NJ: Computer Glitch Forces Nursing Home To File For Chapter 11 Bankruptcy

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NJ: Unisys Glitch Forces Nursing Home To File For Chapter 11 Bankruptcy

Source: The Record, Northern New Jersey

Publication date: 2000-09-19

The owner of a Norwood nursing home has filed for bankruptcy protection after a computer glitch caused it to miss out on $350,000 in Medicaid reimbursements, company officials said Monday.

Continental Norwood Holdings Inc., owner of The Heritage at Norwood, was forced into the Chapter 11 filing after the delayed payment sparked a cash-flow shortage at the company.

The problem was caused by a delay in Medicaid reimbursements by Unisys Corp., a computer manufacturing and consulting company that runs New Jersey's Medicaid reimbursement program.

Unlike other nursing homes that have been forced into bankruptcy because of efforts by the federal government to trim Medicare payments, the Heritage's situation is a temporary one, officials said.

"The company is not bankrupt," said Patricia Gitt, a Continental spokeswoman. "The Chapter 11 was done to protect the company until the problem is worked out."

No changes in care, staffing, or day-to-day operations at the home are planned, she said. "Nothing will be impacted by this. The level of care will remain the same. Operations will remain the same. Employees should know that everything is business as usual."

The Heritage, located on McClellan Street, has about 200 elderly residents.

Nursing homes across the country have suffered as a result of Medicare cuts made by Congress in 1998. The changes established fixed payments for services, drastically reducing the amount of money nursing homes could charge. Since then, five of the nation's 10 largest nursing home chains have filed for bankruptcy, including Genesis Health Ventures, the largest elder-care provider in New Jersey.

Susan Beck, a Unisys spokeswoman, said her company was not immediately aware of the problem at Heritage and said Unisys records show it had made "substantial" Medicaid reimbursements to Heritage in 1999 and 2000.

Unisys, headquartered in Blue Bell, Pa., provides Medicaid services to Kentucky, Louisiana, Massachusetts, and Oklahoma, as well as New Jersey, Beck said. It processes 186 million medical claims a year and disburses $16 billion in payments to health-care providers.

Marilyn Riley, a spokeswoman for the New Jersey Department of Health and Senior Services, said no other nursing homes in New Jersey have complained recently about delays in receiving Medicaid reimbursements.

By law, Heritage is required to inform the state of its bankruptcy filing, but has yet to do so, Riley said.

Because of concerns about quality of care, the state conducts monitoring visits to nursing home that file for bankruptcy, she said.

Last week, New Jersey awarded Unisys a $169 million contract extension to continue using its Medicaid payment system. The contract runs through August 2004.

Staff Writer Don Stancavish's e-mail address is stancavish(at)bergen.com

Publication date: 2000-09-19 ) 2000, YellowBrix, Inc.

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=14024975&ID=cnniw&scategory=Business+and+Finance%3ABankruptcy

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