Audit report, schedule of reimbursable costs and patient day statistics, Meadowbrook Nursing Home, Inc., Tucker, Georgia, Medicaid provider no. 00141864A, for the year ended June 30, 1994, Georgia Department of Medical Assistance [June 30, 1994]

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

AUDIT REPORT SCHEDULE OF REIMBURSABLE COSTS AND
PATIENT DAY STATISTICS MEADOWBROOK NURSING HOME, INC.
TUCKER, GEORGIA MEDICAID PROVIDER NO. 00141864A FOR THE YEAR ENDED JUNE 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE

MEADOWBROOK NURSING HOME, INC. - TABLE OF CONTENTS -

AUDITOR'S REPORT

V

SCOPE OF THE AUDIT

1

SCHEDULE OF REIMBURSABLE COSTS AND PATIENT DAY STATISTICS

2

NOTES TO SCHEDULE

3

SUMMARY OF FIELD AUDIT ADJUSTMENTS

4

EXPLANATION OF FIELD AUDIT ADJUSTMENTS

6

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 7, 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 Meadowbrook Nursing Home, Inc., 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 Meadowbrook Nursing Home, Inc. 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 l of the Notes to Schedule, the accompanying Schedule of Reimbursable Costs and Patient Day Statistics was prepared to present the_<lata 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 Meadowbrook Nursing Home, Inc., on the basis described.

V

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 Meadowbrook Nursing Home, Inc., 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,
~~
Claude L. Vickers State Auditor CLV/as/by
vi

MEADOWBROOK NURSING HOME, INC. 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.
1

MEADOWBROOK NURSING HOME, INC. 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

$1,178,825

$ 9,820 $1,188,645

Special Services

138,069

(3,616)

134,453

Dietary

300,490

1,945

302,435

Laundry and Housekeeping

140,695

(2,482)

138,213

Operation and Maintenance of Plant

274,843

(18,727)

256,116

Administrative and General

311,480

37,655

349,135

Property and Related Expenses

497,350

(7,415)

489,935

Total Reimbursable Costs $2,841,752

$ 17,180 $2,858,932

PATIENT DAY STATISTICS

36,292

36,292

2

MEADOWBROOK NURSING HOME, INC. NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION
Meadowbrook Nursing Home, Inc., is a 100-bed long-term health care facility located in Tucker, Georgia. The facility provides both skilled and intermediate care services to resident patients. The facility was operated as a component of Allgood Health Care, Inc., a chain organization which filed a Home Office Cost Report with DMA 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 DMA 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 ~est 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 Meadowbrook Nursing Home, Inc., on August 3, 1989. 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.
3

MEADOWBROOK NURSING HOME, INC. SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS

ROUTINE SERVICES

1

Incorrect Expense Classifications

$ (2,395)

2

Recalculation of Special Services

Cost Adjustment

10,773

3

Liabilities Not Liquidated

(125)

4

Home Office Costs Paid by Chain

component

(6,448)

5

Cost Report Adjustment Reversal

6,485

6

Costs Misclassified as Nurse Aide

Testing and Training

1,770

7

Nurse Aide Testing and Training Costs

( 240) $ 9,820

SPECIAL SERVICES

1

Incorrect Expense Classifications

$ (4,765)

2

Recalculation of Special Services

Cost Adjustment

1,149

(3,616)

DIETARY

1

Incorrect Expense Classifications

$ 2,395

2

Recalculation of Special Services

Cost Adjustment

(450)

1,945

LAUNDRY AND HOUSEKEEPING

3

Liabilities Not Liquidated

$ (1,675)

8

Costs Not Related to Patient Care

(807)

(2,482)

OPERATION AND MAINTENANCE OF PLANT

3

Liabilities Not Liquidated

$

(182)

4

Home Office Costs Paid by Chain

Component

(7,537)

8

Costs Not Related to Patient Care

(1,495)

9

Accrual Basis of Accounting

(6,524)

10

Fixed Asset Purchases Claimed as

Expense

(2,989)

(18,727)

ADMINISTRATIVE AND GENERAL

1

Incorrect Expense Classifications

$ 4,631

4

Home Office Costs Paid by Chain

Component

(39,129)

8

Costs Not Related to Patient Care

(238)

11

Allocations From Home Office

72,391

37,655

4

MEADOWBROOK NURSING HOME, INC. SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS (continued)

PROPERTY AND RELATED EXPENSES

1

Incorrect Expense Classifications

$

134

8

Costs Not Related to Patient Care

(9,873)

11

Allocations From Home Office

2,324

(7,415)

Net Adjustment to Reimbursable Costs

$ 17,180

5

ADJUSTMENT NUMBER
1

MEADOWBROOK NURSING HOME, INC. 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 Dietary Supplements Special Services Medical Records Supplies Dietary Dietary Supplements Administrative and General Medical Records Supplies Property Taxes Property and Related Expenses Property Taxes

$ 4,765 (134)

(4,765) 2,395
4,631 134

Net Adjustment to Reimbursable Costs

$

0

2

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. The provider failed to complete Schedule B-lA of the cost report. A calculation of the Schedule B-lA was performed during the audit. This adjustments is made to increase reimbursable costs for the net effect of the calculation. A copy of this calculation has been furnished to the provider. (General Instructions to the Cost Report)

6

ADJUSTMENT NUMBER

EXPLANATION {continued)

Adjustment Per Cost Report

Recalculated

Audit

Adjustment Adjustment

Adult Diapers Dietary Supplements Medical Supplies

$ (13,279) (2,702)

$ (2,506) (450)
(1,553)

$ 10,773 (450)
1,149

$ 11,472

COST CENTER Routine services Special Services Dietary
Net Adjustment to Reimbursable Costs

$ 10,773 1,149 {450)
$ 11,472

3

LIABILITIES NOT LIQUIDATED

Liabilities shown on Schedule c of the cost report for June 30, 1993, included amounts which had not been paid at June 30, 1994. Federal regulations provide that short term liabilities must be liquidated within one year after the end of the cost reporting period in which the liability was incurred and must be made by check or other negotiable instrument, cash or legal transfer of other assets. Furthermore, where the liability is not liquidated within the 1-year time limit or does not qualify under the exceptions specified in HCFA 15-2305.1, the cost incurred for the related goods and services is not allowable in the cost reporting period when the liability is incurred, but is allowable in the cost reporting period when the liquidation of the liability occurs. This adjustment is made to reduce reimbursable costs for the expense relating to the unliquidated liability. (HCFA 15-2305A)

COST CENTER Routine Services Laundry and Housekeeping Operation and Maintenance of Plant

$

(125)

(1,675)

{182)

Net Adjustment to Reimbursable Costs

$ (1,982)

4

HOME OFFICE COSTS PAID BY CHAIN COMPONENT

Reimbursable costs claimed by this component of the chain organization included amounts incurred for the benefit of the

7

ADJUSTMENT NUMBER

EXPLANATION (continued)

entire chain. Federal regulations provide that allowable costs incurred for the benefit of, or directly attributable to, a specific provider must be allocated directly to the chain entity for which they were incurred; however, federal regulations also provide that allowable costs that have not been directly assigned to specific chain components must be allocated among the providers on a basis to equitably allocate the costs over the chain components or activities receiving the benefits of the costs. This adjustment is made to remove the costs benefiting the entire chain from this provider's reimbursable costs. (HCFA 15-2150.3)

COST CENTER Routine Services Operation and Maintenance of Plant Administrative and General

$ (6,448) (7,537)
(39,129)

Total Adjustment to Reimbursable Costs

$ (53,114)

5

COST REPORT ADJUSTMENT REVERSAL

An adjustment was made during the cost report preparation to reduce reimbursable costs by the amount of ancillary service revenue received from patients. General instructions to the cost report provide that reimbursable costs for special services are calculated on Schedule B-lA of the cost report. This adjustment is made to reverse the provider adjustment for ancillary services. (General Instructions to Cost Report)

COST CENTER Routine Services

$ 6,485

6

COSTS MISCLASSIFIED AS NURSE AIDE TESTING AND TRAINING COSTS

An adjustment was made during cost report preparation to remove nurse aide testing and training salaries from reimbursable costs. Documentation examined during the audit showed that some of these costs were not incurred to provide nurse aide testing and training services. 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 reverse a portion of the provider's adjustment. (HCFA 15-2304)

8

ADJUSTMENT NUMBER

EXPLANATION (continued)
COST CENTER Routine Services

$ 1,770

7

NURSE AIDE TESTING AND TRAINING COSTS

Documentation examined during the audit showed that the provider did not remove nurse aide testing and training employee benefits from reimbursable costs claimed as prescribed by the Department of Medical Assistance in General Instructions to Cost Report. This adjustment is made to decrease reimbursable costs by the amount of nurse aide testing and training costs. (DMA General Instructions to Cost Report)

COST CENTER Routine Services

$

(240)

8

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 15-2102.3, 2139; DMA Policies and Procedures Section 1002.l(k); General Instructions to the Cost Report)

Items Contributions to Political Action Committee Indirect Costs of Non-Patient Care Areas National Association Dues (50%) Penalties

$

(200)

(5,163)

(38)

(7,012)

$ (12,413)

COST CENTER Laundry and Housekeeping Operation and Maintenance of Plant Administrative and General Property and Related Expenses
Total Adjustment to Reimbursable Costs

$

(807)

(1,495)

(238)

(9,873)

$ (12,413)

9

ADJUSTMENT NUMBER
9

EXPLANATION (continued)

ACCRUAL BASIS OF ACCOUNTING

Documentation examined during the audit showed that

amounts recorded for certain expenses did not reflect actual

amounts incurred for the period under review. Federal

regulations provide that expenditures are recorded in the

period in which they are incurred, regardless of when they are

paid. This adjustment is made to decrease reimbursable costs

claimed for expenses not applicable to the year under review.

(HCFA 15-2302.1)

Reimbursable

Adjustments to Balance Sheet Accounts:

Costs

June 30, 1993 Balance

Accounts Payable

$ (6,524)

COST CENTER Operation and Maintenance of Plant

$ (6,524)

10

FIXED ASSET PURCHASES CLAIMED AS EXPENSE

Reimbursable costs claimed in the cost report included purchases of assets which are considered to be capital additions to property under generally accepted accounting principles. The Uniform Chart of Accounts issued by DMA provides for inclusion of such assets in property accounts. This adjustment is made to reduce reimbursable costs by the amount of purchased assets claim_ed as expense. (HCFA 15-108; DMA Policies and Procedures, Appendix D)

COST CENTER Operation and Maintenance of Plant Cost of Building Improvements Cost of Major Moveable Equipment

$ (2,489) (500)

Net Adjustment to Reimbursable Costs

$ (2,989)

11

ALLOCATIONS FROM HOME OFFICE

The provider was a component of a chain organization for the year ended June 30, 1994. Adjustments were made to the home office cost report filed in connection with the Medicaid Nursing Home Reimbursement Program. This adjustment is made to correct reimbursable costs to reflect the allocation of the adjustments made to the home office cost report. (HCFA 15-2150)

10

ADJUSTMENT NUMBER

EXPLANATION (continued}

COST CENTER Administrative and General Pooled Costs Allocation Statistics Administrative Expenses Property and Related Expenses Pooled Capital Related Allocation Statistics Interest Expense

$

36

72,355 $ 72,391

$

41

2,283

2,324

Net Adjustment to Reimbursable Costs

$ 74,715

11