EXHIBIT H

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Minnesota Attorney General Lori Swanson's

Statement to the United States Senate HELP Committee

May 30, 2012 Field Hearing

i. Introduction.

I than the Senate Committee on Health, Education, Labor & Pensions ("HELP") and

Senator Al Franken, for convening this Comnittee hearng today on the important issue of

ensurng patients' access to health care and protecting the privacy of patients' medical

infonnation.

II. The Attorney General and Charitable Organizations.

Chartable health care organzations in Minnesota benefit from tens of milions of dollars

anually tlU'ugh exemptions on property taxes, sales taxes, and income taxes and their abilty to

issue tax-exempt bonds. The Mirmesota Attorney General regulates chartable organizations in

the State ofMiimesota. Most hospitals and health cae organizations in Minnesota are chartable

institutions; as a result, the Minnesota Attorney General's Office has had a strong histoncal

focus on whether Minnesota chartable hospitals and health care organizations operate in a

maner consistent with their charitable, tax-exempt status, mission, and duties.

For example, one of the more significant cases in the history of the Miimesota Attorney

General's Offce involved a compliance examination and report on the Sister Elizabeth Kenny

Foundation. The Sister Kenny Foundation operated a nonprofit hospital in Minnesota to treat

and research polio. Former Minnesota Attorneys General Miles Lord and Walter Mondale

commenced a review and issued a report exposing, among other things, that a Chicago-based

third pary vendor had overcharged and misledthe chartable hospitaL. The report eventually

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ledto prosecutions of cerain offcers of the vendor and the chartable organization. More

recently, the Minnesota Attorney General's Offce issued compliance review report of Allna

Health System, Medica Health Plans, Healtharers, Blue Cross and Blue Shield of Minnesota,

and Fairvew Health Serices. A 2001 Compliance Review of AlHna Health System eventually

led to the divestitue of Medica Health Plans (an HMO) from its parent organization, Allna, and

the removal of directors and offcer of the organization.

III. The 200S Fairvew Compliance Review Report.

In 2005, the Offce conducted a Compliance Review of Fairview Health Services

(Fairvew). Among other things, the Compliance Review Report found that Fairview had

engaged in inappropriate and overly aggressive collection practices. Like other hospitals at the

time, it also charged up to thee times more for medical treatment to uninsured patients than it

charged to insurance companes for the same servces. After the Report was published, the

Offce entered into an agreement with Fairvew to modify its biling and collection practices.

The agreement required Fairiew to adhere to cerin collection standards, to develop internal

collection and chartable giving poHcies at the Board of Directors level consistent with the

obligations of a charitable organzation receiving tax-exempt benefits, and for the Board to

anually review the hospital's collection and charty care activities. The agreement

requiredFairview to have a zero tolerance policy for abusive, harassing, or oppressive conduct,

both by its own employees and by third pary vendors engaged in collections activity. The

agreement also required Fairview to charge uninsured patients no more than it charged to the

insurance company delivering the most revenue to the hospital (e.g. which is typically the insurer

that negotiates the lowest prices from the hospital). The agreement was filed as a Consent

Decree in Ramsey County District Cour. The Consent Decree was renewed in 2007.

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In 2005 and 2007, Nort Memorial Health Care C~ort Memoriar') signed similar

Consent Decrees with the Minnesota Attomey General.

IV. The 2012 Fairvew Compliance Review Report; The North Memorial Compliance

Review; and the Accretive Health Lawsuit.

In January, 2012, the Offce filed a lawsuit against a vendor of Fairvew and Nort

Memorial named Accretive Health, Inc., a Chicago-based debt collecton management company.

The lawsuit relates to violation of patient privacy rights and unlicensed and unawfu debt

collection activities. The lawsuít is in its early stages.

The Attorney General's Offce also initiated compliance reviews of Fairvew and Nort

Memorial to detenine, among other things, if they were in compliance with the Ramsey County

Distnct Court Consent Decree and if their conduct was otherwise consistent with the duties and

responsibilities ofa tax-exempt chartable health care organzation in the State of Minnesota.

As par of the Compliance Review of Fairew, the Offce reviewed over 100,000 pages

of documents from Fairview and Accretive. Whle the Compliance Review of Fairview has been

completed, we are stil conductng the review of Nort Memorial. North Memorial entered into

a revenue cycle agreement with Accretive in March, 201 i.

v. The 2012 Compliance Review Fidigs Relating to Accretive's Management

Cultue.

The Fairvew Compliance Review focused on the delegation of management activities by

a chartable hospital organization to Accretive, a for-profit company. Fairview paid Accretive

approximately $100 million in 2011 to manage the Fairview employees who collect money from

patients and insurance companes and to provide certain adinistrative serces such as coding

and transcnptíon. Accretive both assumed day-to-day management responsibilty over the

Fairview employees who peronned so-called "revenue cycle" fuctions and embedded its own

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employees into Fairview facilties. Though its embedded workforce, Accretive mMaged the

hospital patient registrars.

The Compliance Review Report makes numerous findings. Among them is that

Accretive repeatedly ignored the Consent Decree between Fairvew and the Minnesota Attorney

General.

In April, 2011, about one year after Accretive entered Fairvew, an Accretive manager

had Accretive collectors sign an acknowledgment that they received a copy of the Consent

Decree's requirements. The Accretive manager then said: "Very little of ths wil drive collector

behavior - it's just so we can all say we have it."

The same month, Fairvew prepared an "issues log" of problems with Accretive. Among

other things, the log noted that Accretive had tred to collect money from patients who were

curent on their payment plans, referred 6,000 accounts to collections without ever having sent

the patient a letter requesting payment, and failed to timely credit 300 patient payments.

The next month, in May, 2011 Faiiew published an audit of Accretive's lack of

compliance with the Consent Decree. The audit found numerous violations by Accretive,

including that the company was not famliar with the Consent Decree and Fairvew's charty care

policy, did not halt collection efforts when patients asked for more documentation, and did not

send itemized statements to patients who requested them. Accretive was copied on the audit.

In September, 2011 Fairvew again advised Accretive that it did not comply with the

Consent Decree or Fairview's charty care policies, that Accretive targetedpatients in payment

plans with collection notices and phone calls, and that Accretive's actions were "resulting in

numerous patient complaints and confusion for patients." Fairvew told Accretive: "Fairview

canot continue ths relationship.. .."

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In December, 2011, Fairview again audited Accretive. The audit showed that Accretive

continued to ignore the Consent Decree. The audit noted violations of the Consent Decree,

federal debt collection laws, state debt collection laws, and patient privacy laws.

It is apparnt from the Compliance Review that: (l) Accretive thought it was above the

law, (2) Accretive's management contract unduly incentivized Accretve to ignore the culture,

mission, and duties of a chartable hospital organization, and (3) the chartable hospital

organization was unable to restain Accretive.

Because of the limited time allotted for testimony, I will focus on just two areas of the

Compliance Review Report:

1. PATIENTS ARE NOT TOLD THAT THEIR MEDICAL DATA IS BEING

ACCESSED IN OTHER COUNTRIES OR BEING USED TO PREDICT THEIR

PROFITABILITY.

Medical privacy is a bedrock principle of the doctor-patient relationship. Over 2,500

years ago, the early Hippocratic Oath for physicians provided: "All that may come to my

knowledge in the exercise of my profession...I wîl keep secret and wil never reveaL." Patient

confidentiality encourages a full and fran exchange of infonnation between patients and their

doctors.

The Minnesota Supreme Court has recognized the right to privacy like this:

"The right to privacy is an integral par of our humanity; one has a public persona,

ex.posed and active, and a private perona, guarded and reserved. The hear of our

liber is choosing which pars of our lives shall become public and which parts

we shall hold close."

Lake v. Walmart Stores, Inc., 582 N.W.2d 231, 235 (Min. 1998.)

Accretive's treatreiit of patient privacy is distubing. Its own records describe

"Common Accretive HIPAA Incidents" to include "(llaptops, unencrted emails, too much

access."

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In the fall of 2011 Minnesota newspapers reported that a laptop with patient data was

stolen out of a car in the Seven Comers distnct of Minneapolis. The laptop belonged to an

Accretive employee and was left in his rental ca. The laptop had patient data on over 23,000

patients of Fairvew and North Memonal, as well as data from St. John's Hospital in Detroit,

Michigan (par of Ascension Health).

The Compliance Review Report includes a copy of a screen shot provided to a Fairew

patient who asked what information about her was on the stolen laptop. The information on the

laptop included, among other things, her name, social secunty number, a numerc score to

predict the "complexity" of the patient, a numenc score to predct the probability of an inpatient

hospital stay, the dollar amount "allowed" to the patient's provider, whether the patient is in a

"frail" condition, and fields to denote whether the patient had any of 22 chronic medical

conditions, including bipolar disorder, depression, HIV, or schizophrenia.

Accretive employees embedded at hospital facilties operate largely on laptop computers,

some of which are left in the plain sight in cars and some of which were never encryted.

Accretive acknowledges that its laptops often contain "tons of patient health and financial

information."

As it tus out, a year before the Accretive employee descnbed above left his laptop(with

information on 23,000 Mirmesota patients) in the car, another Accretive employee working for

Fairview also had a laptop stolen out of his rental car while having dinner at a restaurant.

Accretive did not notify Fairview at the time that the laptop had been stolen. Fairview leamed of

the compliance breach through anonymous tips. Fairvew questioned whether the second stolen

laptop containing its patient data could have been prevented if Accretive had informed Fairview

about the first stolen laptop i 3 months earlier.

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In Febru, 2011 Accretive management stated that there had been four "smash and

grabs," or computer stolen out of employee cars, in the last thee months alone.

On May 11, 2012 Accretive told Senator Franen's office that the company had

experienced nine stolen laptops.

It told my offce in March, 2012 that it found 32 unencryted laptops.

The Compliance Review Report docuents other troubling findings about how Accretive

handles private medical data.

Patients were not told that their patient data is being used and accessed by Accretive.

A Fairvew audit from December, 2011 fomid that Accretive did not properly encrypt

emails that contained patients' private information.

Fairvew patient heath information was accessed and used by Accretive collectors in

Kalamazoo, Michigan. It was accessed by Accretive "revenue cycle" employees embedded at

Fairview.

Accretive also engaged in extensive "data mining" and "consumer behavior modeling"

using patient data. For instance, company indicates that it develops a "Wilingness to Pay" score

about patients using approximately 140"data elements" obtaned from client hospitals. An email

from one company manager stated that the "Wilingness to Pay" score containsvarous elements,

including patients' religion, gender, and martal status.

Accretive allowed employees at its business offce in New Delhi, India to access

Fairview patient data. One of Accetive's clients uncovered a password sharng breach in India,

according to the company's records.

Patients are not aware that their data was being sent to Accretive offices or that it was

accessed out-of-state in Michigan or overseas in hidia, Patients were not advised that Accretive

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would use their patient heath data for collection puroses, to calculate the likely profitabilty of

their futue treatment, or to develop "Wilingness to Pay" scores.

Mr. Chairman, the Amercan people desere better.

2. ACCRETIVE TURED THE ATTORNEY GENERAL CONSENT DECREE ON

ITS HEAD BY ORCHESTRATING BEDSIDE COLLECTION VISITS IN

DOSPIT AL EMERGENCY ROOMS AND USING SURPRISE "STOP LISTSH TO

COLLECT MONEY FROM MEDICALLY DISTRESSED PATIENTS ON THE

MORNING OF THEIR SURGERY.

An estimated twenty percent of Americans face a life-changing event in the Emergency

Room. It is a place where husbands lose wives, wives lose husbands, parents lose children, and

children lose parents. It is a place of medical trauma and emotional sufferng, both for patients

and their familes. It is and should be a solem place.

The Compliance Review Report includes a docuent prepared by Accretive which

identifies how it differentiates itself from other companies. Encapsulating the culture of

Accretive, the char refers to its method as the "Accretive Secret Sauce," saying on the cover

page: "Check out our ASS!" and "You've never seen ASS like ours!"

The "Accretive Secret Sauce" concedes that "a tyical hospital" does not collect money

from patients in the Emergency Room. By contrast, one of Accretive's "Secret Sauce" devices is

to place collectors into Emergency Rooms.

Our Compliance Review Report found a cultue clash between Accretive's "Secret

Sauce" and its self~described "numbers drven culture," on the one hand) andthe mission and

duties of a chartable hospital, on the other hand. Accretive-which was responsible for day-today management of the hospital revenue cycle employees-publicized quotas for how much

money hospital registration staff had to collect from patients, publicized who among individual

patient registrars was ahead and who was behind in the "race" to collect, incentivized hospital

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employees to collect more money with prizes and gift, and promised to dress up as clowns or

tukeys or to shave their head if hospital patient registrars met their collection quotas.

The "Secret Sauce" drove a culture of aggressive collections from medically distressed

patients. As one Fairvew employee said in a 2010 survey finding 40 percent of Fairview staff to

be imcomfortable with the collection activity: "As far as the Accretive intiatives, all we really

know is that it is about money and how much we can collect."

We have heard from patients who had insurance, but were still asked to take out their

credit cards or checkbooks while sufferingon Emergency Room gurneys.

We've heard frm patients who were overcharged because the Accretive "Secret Sauce"

aimed high and demanded that patients pay too much money.

We've heard frm patients who had to fight for refunds.

We've from patients who were surrised to be stoplisted in the early morning hours

before their surger, hit up to pay while weak and sufferng before their treatment at a time of

medical distress and high angst.

We've heard from patients who received a bedside collection visits in the Emergency

Room. Some of these patients were asked to pay money while wrthing in pain. Others were

asked to pay money while disoriented on pain medication. Most of these patients were on a

guey in varous stages of undress. In some cases, the collectors had to bring them their wallet

from their pants, and in other cases patients had to haggle over their abilty or need to pay the

bil.

As noted above, the Ramsey County Distrct Cour Consent Decree requires Fairview to

have a zero tolerance poHcy for abusive, harassing, or oppressive collection conduct, whether by

its own employees or by third paries engaged in collections activity. When thee doctors said in

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March, 2011 that the collection activity was generating complaints and tuing patients away, a

top Accretive executive at Fairvew trvialized their concerns as "countr club" talk.

Our Office does not enforce the Emergency Medical Treatment and Active Labor Act

(EMTALA). We do enforce the chartable organzation laws in Minesota. Accretive's

management contract unduly incentivized the company to ignore the culture, mission, and duties

of the chartable hospital. It is not consistent with the mission and duties of a chartable hospital

organzation that receives tax exemptions from the citizen of Minesota for a management

company to orchestrate this tye of collection conduct toward Minnesota patients.

Senator, I than you for hosting this hearg. I am parcularly pleased that the hearng

was located in St. Paul, where Minnesotans can partcipate and see their goverent at work.

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