Audit report, schedule of reimbursable costs and patient day statistics, Moss Oaks Health Care Center, Pooler, Georgia, Medicaid provider no. 00238741A, 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 MOSS OAKS HEALTH CARE CENTER
POOLER, GEORGIA MEDICAID PROVIDER NO. 00238741A FOR THE YEAR ENDED JUNE 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE

MOSS OAKS HEALTH CARE 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

Page
V
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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
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 Eagles Nest Truck Station, Inc., d/b/a Moss Oaks Health Care 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 Eagles Nest Truck Station, Inc., d/b/a Moss Oaks Health. Care 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, evi?ence 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 Schetlule, 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 Eagles Nest Truck Station, Inc., d/b/a Moss Oaks Health Care 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 Eagles Nest Truck Station, Inc., d/b/a Moss Oaks Health Care 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,
d'~
Claude L. Vickers State Auditor CLV/dt/by
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MOSS OAKS HEALTH CARE 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 OMA 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.
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MOSS OAKS HEALTH CARE 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

$1,198,931

$ (77,966) $1,120,965

Special Services

85,749

2,161

87,910

Dietary

312,600

(3,573)

309,027

Laundry and Housekeeping

204,239

(2,778)

201,461

Operation and Maintenance of Plant

176,517

(16,853)

159,664

Administrative and General 337,818

44,851

382,669

Property and Related Expenses

386,820

(9,476)

377,344

Total Reimbursable Costs $2,702,674

$ (63,634) $2,639,040

PATIENT DAY STATISTICS

41,820

41,820

2

MOSS OAKS HEALTH CARE CENTER NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION
Moss Oaks Health Care Center is a 122-bed long-term health care facility located in Pooler, Georgia. The facility provides both skilled and intermediate care services to resident patients. The facility was owned by Eagles Nest Truck Station, Inc., and 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 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 Effective July 1, 1994, in accordance with Section 1002.2 of DMA Policies
and Procedures for Nursing Home Services, the provider is reimbursed for property and related expenses under the Dodge Index system rather than historical costs.
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MOSS OAKS HEALTH CARE CENTER SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS

ROUTINE SERVICES

1

Reconciliation of Cost Report to

General Ledger

$ (12,908)

2

Incorrect Expense Classifications

(368)

3

Liabilities Not Liquidated

(245)

4

Lack of Sufficient Documentation

(4,000)

5

Costs Not Related to Patient Care

(7,386)

6

Home Office Costs Paid by Chain

component

(52,815)

7

Accrual Basis of Accounting

( 119)

8

Expense Purchases Claimed as Fixed

Asset

1,266

9

Nurse Aide Testing and Training Costs

(1,391) $ (77,966)

SPECIAL SERVICES

1

Reconciliation of Cost Report to

General Ledger

$

(264)

2

Incorrect Expense Classifications

2,548

3

Liabilities Not Liquidated

(123)

2,161

DIETARY

1

Reconciliation of Cost Report to

General Ledger

$

( 599)

4

Lack of Sufficient Documentation

(2,974)

(3,573)

LAUNDRY AND HOUSEKEEPING

1

Reconciliation of Cost Report to

General Ledger

$

(634)

3

Liabilities Not Liquidated

(2,144)

(2,778)

OPERATION AND MAINTENANCE OF PLANT

1

Reconciliation of Cost Report to

General Ledger

$

(141)

2

Incorrect Expense Classifications

157

3

Liabilities Not Liquidated

(1,482)

4

Lack of Sufficient Documentation

(808)

5

Costs Not Related to Patient Care

(4,100)

6

Home Office Costs Paid by Chain

Component

(7,537)

7

Accrual Basis of Accounting

(2,432)

10

Fixed Asset Purchases Claimed as

Expense

(510)

(16,853)

4

MOSS OAKS HEALTH CARE CENTER SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS (continued)

ADMINISTRATIVE AND GENERAL

1

Reconciliation of Cost Report to

General Ledger

$

(543)

2

Incorrect Expense Classifications

1,798

4

Lack of Sufficient Documentation

(196)

5

Costs Not Related to Patient Care

(43)

6

Home Office Costs Paid by Chain

Component

(39,128)

11

Allocations from Home Office

82,963 $ 44,851

PROPERTY AND RELATED EXPENSES

2

Incorrect Expense Classifications

4

Lack of Sufficient Documentation

5

Costs Not Related to Patient Care

8

Expense Purchases Claimed as Fixed

Asset

10

Fixed Asset Purchases Claimed as

Expense

11

Allocations from Home Office

$ (4,135) (1,006) (8,000)
(32)
28 3,669

(9,476)

Net Adjustment to Reimbursable Costs

$ (63,634)

5

ADJUSTMENT NUMBER
1

MOSS OAKS HEALTH CARE CENTER EXPLANATION OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

EXPLANATION

RECONCILIATION OF COST REPORT TO GENERAL LEDGER

Adjustments were made to the general ledger, after the cost report was submitted to the Department of Medical Assistance, to remove costs related to an Employee Stock Ownership Plan in accordance with a consent order dated December 9, 1994. This adjustment is made to reconcile the cost report to the general ledger.

COST CENTER Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance of Plant Administrative and General

$ (12,908) (264) (599) (634) (141) (543)

Total Adjustment to Reimbursable Costs

$ (15,089)

2

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. (DMA Policies and Procedures, Appendix D)

COST CENTER Routine services Infectious Waste Control Inservice Training Supplies Rental Expense Special Services Oxygen Concentrator Rental Operation and Maintenance of Plant Infectious Waste Control Administrative and General Communication Expense Inservice Training Supplies Patient Trust Fund Bond

$

(157)

(106)

(105) $

(368)

2,548

157

$ 1,092 106 600

1,798

6

ADJUSTMENT NUMBER

EXPLANATION (continued)

Property and Related Expenses Communication Expense Oxygen Concentrator Rental Patient Trust Fund Bond Rental Expense

$ (1,092) (2,548) (600) 105

(4,135)

Net Adjustment to Reimbursable Costs

$

0

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 th~ 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 Special Services Laundry and Housekeeping Operation and Maintenance of Plant

$ (245) (123)
(2,144) (1,482)

Net Adjustment to Reimbursable Costs

$ (3,994)

4

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)

7

ADJUSTMENT NUMBER

EXPLANATION (continued)
COST CENTER Routine Services Dietary Operation and Maintenance of Plant Administrative and General Property and Related Expenses
Total Adjustment to Reimbursable Costs

$ (4,000) (2,974) (808) (196) (1,006)
$ (8,984)

5

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 15-202.2, 2102.3, 2139; DMA Policies and Procedures Section 1002.l(k))

Items Duplicate Payments Excess Borrowing National Association Dues (50%) Penalties

$ (9,354) (8,000) (43) (2,132)

$ (19,529)

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

$ (7,386) (4,100) (43) (8,000)
$ (19,529)

6

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 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

8

ADJUSTMENT NUMBER

EXPLANATION (continued)

assigned to specific chain ccmponents 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

$ (52,815) (7,537)
(39,128)

$ (99,480)

7

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)

Adjustments to Balance Sheet Accounts:

Reimbursable Costs

June 30, 1993 Balance Accounts Payable

$ (2,551)

COST CENTER Routine Services Operation and Maintenance of Plant
Total Adjustment to Reimbursable costs

$

( 119)

(2,432)

$ (2,551)

8

EXPENSE PURCHASES CLAIMED AS FIXED ASSET

Documentation examined during the audit showed that costs incurred for certain reimbursable expenses were capitalized by the provider. This adjustment is made to include these expenses in reimbursable costs and to reduce reimbursable costs by the amount of depreciation related to the erroneously capitalized items. (HCFA 15-108)

9

ADJUSTMENT NUMBER

EXPLANATION (continued)
COST CENTER Routine Services Costs of Supplies Property and Related Expenses Depreciation Expense
Total Adjustment to Reimbursable Costs

$ 1,266 (32)
$ 1,234

9

NURSE AIDE TESTING AND TRAINING COSTS

Documentation examined during the audit showed that the provider did not remove nurse aide testing and training costs 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

$ (1,391)

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 claimed as expense and to increase reimbursable costs by depreciation allowable. (HCFA 15-108; DMA Policies and Procedures, Appendix D)

COST CENTER Operation and Maintenance of Plant Cost of Major Movable Equipment Property and Related Expenses Allowable Depreciation Expense

$

(510)

28

Net Adjustment to Reimbursable Costs

$

(482)

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

10

ADJUSTMENT NUMBER

EXPLANATION (continued)

reimbursable costs to reflect the allocation of the adjustments made to the home office cost report. (HCFA 15-2150)

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

$

(413)

83,376

82,963

$

1,039

2,630

3,669

Net Adjustment to Reimbursable Costs

$ 86,632

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