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Accretive Put Debt Collectors in Hospitals, State AG Says

Accretive Health Inc. (AH) tumbled by the most ever after Minnesota’s attorney general alleged that the company improperly posted debt collectors in hospital emergency rooms and at the bedsides of patients.

Accretive dropped 42 percent to $10.75 in New York today, the most since the debt-collection company first sold shares to the public in 2010.

Minnesota Attorney General Lori Swanson is suing Chicago- based Accretive for violations of U.S. and state patient-privacy and debt-collection laws. She said patients at Fairview Health Services, a Minnesota hospital chain, were pressured for payment before they received care in some cases and that Accretive’s debt collectors didn’t properly disclose their role.

Employees of Fairview, a nonprofit chain of seven hospitals based in Minneapolis, were required to use a computer system derisively called “Blue Balls” to track whether patients paid their bills and push for payment before they received care, Swanson said yesterday. The payment system began after Fairview hired Accretive in May 2010, Swanson said in a report describing the companies’ relationship.

Accretive’s tactics as “a high-pressure boiler-room-style sales atmosphere,” are “in conflict with the purpose of a charitable health-care organization,” according to the report based on internal documents and interviews with employees.

Swanson said Fairview may have jeopardized its tax-exempt status by partnering with the debt-collection company.

“It is critical that our business practices align with our values and comply with applicable laws and industry standards,” Fairview said in a statement.

Payment Scripts

Ryan Davenport, a spokesman for the hospital group, said in an e-mail that he couldn’t “address specific issues raised” in Swanson’s report.

Actions that Accretive used at Fairview included issuing emergency room employees “scripts” for conversations with patients that “can lead a patient or her family to believe the patient will not receive treatment until payment is made,” Swanson said in her report.

Federal law prohibits hospitals from refusing emergency treatment to anyone, regardless of ability to pay.

Employees were instructed to ask for credit card payments, tell patients they’d wait for them to retrieve their checkbooks from their cars, or if the patients said they couldn’t pay, remind them that debt-collection activities “can affect your credit score,” according to the scripts.

‘Accountable Care’

Fairview’s board of directors voted to end part of its contract with Accretive last month, a decision that may cost the collection company as much as $68 million this year, Accretive said in a March 29 filing with the U.S. Securities and Exchange Commission.

“We have a great track record of helping hospitals enhance their quality of care,” Francesca Luthi, a spokeswoman for Accretive, said yesterday in a statement. “For example, we have helped over 250,000 patients get insurance coverage.”

Luthi’s statement was issued by Rhonda Barnat, a managing director of the Abernathy MacGregor Group in New York.

Fairview is one of 32 large hospital systems and physician groups around the country participating in an experiment with Medicare to try to coordinate patient care more efficiently TO reduce costs. Fairview gets to split any savings with the government if the arrangement, called an “accountable care organization,” is successful.

A spokesman for Medicare, Brian Cook, didn’t immediately respond to an e-mail yesterday after business hours seeking comment on Fairview’s participation in the program.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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