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Accretive is the Symptom to a Bigger Problem

May 21, 2012 By Lucas Smith, Undergraduate Research Fellow

If you have been reading the news lately, you probably noticed that the State Attorney General is suing Chicago-based company Accretive. The AG’s office released a six-volume report detailing the exploits of Accretive’s employees in the Fairview hospital system. Accretive is accused of, amongst other things, attempting to coerce patients into settling outstanding debts before receiving medical care.

While many patients and medical professionals question Accretive’s ethics, their tactics are an unfortunate and inevitable consequence of the medical debt problem. Hospitals, nationally, provided a total of $39.3 billion in uncompensated medical care in 2010. And to deal with this problem hospital networks like Fairview turn to companies like Accretive to recoup losses. Without getting at the core problem of medical debt, more Accretive-like incidents are inevitable.

According to a study published in 2009, approximately 54.4% of bankruptcies in the United States are the result of the increasingly high cost of medical care. In addition to listing illness or medical bills as causes of their bankruptcy, respondents also listed “aggressive collection efforts.” Not only due medical bills swallow a substantial amount, but the illness often forces the primary breadwinner to stay home and care for a sick family member instead of working. Illness functions like a parasite on a household’s income; a survey from the Commonwealth Fund reported that 44% of families with medical debt had to use all of their savings to pay their bills.

But bankruptcy is only the beginning, as a 2006 article points out, “[w]hatever the level of medical bankruptcy, the actual problem is much greater because medical debt… is pervasive and damaging not only to personal finances but to health care access as well.” While the risks posed by medical debt are greater on those without health insurance, it is not exclusively so. Some 15% of those who had insurance in the last year had medical debt. Even more surprising, 70% of all those with debt reported having insurance at the time they incurred the debt.

An important, non-fiscal, consequence of this trend is that people with medical debt have inadequate access to medical care. According to the same 2006 article, a national survey found that even people with insurance that had medical debt reported just as high of a barrier to care as people that had no insurance. While surprising, the trend does make sense. A person with medical debt is unlikely to want to add to it so they forgo filling a prescription or going to the doctor.

That is the truly devastating aspect of Accretive behavior. Their aggressive debt collection practices are likely to deter Minnesotans from seeking care. According to one survey, over two thirds of people whose medical debt had been referred to collection agencies reported that it caused them to change their care-seeking behavior. Often this involved going to different providers or delaying, and even avoiding, medical treatments.

A recent Star Tribune piece provides a detailed summary of Accretive’s effort to pressure hospital employers into collecting more money. Andrew Cook said in an email to Fairview executives; “We've started firing people that aren't getting with the program." According the AG’s report, hospital employees were told to tell emergency room patients they would wait while the patient went and got their checkbook from their car. If this happened every time you need a doctor, would you keep going? Probably not.

But policymakers are in a bind. The only way to truly deal with this probably is through a comprehensive reform effort that lowers cost for consumers that likely involves transitioning away from an insurance-based health system. But given the polarized nature of government, such reform is unlikely. That only leaves them with the option of treating the symptom. Attorney General Lori Swanson’s law suit is exactly that. It punishes Accretive for what they have done, but does not do anything to deal with the broader systemic problem that lies beneath the surface. Which unfortunately makes it inevitable.

Accretive, in what I imagine is a PR move, has announced they are funding a panel of health care policy "all-stars," including Tom Daschle, to put together national standards for medical debt collection. While not a bad idea in theory, the credibility of the panel's report depends on its ability to maintain its independence from Accretive. But, even if they can, the end result still only treats the symptom, not the problem.

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