The federal government last month started to shut four Northwoods Rehabilitation and Extended Care facilities out of the Medicare program, potentially throwing the care of 400 patients into even greater uncertainty.
The Northwoods facilities averted the threat of closure Tuesday when their new administrator reached a verbal agreement with the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services.
After realizing the nursing homes are no longer being operated by a Niskayuna firm that was recently found guilty of criminal charges, CMS 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.
CMS’ threat to exclude Northwoods from the Medicare program followed the conviction in October of the nursing home’s former operator on nine misdemeanor charges. The loss of eligibility for Medicare, which last year provided Northwoods with $7.5 million or 20 percent of its annual revenues, could have brought the nursing homes a step closer to closure.
Highgate LTC Management, the Niskayuna firm convicted by the Cortland jury, 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 Tuesday, Highgate’s Chapter 11 trustee and Long Hill filed a lawsuit against Leavitt in another bid to restore the nursing homes’ Medicare billing rights. Fifteen percent or up to 60 patients at Northwoods facilities are covered by Medicare.
Despite Long Hill’s deal with CMS, 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,” said Mark Fishman, the Chapter 11 trustee.
The termination of Northwoods’ Medicare privileges could have prompted the General Electric Credit Corporation 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.
The Cortland 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. Those actions followed 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.
In November 2006, a Rensselaer County judge ordered Long Hill to assume control over the 512-bed Northwoods system. There are Northwoods nursing homes in Cortland, Niskayuna, East Greenbush and Schaghticoke.
“[CMS] 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 CMS. Lawlor said CMS never ceased providing Northwoods with Medicare funds.
A CMS spokesman did not immediately respond Wednesday to an e-mail seeking comment.
More from The Daily Gazette: