Accretive Health, one of the nation’s largest collectors of medical debt, has agreed to pay $2.5 million to the Minnesota state attorney general’s office to settle accusations that it violated a federal law requiring hospitals to provide emergency care, even if patients cannot afford to pay.
The company has not admitted wrongdoing.
As part of Monday’s settlement, Accretive Health is also banned from contracting with hospitals within the state for at least two years, effectively ending its business at three Minnesota hospitals. For four years after that, the company will have to obtain permission from the attorney general before resuming business in the state.
In April, Lori Swanson, the Minnesota attorney general, disclosed hundreds of Accretive’s internal documents that outlined aggressive collection tactics, including embedding debt collectors as employees in emergency rooms and pressuring patients to pay before receiving treatment.
“A hospital emergency room should be a sanctuary for the sick and wounded, not a hunting ground for collectors,’’ Swanson said Monday.
The settlement will end a civil suit against Accretive, which Swanson filed in January after a laptop with patient information was stolen, saying that the company had violated debt collection laws and patient privacy protections.
“Even though we believe the claims against us were either baseless or exaggerated, we have used this opportunity to carefully examine our own practices in order to ensure we are setting the very highest standards for our own performance and achieving the best possible outcomes for hospitals, patients and communities,’’ said Mary Tolan, Accretive Health’s chief executive.
The revelations in Minnesota reverberated across the country because they raised concerns that such aggressive debt collection practices have become common at hospitals. Accretive Health contracts with hospitals to help them recoup some money on the unpaid bills that have piled up during the financial crisis and the economic downturn. The company contracts with some of the largest hospital systems in the country.
Representative Pete Stark, Democrat of California, who is the highest ranking member of the House subcommittee that oversees Medicare and other health services, led an investigation in March into the company’s practices.
Hospitals have long hired outside collection agencies to pursue patients after they have left facilities. But mounting financial pressures on health care providers have resulted in hospitals letting collection firms in the front door, turning over the management of their staffing, like patient registration and scheduling, along with their collection activities, according to Swanson.
As more hospitals contract with debt collectors, concerns are growing that cozy relationships will threaten patient privacy, according to Anthony Wright, executive director of Health Access California, a consumer advocacy coalition.
For their part, hospitals say that they are in a tough place. The more than 5,000 community hospitals in the United States provided $39.3 billion in uncompensated care in 2010, up 16 percent from 2007, the American Hospital Association, a trade group said.