Audit report, schedule of reimbursable costs and agency visit statistics, Memorial Home Health, Adel, Georgia, Medicaid provider no. 00316258A, for the year ended June 30, 1994, Georgia Department of Medical Assistance

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

AUDIT REPORT SCHEDULE OF REIMBURSABLE COSTS
AND AGENCY VISIT STATISTICS MEMORIAL HOME HEALTH ADEL, GEORGIA
MEDICAID PROVIDER NO. 00316258A FOR THE YEAR ENDED JUNE 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE
Report Prepared By: State ofGeorgia
Department ofAudits and Accounts Medicaid and Local Government Audits Division
254 Washington Street, S. W., Suite 322 Atlanta, Georgia 30334-8400 (404) 656-2006 Michael A. Plant, Director

MEMORIAL HOME HEALTH - TABLE OF CONTENTS -

AUDITOR'S REPORT

iii

SCOPE OF THE AUDIT

SCHEDULE OF RETh,ffilJRSABLE COSTS

2

NOTES TO SCHEDULE

3

SUMMARY OF FIELD AUDIT ADWSTMENTS

5

EXPLANATION OF FIELD AUDIT ADWSTMENTS

7

CLAUDE L VICKERS
STATEAUDITOR

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facsimile (404) 656-7535
August 11, 1995

Home Health Services Program Division ofNon-Institutional Reimbursement Georgia Department ofMedical Assistance 2 Peachtree Street, NW 25th Floor Atlanta, Georgia 30303-3159
Ladies and Gentlemen:
We have audited parts I and II of the Medicaid Cost Data Form filed with the Georgia Department ofMedical Assistance under the Title XIX Medicaid Program by Memorial Hospital of Adel, Inc., d/b/a Memorial Home Health for the year ended June 30, 1994, and have compiled the accompanying Schedule ofReimbursable Costs and Agency Visit Statistics based on our audit. The Medicaid Cost Data Form is the responsibility ofthe management ofMemorial Hospital of Adel, Inc., d/b/a Memorial Home Health. Our responsibility is to determine if the reimbursable costs and agency visit statistics reported on the Medicaid Cost Data Form are reasonable and allowable, in all material respects, in accordance with the federal and state laws, regulations, policies and procedures governing the Georgia Home Health Services Program. It is also our responsibility to report the results of our audit, including any required adjustments to parts I and II ofthe Medicaid Cost Data Form, to the Georgia Department ofMedical Assistance.
We conducted our audit in accordance with the Home Health Agency 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 Parts I and II of the Medicaid Cost Data Form. 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.

lll

Our audit was limited to the direct costs of the home health agency and did not include tests ofthe Medicare cost report, form HCFA-2552, filed by Memorial Hospital of Adel, Inc. This report, and any adjustments to the costs allocated to Memorial Hospital of Adel, Inc., d/b/a Memorial Home Health are the responsibility of the Medicare intermediary. The amount of adjustments, if any, are not known to us and may be material.
As described in Note 1 ofthe Notes to Schedule, the accompanying Schedule ofReimbursable Costs and Agency Visit Statistics was prepared to present the data necessary for the Georgia Department ofMedical 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 ofthe assets, liabilities, revenues and expenses ofMemorial Hospital of Adel, Inc., d/b/a Memorial Home Health on the basis described.
In our opinion, except for the effects of the matter discussed in the third paragraph, the "adjusted totals" column in the accompanying Schedule of Reimbursable Costs and Agency Visit Statistics - which was compiled by us and reflects any adjustments to parts I and II of the Medicaid Cost Data Form required as a result of our audit - presents fairly, in all material respects, the reimbursable costs and agency visit statistics of Memorial Hospital of Adel, Inc., d/b/a Memorial Home Health 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 Home Health Services Program and is not to be used or relied upon for any other purpose.
Respectfully submitted,
f7~.~
Claude L. Vickers State Auditor
CLV/kr/ca
V

MEMORIAL HOME HEALTH SCOPE OF THE AUDIT
FOR THE YEAR ENDED JUNE 30, 1994
This audit was performed in order to determine if the reimbursable costs and agency visit statistics reported in parts I and II of the Medicaid Cost Data Form 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 parts I and II of the Medicaid Cost Data Form 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 parts I and II of the Medicaid Cost Data Form, 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 Home Health Services and for compliance with federal laws and regulations applicable to the Title XIX Medicaid Program. Any adjustments to parts I and II of the Medicaid Cost Data Form required as a result of our audit are included in this report.
Costs reported in part II of the Medicaid Cost Data Form include indirect costs allocated to the home health agency from Memorial Hospital of Adel, Inc. These indirect cost allocations result from the step-down ofgeneral service costs from the hospital as shown on the Medicare cost report Worksheet B, Parts I and II. Our audit did not include tests of either these indirect costs or the reclassifications and adjustments made to determine net expenses for cost allocation on the Medicare cost report worksheets. These costs are subject to audit by the Medicare intermediary.
Costs reported in Part II ofthe Medicaid Cost Data Form also include the direct costs of the home health agency. These costs are comprised ofboth the direct costs of providing the reimbursable services and the home health indirect costs allocated to them. These indirect cost allocations result from the stepdown of the home health agency's general service costs on the Medicare cost report. The costs associated with these general service cost centers were included in our audit and adjustments to these cost centers, if any, are shown in the accompanying Summary of Field Audit Adjustments.
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.
I

MEMORIAL HOME HEALTH SCHEDULE OF REIMBURSABLE COSTS
AND AGENCY VISIT STATISTICS FOR THE YEAR ENDED JUNE 30, 1994

REIMBURSABLE COSTS
Skilled Nursing Care Physical Therapy Speech Therapy Home Health Aide
Total Reimbursable Costs

PER COST DATAFORM
AS FILED

FIELD AUDIT ADWSTMENTS

ADWSTED TOTALS

$

1,263,447 $

186,580

11,297

560 963

(60,160) $ (176) (11)
15 049

1,203,287 186,404 11,286 576 012

$

2 022 287 $

(45 298) $

1 976 989

MEDICAID VISITS
Skilled Nursing Care Physical Therapy Speech Therapy Home Health Aide
Total Medicaid Visits

1,551 84 7
343
1 985

(2)

1,549

84

7

343

(2)

l 983

TOTAL AGENCY VISITS
Skilled Nursing Care Physical Therapy Speech Therapy Home Health Aide
Total Agency Visits

19,667 1,878 138
22,512
44 195

(48)

19,619

1,878

138

13

22,525

(35)

44 160

2

MEMORIAL HOME HEALTH NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION
Memorial Home Health provides home health services to residents ofBerrien, Brooks, Clinch, Cook, Echols, Lanier, and Lowndes counties. The residents of this seven county area are served through the provider's offices in Adel, Georgia. The agency was operated by Memorial Hospital of Adel, Inc., and is classified as a hospital-based home health agency.
BASIS OF ACCOUNTING The Medicaid Cost Data Form and the associated Schedule of Reimbursable Costs and
Agency Visit 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 Home Health Services published by the Georgia Department ofMedical 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 agency visit statistics required for DMA to determine the 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 Medicaid Program and is not to be used or relied upon for any other purpose.
NOTE 2: FIELD AUDIT ADJUSTMENTS The Field Audit Adjustments .column on the Schedule is provided to show the net effect of
adjustments made during the field audit process. The audit adjustments made as a result of this audit are shown on the Summary ofField Audit Adjustments and are explained in the Explanation of Field Audit Adjustments.
NOTE 3: MEDICAID AGGREGATE COST PER VISIT The Schedule ofReimbursable Costs and Agency Visit Statistics shows the allowable costs
and visit statistics claimed on the cost data form, any field audit adjustments made, and the resulting totals after adjustment. In the summary on the following page, these data have been used to calculate the Medicaid aggregate cost per visit in the same manner used by DMA to calculate the per visit reimbursement rate. The aggregate cost per visit shown does not include any inflation factor, incentives, or supply add-on; nor does it necessarily reflect the amounts which will be used by DMA for rate-setting purposes.
3

MEMORIAL HOME HEALTH NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994

Skilled Nursing Care Physical Therapy Speech Therapy Home Health Aide
Total

TOTAL AGENCY
COST

TOTAL AGENCY
VISITS

AGENCY COST
PER VISIT

MEDICAID VISITS

MEDICAID COST

MEDICAID VISITS

AGGREGATE COST
PER VISIT

$ 1,203,287 186,404 11,286 576,012
$ 1,976,989

19,619 $ 1,878 138
22,525
44,160

61.33 99.26 81.78 25.57

1,549 $ 84 7
343
1,983 $

95,000 8,338 572 8 771
112,681

1,983 $

56.82

MEMORIAL HOME HEALTH SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADWSTMENT NUMBER

REIMBURSABLE COSTS

SKILLED NURSING CARE

1

Step Down of General Service Costs $ (13,180)

2

Incorrect Expense Classifications

(46,595)

3

Lack of Sufficient Documentation

(385) $

PHYSICAL THERAPY

I

Step Down of General Service Costs

SPEECH THERAPY

I

Step Down of General Service Costs

HOME HEALTH AIDE

I

Step Down of General Service Costs $

2,638

2

Incorrect Expense Classifications

12 411

AD:MINISTRATIVE AND GENERAL

1

Step Down of General Service Costs $

3,148

2

Incorrect Expense Classifications

4,015

3

Lack of Sufficient Documentation

(736)

4

Costs Not Related to Patient Care

(4,702)

5

Related Party Costs

(1,725)

(60,160) (176) (11)
15,049
0

Net Adjustment to Reimbursable Costs

$ ~s 22s)

MEDICAID VISITS

6

Skilled Nursing Care

(2)

5

MEMORIAL HOME HEALTH SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT
NUMBER

TOTAL AGENCY VISITS

7

Skilled Nursing Care

(48)

7 Home Health Aide

13

Net Adjustment to Total Agency Visit Statistics

(35)

6

MEMORIAL HOME HEALIB EXPLANATION OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

EXPLANATION

1

STEP DOWN OF GENERAL SERVICE COSTS

General service costs ofthis provider are stepped down to the other cost centers on Worksheet H-4 of the Medicare cost report. Adjustments were made to the general service costs claimed. These adjustments must be stepped down to the other cost centers in the same way as were the claimed costs. This adjustment is made to step down the net adjustments to the general service cost centers to the other cost centers. (Instructions to Medicare Cost Report Form 2552)

COST CENTER

Skilled Nursing Care

Physical Therapy

Speech Therapy

Home Health Aide

Administrative and General

Incorrect Expense Classifications

$

Lack of Sufficient Documentation

Costs Not Related to Patient Care

Related Party Costs

Net Adjustment to Reimbursable Costs (1)

$
(4,015) 736
4,702 1 725
$

(13,180) (176) (11) 2,638
3 148
o. ssn

(1) A total of $7,581 was stepped down to other cost centers which do not receive Medicaid reimbursement and are, therefore, not included in this report.

7

ADJUSTMENT NUMBER

EXPLANATION (continued)

2

INCORRECT EXPENSE CLASSIFICATIONS

Documentation examined during the audit showed that some of the expenses were not properly classified. 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 reclassify costs to the appropriate cost centers. (HCFA 15-2304; Instructions to Cost Report)

COST CENTER Skilled Nursing Care Administrative Travel Chargeable Supplies Contracted Services Salaries Uniform Allowance Home Health Aide Salaries Uniform Allowance Administrative and General , Administrative Travel Contracted Services

$

(6,515)

(23,584)

(4,085)

(9,936)

(2,475) $

(46,595)

$

9,936

2 475

12,411

$

6,515

(2,500)

4 015

Net Adjustment to Reimbursable Costs (1)

$ po J62}

(1) A total of$30,169 was reclassified to other cost centers which do not receive Medicaid reimbursement and are, therefore, not included in this report.

3

LACK OF SUFFICIENT DOCUMENTATION

Some ofthe 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)

8

ADJUSTMENT NUMBER

EXPLANATION (continued)

COST CENTER Skilled Nursing Care Administrative and General

Total Adjustment to Reimbursable Costs

$

(385)

(736)

$====(]:!::l::::!:12!!!::::]!:6)=

4

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; DMA Policies and Procedures Section 1001.2(b), (t), (h))

Items Advertising Association Dues (50%) Civic Organization Dues Donations Duplicate Payments

$

(1,069)

(1,538)

(1,265)

(300)

(530)

$

(4 702)

COST CENTER Administrative and General

$

(4 702)

5

RELATED PARTY COSTS

Documentation examined during the audit showed that the provider paid for inservice training obtained from a related party. These costs were also stepped down to the provider through the allocation ofgeneral service costs on worksheet B of the Hospital Cost Report, form HCFA-2552. Federal regulations provide that cost information as developed by the Provider must be current, accurate, and insufficient detail to support payments made for services rendered to beneficiaries. This adjustment is made to remove the duplicated related party expenses from reimbursable costs. (HCFA 15-2304)

9

ADJUSTMENT NUMBER

EXPLANATION (continued)

COST CENTER Administrative and General

$

0 725)

6

MEDICAID VISIT STATISTICS

Visit logs examined during the audit showed that the provider made 1,983 total
visits applicable to Medicaid Home Health Services rather than the 1,985 shown on
the cost data form. An adjustment of 2 visits has been made to correct the statistical
information.

MEDICAID VISITS BY DISCIPLINE Skilled Nursing Care

7

TOTAL AGENCY VISIT STATISTICS

Visit logs examined during the audit showed that the provider made 44, 160 total visits applicable to Medicaid reimbursable disciplines rather than the 44,195
shown on the cost data form. An adjustment of35 visits has been made to correct the
statistical information.

AGENCY VISITS BY DISCIPLINE

Skilled Nursing Care

(48)

Home Health Aide

13

Total Adjustment to Total Agency Visit Statistics

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