revenue cycle work, the final authority sits with Fairview … we viewed our work with Fairview as collaborative. We saw it as a shared set of responsibilities.”

Franken read from Accretive’s SEC filings which stated the company “assumes full responsibility for the management and cost of a customer’s revenue cycle” and that it has the right to control and direct hospital staff. “It says you can fire employees,” Franken said

Kazarian explained that the SEC filings are “written more broadly.” Accretive has 26 contracts with Fairview that detail exactly who is responsible for what.

“It seems to me that Accretive is saying one thing in the SEC filings that it does assume full responsibility and that Accretive is saying pretty much the opposite thing in the document s that I got from you and your written testimony today, that Fairview is responsible,” Franken said. “And I just don’t get it.”

4) Sensitive data needs to be treated like gold, because losing it can take away yours. A laptop containing unencrypted patient data was stolen from an Accretive employee last year. Where Accretive management erred was that the employee was not working in the division that has access such data, but had given it to him because to help him explore if he wished to join that part of the company.

5) Remember you are dealing with human beings. Accretive was criticized for imposing a numbers-driven culture at Fairview, one that lacked compassion. Sen. Franken described Accretive’s practices as “badgering. Attorney General Swanson focused her criticism on what she claimed Accretive called its “secret sauce,” visiting patients in the emergency to collect fees. The attorney general claimed that patients under physical duress – in pain, disoriented, under the influence of pain killers – were asked to pay hospital fees.

Accretive’s Kazarian testified that compassion is a central part of the company’s business philosophy and mission. “The core of what we do every day — everywhere we work — is help hospitals find all available coverage for patients, and ensure that insurance companies and government programs pay the hospitals the money they are owed for the care they provide,” Kazarian said. “We go to bat for patients who have been denied insurance coverage for pre-existing conditions. We advocate for patients when their insurance company refuses coverage for conditions that are medically necessary. We fight to get patients who qualify on disability. Over 95% of the revenue we secure for hospitals come from insurance companies or government payors.”

At the conclusion of yesterday’s hearing, Sen. Franken read two thank you notes from patients who praised Accretive for their compassion and hard work on their behalf. “I think that should be the norm,” Franken said. “This is Minnesota. People in Minnesota are good at their jobs and we nothing if not nice. I would expect Minnesota Health Care employees do a great job in very difficult circumstances.

“The revenue cycle folks that were doing these jobs for Fairview had to exercise a lot of judgment,” he continued. “These jobs require not just sensitivity but also the ability to make distinctions, distinctions about when and how and where it is proper to ask patient for money. It seems to me that there is right way and wrong way, and a right time and a wrong time to do these things. And to help your employees get right means creating the right culture. We are all human beings and human beings are not perfect, but leadership in the industry isn’t just about providing the right software and the right processes, it’s about providing thoughtful guidance. It’s about creating a culture where people err on the side of compassion.”