GA t.R\'6, 00 tl\3M4- '993--'li./- 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 C3S}