The operator of four Northwoods Rehabilitation and Extended Care facilities has staved off a move by the U.S. Department of Health and Human Services to shut the facilities out of the Medicare program, potentially throwing the care of 400 patients further into limbo.
The Northwoods facilities averted the threat of closure Tuesday when their new administrator reached a verbal agreement with the Centers for Medicare and Medicaid, a division of HHS. After realizing that the nursing homes are no longer being operated by a Niskayuna firm that was recently found guilty of criminal charges, CMM agreed to keep Northwoods’ Medicare status intact, according to people familiar with the matter.
“There will be no disruption. We essentially resolved the matter with Medicare,” said David Lawlor, the treasurer of the Long Hill Alliance Company, the Hartford, Conn., firm that assumed control over the Northwoods facilities in November 2006.
CMM’s threat to exclude of Northwoods from the Medicare program followed a state Supreme Court case in October in Cortland in which the former operator of the nursing homes was found guilty of nine misdemeanor charges. The loss of eligibility for Medicare, which provided Northwoods with $7.5 million last year, 20 percent of its annual revenues, could have brought the nursing homes a step closer to closure.
Highgate LTC Management, the Niskayuna firm convicted of the criminal charges, filed Tuesday for a temporary restraining order that would prohibit HHS Secretary Michael Leavitt from excluding the Northwoods facilities from the Medicare program. Highgate in April filed for Chapter 11 protection in U.S. Bankruptcy Court in Albany.
In bankruptcy court on Tuesday, Highgate’s Chapter 11 Trustee Mark Fishman and the Long Hill said it filed a lawsuit against Leavitt in another bid to restore the nursing homes’ billing rights under Medicare Parts A and B. Fifteen percent of the patients at Northwoods facilities, as many as 60 patients, are covered by Medicare.
Despite Long Hill’s deal with CMM, Lawlor said the suit was filed as a precautionary measure. At a hearing Wednesday, a bankruptcy court judge was notified about the Medicare resolution.
“It appears that the problem is solved, but if I am incorrect, there will be a hearing next week,” Fishman said.
The termination of Northwoods’ Medicare privileges could have prompted General Electric Credit Corp. to cut off Highgate’s funding. It also could have forced Fishman to abort efforts to sell the nursing homes, according to court documents.
“If that event occurs, [Long Hill] will be unable to meet its payroll and other obligations and would be forced to not only discharge the Medicare patients but also to begin the closure of all facilities,” the Long Hill suit states.
A jury found Highgate guilty of six counts of violating health laws and three counts of falsifying business records. In October 2006, then-Attorney General Eliot Spitzer indicted and arraigned Highgate following an investigation that found Northwoods employees at a Cortland facility failed to treat a comatose patient according to his health plan. The workers also lied on medical records about the services they delivered.
Long Hill claims HHS should not cut Northwoods from Medicare because the jury found it guilty of misdemeanor — not felony — charges. The Connecticut firm also claims HHS is improperly blocking them — not Highgate — from Medicare funds.
In November 2006, a Rensselaer County judge ordered Long Hill to assume control over the 512-bed Northwoods system, which includes nursing homes in Cortland, Niskayuna, East Greenbush and Schaghticoke. The judge also barred Highgate from collecting income from the nursing homes, including Medicare revenues.
“[CMM] didn’t realize we replaced the principals of Highgate,” Lawlor said.
Medicare is a federal health insurance program primarily for Americans 65 and over. It is administered by CMM. Lawlor said CMM never ceased providing Northwoods with Medicare funds.