Audit report, schedule of reimbursable patient day statistics, Paulding Memorial Nursing Unit, Dallas, Georgia, Medicaid provider no. 00142359A, 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 PAULDING MEMORIAL NURSING UNIT
DALLAS, GEORGIA MEDICAID PROVIDER NO. 00142359A FOR THE YEAR ENDED JUNE 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE

PAULDING MEMORIAL NURSING UNIT - 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

5

EXPLANATION OF FIELD AUDIT ADJUSTMENTS

6

APPENDIX

MANAGEMENT COMMENT LETTER

8

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
December 9, 1994

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 Paulding County Hospital Authority d/b/a Paulding Memorial Nursing Unit, 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 Paulding County Hospital Authority d/b/a Paulding Memorial Nursing Unit. 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. Except as described in the following paragraph 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.
Our audit did not include tests of the Medicare cost report, form HCFA 2552, filed by Paulding Memorial Hospital. This report is audited by the Medicare intermediary. Any adjustments to the costs allocated to Paulding County Hospital Authority d/b/a Paulding Memorial Nursing Unit, are the responsibility of the Medicare intermediary. The amount of the adjustments, if any, are not known to us and may be material.

V

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 Paulding County Hospital Authority d/b/a Paulding Memorial Nursing Unit, 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 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 Paulding County Hospital Authority d/b/a Paulding Memorial Nursing Unit 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/klr/by

Claude L. Vickers State Auditor

vi

PAULDING MEMORIAL HURSING UNIT 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 (OMA) 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.
Information contained in the cost report Schedule B-2, Supporting Schedule of Operating Expenses, is based upon both direct costs of the nursing facility and indirect costs allocated to it from Paulding Memorial Hospital. These indirect cost allocations result from the step-down of general 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. Any audit adjustments by the Medicare intermediary made to indirect costs which impact the nursing facility will be reflected in the Medicaid cost report in the year the Medicare cost report is final-settled.
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 our audit, a reportable condition was identified in controls applicable to financial operations and in controls related to compliance with Medicaid policies, procedures, laws and/or regulations. This weakness is described in the management letter included in the Appendix of this report.
1

PAULDING MEMORIAL NURSING UNIT SCHEDULE OF REIMBURSABLE COSTS
AND PATIENT DAY STATISTICS FOR THE YEAR ENDED JUNE 30, 1994

REIMBURSABLE COSTS

PER COST REPORT
AS FILED

Routine Services

$1,657,037

Special Services

14,262

Dietary

881,949

Laundry and Housekeeping

622,283

Operation and Maintenance of Plant

411,080

Administrative and General

406,247

Property and Related Expenses

564,861

OFFICE

FIELD

AUDIT

AUDIT

ADJUSTMENTS ADJUSTMENTS

ADJUSTED TOTALS

$ 1,439 $1,658,476

14,262

881,949

622,283

1,941 (10,000)

413,021 396,247

(4,298)

560,563

Total Reimbursable Costs $4,557,719

$ (10,918) $4,546,801

PATIENT DAY STATISTICS

49,330

36

49,366

2

PAULDING MEMORIAL NURSING UNIT NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION
Paulding Memorial Nursing Unit is a 136-bed long-term health care facility located in Dallas, Georgia. The facility provides both skilled and intermediate care services to resident patients. The facility is owned and operated by Paulding County Hospital Authority which operated both Paulding Memorial Hospital and Paulding Memorial Nursing Unit in the same physical facility during the year under review.
The provider was in compliance with the Department of Medical Assistance's requirements for classification as a hospital-based nursing home as specified in DMA Policies and Procedures for Nursing Home Services, paragraph 1002.1.g.
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 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: SUBSEQUENT EVENT Subsequent to the year under review, the provider entered into an
agreement to lease the facility to Paulding Medical Center, Inc., contingent
3

PAULDING MEMORIAL NURSING UNIT NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994 upon certain conditions included in the lease agreement. Because this property transaction will occur after June 14, 1983, the provider will be reimbursed for property and related expenses under the Dodge Index system rather than historical costs.
4

PAULDING MEMORIAL NURSING UNIT SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS

ROUTINE SERVICES

1

Incorrect Expense Classifications

$ (1,941)

2

Cost Report Adjustment Reversal

4,298

3

Costs Not Related to Patient care

(918) $ 1,439

OPERATION AND MAINTENANCE OF PLANT

1

Incorrect Expense Classifications

1,941

ADMINISTRATIVE AND GENERAL

4

Accrual Basis of Accounting

(10,000)

PROPERTY AND RELATED EXPENSES

2

Cost Report Adjustment Reversal

(4,298)

Net Adjustment to Reimbursable Costs

$ (10,918)

PATIENT DAY STATISTICS

5

Increase in Patient Day Statistics

36

5

ADJUSTMENT NUMBER
1

PAULDING MEMORIAL NURSING UNIT 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. (DMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Supplies Operation and Maintenance of Plant Supplies

$ (1,941) 1,941

Net Adjustment to Reimbursable Costs

$

0

2

COST REPORT ADJUSTMENT REVERSAL

An adjustment was made during cost report preparation to reclassify equipment leases to the Property and Related Expenses cost center. Documentation examined during the audit showed that these expenses had been reclassified to the hospital on Worksheet A-6 of the Medicare Cost Report form HCFA-2552. This adjustment is made to reverse the provider adjustment.

COST CENTER Routine Services Property and Related Expenses

$ 4,298 (4,298)

Net Adjustment to Reimbursable Costs

$

0

3

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

6

ADJUSTMENT NUMBER

EXPLANATION (continued)

made to remove the non-patient care expenses from reimbursable costs. (HCFA 15-2102.3, 2136.2; OMA Policies and Procedures Section 1002.l(k))

Items Advertising State Association Dues (50%)

$

(238)

(680)

$

(918)

COST CENTER Routine Services

$

(918)

4

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, 1994 Balance Accounts Payable

$ (10,000)

Net Adjustment to Reimbursable Costs

$ (10,000)

COST CENTER Administrative and General

$ (10,000)

5

PATIENT DAY STATISTICS

Census records examined during the audit showed that the nursing home had 49,366 patient days of service rather than the 49,330 shown on the cost report. The adjustment of 36 days has been made to correct the statistical information.

7

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

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

MICHAEL A. PLANT
DIRECTOR (404) 656-2006

Georgia Department of Medical Assistance Atlanta, Georgia
and Management Officials of Paulding Memorial Nursing Unit
We have audited the records and documentation supporting the cost report filed by Paulding Memorial Nursing Unit 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, a condition was noted that we believe is a weakness which should be addressed by management. In our audit we found that patient trust fund ledgers were not properly maintained.
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, 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 finding 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 Paulding Memorial Nursing Unit for the year ended June 30, 1994. This letter
8

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
9