Audit report, schedule of reimbursable patient day statistics, Ashton Woods Nursing Home and Rehabilitation Center, Atlanta, Georgia, Medicaid provider no. 00140115A, for the year ended June 30, 1994, Georgia Department of Medical Assistance [June 30, 1994]

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STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA. GEORGIA 30334

AUDIT REPORT SCHEDULE OF REIMBURSABLE COSTS AND
PATIENT DAY STATISTICS ASHTON WOODS NURSING HOME AND
REHABILITATION CENTER ATLANTA, GEORGIA
MEDICAID PROVIDER NO. 00140115A FOR THE YEAR ENDED JUNE 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE

ASHTON WOODS NURSING HOME AND REHABILITATION CENTER
- TABLE OF CONTENTS -
AUDITOR'S REPORT SCOPE OF THE AUDIT SCHEDULE OF REIMBURSABLE COSTS AND PATIENT DAY STATISTICS NOTES TO SCHEDULE SUMMARY OF FIELD AUDIT ADJUSTMENTS EXPLANATION OF FIELD AUDIT ADJUSTMENTS APPENDIX
MANAGEMENT COMMENT LETTER

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3 4 5
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CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
January 26, 1995

Nursing Home Reimbursement Section Georgia Department of Medical Assistance 2 Peachtree Street, NW Room 27-208 Atlanta, Georgia 30303-3159
Ladies and Gentlemen:
We have audited the Nursing Home Cost Report filed with the Georgia Department of Medical Assistance under the Title XIX Medicaid Program by International Health care Properties, XV, L.P., d/b/a Ashton Woods Nursing Home and Rehabilitation Center for the year ended June 30, 1994, and have compiled the accompanying Schedule of Reimbursable Costs and Patient Day Statistics based on our audit. The Nursing Home Cost Report is the responsibility of the management of International Health Care Properties, XV, L.P., d/b/a Ashton Woods Nursing Home and Rehabilitation Center. Our responsibility is to determine if the reimbursable costs and patient day statistics reported in the Nursing Home Cost Report are reasonable and allowable, in all material respects, in accordance with the federal and state laws, regulations, policies and procedures governing the Georgia Nursing Home Reimbursement Program. It is also our responsibility to report the results of our audit, including any required adjustments to the cost report data, to the Georgia Department of Medical Assistance.
We conducted our audit in accordance with the Nursing Home Audit Program approved by the Georgia Department of Medical Assistance. Our audit included examining and evaluating, on a test basis, evidence supporting the amounts and disclosures in the Nursing Home Cost Report. Our audit also included assessing the accounting principles used and significant estimates made by management. We believe our audit provides a reasonable basis for our report.
As described in Note 1 of the Notes to Schedule, the accompanying Schedule of Reimbursable Costs and Patient Day Statistics was prepared to present the data necessary for the Georgia Department of Medical Assistance to determine Medicaid reimbursement and is not intended to be a presentation in accordance with generally accepted accounting principles, nor is it intended to be a complete presentation of the assets, liabilities, revenues and expenses of International Health Care Properties, XV, L.P., d/b/a Ashton Woods Nursing Home and Rehabilitation Center on the basis described.
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In our opinion, the "adjusted totals" column in the accompanying Schedule of Reimbursable Costs and Patient Day Statistics - which was compiled by us and reflects any adjustments to the cost report data required as a result of our audit - presents fairly, in all material respects, the reimbursable costs and patient day statistics of International Health Care Properties, XV, L.P., d/b/a Ashton Woods Nursing Home and Rehabilitation Center for the year ended June 30, 1994, on the basis of accounting described in Note 1.
This report is intended to be used solely in connection with the administration of the Georgia Department of Medical Assistance Nursing Home Reimbursement Program and is not to be used or relied upon for any other purpose.
Respectfully submitted,

CLV/ng/by

Claude L. Vickers State Auditor

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ASHTON WOODS NURSING HOME AND REHABILITATION CENTER SCOPE OF THE AUDIT
FOR THE YEAR ENDED JUNE 30, 1994
This audit was performed in order to determine if the reimbursable costs and patient day statistics reported in the Nursing Home Cost Report are reasonable and allowable, in all material respects, in accordance with the federal and state laws, regulations, policies and procedures governing the Georgia Medicaid Program, and to report to the Georgia Department of Medical Assistance (DMA) any adjustments to the cost report data required as a result of our audit.
In order to accomplish these objectives, we examined, on a test basis, evidence supporting the amounts and disclosures in the Nursing Home Cost Report, and assessed the accounting principles used and significant estimates made by management. Tested transactions and accounts were evaluated for compliance with DMA Policies and Procedures for Nursing Home Services and for compliance with federal laws and regulations applicable to the Title XIX Medicaid Program. Any adjustments to the cost report data required as a result of our audit are included in this report.
Our audit included a limited consideration of the organization"s internal control structure sufficient to plan the audit. Our consideration for this limited purpose would not necessarily disclose all reportable conditions in the internal control structure. Accordingly, we do not express an opinion on the internal control structure. However, as a resuit of our audit, reportable conditions were identified in controls applicable to financial operations and in controls related to compliance with Medicaid policies, procedures, laws and/or regulations. These weaknesses are described in the management letter included in the Appendix of this report.
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ASHTON WOODS NURSING HOME AND REHABILITATION CENTER
SCHEDULE OF REIMBURSABLE COSTS AND PATIENT DAY STATISTICS
FOR THE YEAR ENDED JUNE 30, 1994

REIMBURSABLE COSTS

PER COST REPORT
AS FILED

OFFICE

FIELD

AUDIT

AUDIT

ADJUSTMENTS ADJUSTMENTS

ADJUSTED TOTALS

Routine Services

$1,963,026

$ (20,085) $1,942,941

Special Services

334,728

(31,889)

302,839

Dietary

467,894

(2,473)

465,421

Laundry and Housekeeping

267,311

6,171

273,482

Operation and Maintenance of Plant

220,768

(12,721)

208,047

Administrative and General 726,360

1,503

727,863

Property and Related Expenses

824,434

(2,044)

822,390

Total Reimbursable Costs $4,804,521

$ (61,538) $4,742,983

PATIENT DAY STATISTICS

53,535

53,535

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ASHTON WOODS NURSING HOME AND REHABILITATION CENTER NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION
Ashton Woods Nursing Home and Rehabilitation Center is a 157-bed long-term health care facility located in Atlanta, Georgia. The facility provides both skilled and intermediate care services to resident patients. The facility was operated as a freestanding nursing home by International Health Care Properties, XV, L.P., for the year ended June 30, 1994.
BASIS OF ACCOUNTING The Nursing Home Cost Report and the associated Schedule of Reimbursable
Costs and Patient Day Statistics, hereinafter referred to as the Schedule, were prepared in conformity with the Principles of Reimbursement for Provider Cost published by the Secretary of Health and Human Services as modified by the provisions of Policies and Procedures for Nursing Home Services published by the Georgia Department of Medical Assistance. This basis of accounting required by the Medicaid Program differs from generally accepted accounting principles. Consequently, the information presented in this report reflects only the allowable reimbursable costs and patient day statistics and required for OMA to determine the healthcare provider's Medicaid reimbursement rate. This report does not reflect the provider's financial position or the results of its operations; it is intended to be used solely in connection with the administration of the Georgia Department of Medical Assistance Nursing Home Reimbursement Program and is not to be used or relied upon for any other purpose.
NOTE 2: OFFICE AUDIT ADJUSTMENTS The Office Audit Adjustments column on the Schedule is provided to show
the net effect of adjustments made during the office audit process. No office audit was performed prior to the cost report field audit and, therefore, no adjustments are shown.
NOTE 3: FIELD AUDIT ADJUSTMENTS The Field Audit Adjustments column on the Schedule is provided to show
the net effect of adjustments made during the cost report field audit process. The audit adjustments made as a result of this audit are shown on the Summary of Field Audit Adjustments and are explained in the Explanation of Field Audit Adjustments.
NOTE 4: PROPERTY COST REIMBURSEMENT Records examined during the audit showed that the land, buildings, and
equipment used in health care operations were acquired by International Health Care Properties, XV, L.P., on July 1, 1992. Because this property transaction occurred after June 14, 1983, the provider is reimbursed for property and related expenses under the Dodge Index System rather than historical costs.
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ASHTON WOODS NURSING HOME AND REHABILITATION CENTER NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994 NOTE 5: SUBSEQUENT EVENT
Records examined during the audit showed that the land, buildings, and equipment used in health care operations were acquired by Welcare International Management Corporation on December 20, 1994. For the year ended June 30, 1995, Welcare International Management Corporation will be required to file a home office cost report with the Georgia Department of Medical Assistance.
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ASHTON WOODS NURSING HOME AND REHABILITATION CENTER
SUMMARY OF FIELD AUDIT ADJUSTMENTS FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS

ROUTINE SERVICES

1

Incorrect Expense Classifications

$ (11,829)

2

Self-Insurance Reserve Fund

(8,256) $ (20,085)

SPECIAL SERVICES

3

Related Party Costs

$ (22,258)

4

Recalculation of Special Services Cost

Adjustment

139,623

5

Costs Not Related To Patient Care

(149,254)

(31,889)

DIETARY

1

Incorrect Expense Classifications

$ (1,560)

2

Self-Insurance Reserve Fund

(913)

(2,473)

LAUNDRY AND HOUSEKEEPING

1

Incorrect Expense Classifications

$ 7,373

2

Self-Insurance Reserve Fund

(1,202)

6,171

OPERATION AND MAINTENANCE OF PLANT

1

Incorrect Expense Classifications

(12,721)

ADMINISTRATIVE AND GENERAL

1

Incorrect Expense Classifications

$ 19,535

2

Self-Insurance Reserve Fund

(1,155)

5

Costs Not Related to Patient Care

(20,444)

6

Cost Report Adjustment Reversal

3,567

1,503

PROPERTY AND RELATED EXPENSES

1

Incorrect Expense Classifications

$

( 798)

7

Lack of Sufficient Documentation

(1,246)

(2,044)

Net Adjustment to Reimbursable Costs

$ (61,538)

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ADJUSTMENT NUMBER
1

ASHTON WOODS NURSING HOME AND REHABILITATION CENTER
EXPLANATION OF FIELD AUDIT ADJUSTMENTS FOR THE YEAR ENDED JUNE 30, 1994

EXPLANATION

INCORRECT EXPENSE CLASSIFICATIONS

Documentation examined during the audit showed that some of the expenses were not classified in accordance with the Uniform Chart of Accounts prescribed by the Department of Medical Assistance for providers participating in the Medicaid Nursing Home Reimbursement Program. This adjustment is made to reclassify costs to the appropriate cost centers. (OMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Lease Expense Licensing Agreement Repairs Supplies Dietary Lease Expense Repairs Laundry and Housekeeping Supplies Operation and Maintenance of Plant Communication Expense Lease Expense Repairs Administrative and General Communication Expense Liability Insurance Expense Licensing Agreement Repairs Property and Related Expenses Lease Expense Liability Insurance Expense

$ (3,024) (1,017) (415) {7,373) $ (11,829)

$

(574)

(986)

(1,560)

7,373

$

(438)

(14,949)

2,666

(12,721)

$

438

19,345

1,017

(1,265)

19,535

$ 18,547 (19,345)

(798)

Net Adjustment to Reimbursable Costs

$

0

2

SELF-INSURANCE RESERVE FUND

Documentation examined during the audit showed that reimbursable costs claimed included contributions to a self-funded trust for group health insurance. Federal regulations provide that contributions for any period in excess of the amount of losses paid by the fiduciary of the selfinsurance fund plus expenses related to these losses are not allowable. This adjustment is made to remove from reimbursable

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ADJUSTMENT NUMBER

EXPLANATION (continued)

costs the contributions made to the self-insurance reserve fund in excess of the allowable expenses. (HCFA 15-2161, 2162)

COST CENTER Routine Services Dietary Laundry and Housekeeping Administrative and General

$ (8,256) (913)
(1,202) (1,155)

Total Adjustment to Reimbursable Costs

$ (11,526)

3

RELATED PARTY COSTS

Documentation examined during the audit showed that the
provider paid for I. v. Therapy Services obtained from related
parties. Federal regulations provide that costs applicable to services, facilities, and supplies furnished by related organizations are includable in the allowable cost of the provider at the cost to the related organization. This adjustment is made to reduce reimbursable costs to the related party's cost. (HCFA 15-1000)

COST CENTER Administrative and General

$ (22,258)

4

RECALCULATION OF SPECIAL SERVICES COST ADJUSTMENT

The provider received revenues from the sale of ancillary services to patients; therefore, reimbursable costs for special services are limited to the maximum reimbursable cost calculated on Schedule B-lA of the cost report. Documentation examined during the audit showed that certain adjustments were necessary to amounts reported on Schedule B-lA as total cost per books, total charges, total patient days, and Medicaid patient days. These adjustments required the recalculation of Schedule B-lA. A copy of this recalculation has been furnished to the provider. This adjustment is made to increase reimbursable costs for the net effect of the recalculation. (General Instructions to the Cost Report)

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ADJUSTMENT NUMBER

EXPLANATION (continued)

Special Service Pharmacy Speech Therapy Oxygen Occupational Therapy Medical Supplies Other

Adjustment Per Cost Report
$(119,406) (197,704) (108,842) (481,399) (3,775) (91,357)

Recalculated

Adjustment

$

0

(197,703)

(108,825)

(479,882)

(3,769)

(72,681)

Audit Adjustment $ 119,406
1 17 1,517
6 18,676

$139,623

COST CENTER Special Services

$139,623

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COSTS NOT RELATED TO PATIENT CARE

Expenses claimed in the cost report included payments which were not considered to be for patient care operations. Federal regulations provide that costs which are not appropriate or necessary and proper in developing and maintaining the operation of patient care facilities and activities are not allowable in computing reimbursable costs. This adjustment is made to remove the non-patient care expenses from reimbursable costs. (HCFA 15-300, 2102.3; DMA Policies and Procedures Section 902, 1002.l(k))

Items Advertising Alcoholic Beverages Association Dues (50%) Bad Debt Expense Civic Organization Dues Marketing Expenses Non-sponsored Employee Benefits Prescription Drugs

$ (2,945) (214)
(1,861) (4,303)
(762) (33,163)
(3,146) (123,304)

$(169,698)

COST CENTER Special Services Administrative and General
Total Adjustment to Reimbursable Costs

$(149,254) (20,444)
$(169,698)

8

ADJUSTMENT NUMBER
6

EXPLANATION (continued)

COST REPORT ADJUSTMENT REVERSAL

An adjustment was made during cost report preparation to offset costs associated with the operation of a beauty and barber shop with revenue received. Documentation examined during the audit showed that the provider offset amounts in excess of the actual cost incurred. This adjustment is made to reverse a portion of the provider adjustment.

COST CENTER Administrative and General

$ 3,567

7

LACK OF SUFFICIENT DOCUMENTATION

Some of the expenses shown on the cost report were not supported by adequate documentary evidence. Federal regulations provide that cost information as developed by the provider must be current, accurate, and in sufficient detail to support payments made for services rendered to beneficiaries. This adjustment is made to remove the undocumented expenses from reimbursable costs. (HCFA 15-2304)

COST CENTER Property and Related Expenses

$ (1,246)

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CLAUDE L. VICKERS
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS
MEDICAID AND LocAL GOVERNMENT Auo1Ts DMs10N
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
MANAGEMENT COMMENT LETTER

MICHAEL A. PI.ANT
DIRECTOR (404) 656-2006

Georgia Department of Medical Assistance Atlanta, Georgia
and Management Officials of Ashton Woods Nursing and Rehabilitation Center
We haye audited the records and documentation supporting the cost report filed by Ashton Woods Nursing Home and Rehabilitation Center in connection with the Medicaid Nursing Home Reimbursement Program for the year ended June 30, 1994. Our audit included a limited consideration of the organization's internal control structure sufficient to plan the audit. Our consideration for this limited purpose would not necessarily disclose all reportable conditions in the internal control structure. Accordingly, we do not express an opinion on the internal control structure.
However, as a result of this audit, conditions were noted that we believe are weaknesses which should be addressed by management. In our audit we found that:
1. Expenses were not properly classified in accordance with the DMA Chart of Accounts, causing numerous reclassification adjustments.
2. Expenses claimed on the cost report included items not related to patient care operations.
3. Transactions with related parties were not properly accounted for or reported on the cost report.
As a participant in the Medicaid Nursing Home Reimbursement Program, the Provider has the responsibility of compliance with program policies and procedures particularly with provisions of the Federal Provider Reimbursement Manual. Section 2304 of this publication states:
"Cost information as developed by the provider must be current, accurate, and in sufficient detail to support payments made for services rendered to beneficiaries. This includes all ledgers, books, records and original evidences of cost ( purchase requisitions, purchase orders, vouchers, requisitions for materials,
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inventories, labor time cards, payrolls, bases for apportioning costs, etc.) which pertain to the determination of reasonable cost, capable of being audited." The provider should take corrective action to resolve the audit findings mentioned above. This management comment letter is related to findings during an audit of the cost report filed in connection with the Medicaid Nursing Home Program by Ashton Woods Nursing and Rehabilitation Center for the year ended June 30, 1994. This letter and the related audit report are intended to be used solely in connection with the administration of the Medicaid Nursing Home Reimbursement Program.
GEORGIA DEPARTMENT OF AUDITS
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