Neighborhood Health Center files Chapter 11 bankruptcy

New Jersey's reimbursement policy has hurt FQHCs such as Plainfield's.

 

Plainfield-based Neighborhood Health Services Corporation (NHSC) has filed for Chapter 11 bankruptcy, according to multiple sources.

Like other federally qualified health centers (FQHCs) throughout New Jersey, the NHSC -- which has operations in Plainfield, Elizabeth, Philipsburg and Newton -- finds itself between a rock and a hard place, with demand for services on the increase and longstanding reimbursement issues with the Christie administration.

Still known locally as "The Plainfield Health Center", the agency's patients are primarily uninsured or covered by Medicaid. Medicaid patients are insured by managed care organizations (MCOs) who make the actual payments to the health centers, with the difference between the MCO payment and the Medicaid entitlement to be made up by the state.

However, New Jersey's MCOs have for years now used tactics of underpaying amounts requested and delaying payments -- the health centers say for unreasonable periods of time. This combination of factors puts New Jersey's FQHCs -- including NHSC -- in a cash flow bind.

Since 2011, New Jersey has changed its payment policy and was only paying the difference between an MCO payment and the full Medicaid-entitled payment where the MCO had paid a claim. No MCO payment, no state payment.

The situation got so bad that in 2012 the health centers' umbrella group, the NJ Primary Health Care Association, took the state to court. Though the state was told to change its payment practices and the judgment was sustained on appeal, the state evidently has simply continued to ignore the mandate. (See detailed coverage by NJ Spotlight from last September here.)

The Plainfield Health Center has its roots all the way back in 1969, with the inception of a well-baby clinic on West 4th Street under the auspices of the Model Cities Program (part of President Lyndon Johnson's "War on Poverty"). It has grown over the years into an agency that now serves more than 22,000 patients in multiple locations (see more on their website here).

The agency has become even more important to healthcare delivery in Plainfield since the closing of Muhlenberg Hospital in 2008. Its demise would be catastrophic to the Plainfield area.

Under Chapter 11 bankruptcy, an entity seeks court protection to remain in control of its operations and assets, while working out a restructuring of its debts in order to continue in business.

Plainfield's YWCA is currently operating under a Chapter 11 bankruptcy, and the city of Detroit has recently emerged from the largest municipal Chapter 11 bankruptcy in US history.

While the courts may help resolve the immediate issues of cash flow and holding creditors at bay, the long term sustainability of the Neighborhood Health Services Corporation, and other FQHCs like it, will only be achieved with the resolution of the Medicaid reimbursement situation with the state -- and that may have to wait until a different governor is sitting in the NJ statehouse.

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  -- Dan Damon [follow]

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