Audit report, schedule of reimbursable costs and patient day statistics, Providence Health Care of Sparta, Sparta, Georgia, Medicaid provider no. 00142623A, 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 PROVIDENCE HEALTH CARE OF SPARTA
SPARTA, GEORGIA MEDICAID PROVIDER NO. 00142623A FOR THE YEAR ENDED JUNE 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE

PROVIDENCE HEALTH CARE OF SPARTA - 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 APPENDIX
MANAGEMENT COMMENT LETTER

Page
V
1 2 3 5 7
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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 20, 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 Vantage Healthcare Corporation, d/b/a Providence Health Care of Sparta 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 Vantage Healthcare Corporation, d/b/a Providence Health Care of Sparta. 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 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 Vantage Healthcare Corporation, d/b/a Providence Health Care of Sparta 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 Vantage Healthcare corporation, d/b/a Providence Health Care of Sparta 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 Horne Reimbursement Program and is not to be used or relied upon for any other purpose.
Re;;;~:A

CLV/scp/bw

Claude L. Vickers State Auditor

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PROVIDENCE HEALTH CARE OF SPARTA 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. However, as a result of our audit, a reportable condition was identified in controls applicable to financial operations. This weakness is described in the management letter included in the Appendix of this report.
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PROVIDENCE HEALTH CARE OF SPARTA 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

$ 792,002

$ (2,403) $ 789,599

Special Services

63,433

(2,283)

61,150

Dietary

189,624

422

190,046

Laundry and Housekeeping

133,882

(250)

133,632

Operation and Maintenance of Plant

120,198

(375)

119,823

Administrative and General 222,068

6,122

228,190

Property and Related Expenses

177,606

(4,006)

173,600

Total Reimbursable Costs $1,698,813

$ (2,773) $1,696,040

PATIENT DAY STATISTICS

25,445

(46)

25,399

2

PROVIDENCE HEALTH CARE OF SPARTA NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES EH'rITY INFORMATION
Providence Health Care of Sparta is a 71-bed long-term health care facility located in Sparta, Georgia. The facility provides both skilled and intermediate care services to resident patients. The facility was owned by Vantage Healthcare Corporation and operated as a component of Beverly Enterprises, 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 ~ 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: LEASED FACILITIES The land, buildings, and equipment used in health care operations were
leased from Providence Health Care Center, Inc. The cost of this lease was $4.48 per available bed per day for the year ended June 30, 1994.
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PROVIDENCE HEALTH CARE OF SPARTA NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994 NOTE 5: PROPERTY COST REIMBURSEMENT
Records examined during the audit showed that the lease on the facility was renewed on July 1, 1990. 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.
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PROVIDENCE HEALTH CARE OF SPARTA SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS

ROUTINE SERVICES

1

Incorrect Expense Classifications

$ (5,346)

2

Costs Not Related to Patient Care

(79)

3

Costs Misclassified as Nurse Aide

Testing and Training Costs

3,022 $ (2,403)

SPECIAL SERVICES

1

Incorrect Expense Classifications

$

( 172)

2

Costs Not Related to Patient Care

(22,013)

4

Accrual Basis of Accounting

(750)

5

Cost Report Adjustment Reversal

525

6

Recalculation of Special Services Cost

Adjustment

20,127

(2,283)

DIETARY

1

Incorrect Expense Classifications

422

LAUNDRY AND HOUSEKEEPING

1

Incorrect Expense Classifications

(250)

OPERATION AND MAINTENANCE OF PLANT

1

Incorrect Expense Classifications

$

150

5

Cost Report Adjustment Reversal

(525)

(375)

ADMINISTRATIVE AND GENERAL

1

Incorrect Expense Classifications

$ 9,202

2

Costs Not Related to Patient Care

(1,402)

4

Accrual Basis of Accounting

(473)

7

Allocations From Home Office

(1,205)

6,122

PROPERTY AND RELATED EXPENSES

1

Incorrect Expense Classifications

(4,006)

Net Adjustment to Reimbursable Costs

$ (2,773)

5

PROVIDENCE HEALTH CARE OF SPARTA SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

PATIENT DAY STATISTICS

8

Decrease in Patient Day statistics

(46)

6

ADJUSTMENT NUMBER

PROVIDENCE HEALTH CARE OF SPARTA EXPLANATION OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED JUNE 30, 1994
EXPLANATION

1

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 Medical Records Expense Special services Dietary Supplies Dietary Dietary Supplies Laundry and Housekeeping Dietary Supplies Operation and Maintenance of Plant Repairs Expense Administrative and General Ad Valorem Tax Communication Expense Liability Insurance Expense Medical Records Expense Rental Expense Repairs Expense Tax Consulting Property and Related Expenses Ad Valorem Tax Communication Expense Liability Insurance Rental Expense Tax Consulting

$ (5,346)

( 172)

422

(250)

150

$

(279)

477

3,552

5,346

(49)

(150)

305

9,202

$

279

(477)

(3,552)

49

(305)

(4006)

Net Adjustment to Reimbursable Costs

$

0

2

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

7

ADJUSTMENT NUMBER

EXPLANATION (continued}

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, 2160; OMA Policies and Procedures Section 902, 1002.l(k) )

Items Directory Advertising Prescription Drugs Workers' Compensation Claims not Filed

$ (1,402) (22,013) (79)

$ (23,494)

COST CENTER Routine Services Special Services Administrative and General

$

(79)

(22,013)

(1,402)

Total Adjustment to Reimbursable Costs

$ (23,494)

3

COSTS MISCLASSIFIED AS NURSE AIDE TESTING AND TRAINING COSTS

An adjustment was made during cost report preparation to remove nurse aide testing and training expenses 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)

COST CENTER Routine Services

$ 3,022

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

8

ADJUSTMENT NUMBER

EXPLANATION (continued)

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

$ (1,223)

COST CENTER Special Services Administrative and General
Net Adjustment to Reimbursable Costs

$

(750)

(473)

$ (1,223)

5

COST REPORT ADJUSTMENT REVERSAL

An adjustment was made during cost report preparation to reclassify expense. Documentation examined during the audit showed that the reclassification should not have been made. This adjustment is made to reverse a portion of the provider adjustment.

COST CENTER Special services Operation and Maintenance of Plant

$

525

(525)

Total Adjustment to Reimbursable Costs

$

0

6

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. Documentation examined during the audit showed that certain adjustments were necessary to amounts reported on Schedule B-lA as total cost per books, total charges, Medicaid charges, total patient days, and Medicaid patient days. These adjustments required the recalculation of Schedule B-lA. A copy of this recalculation has been furnished to the provider. This adjustment is made to increase reimbursable costs for the net effect of the recalculation. (General Instructions to the Cost Report)

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ADJUSTMENT NUMBER

EXPLANATION (continued)

s12ecial Service Physical Therapy Pharmacy Medical Supplies Other Special Care

Adjustment Per Cost Re12ort
$(126,669) (21,277) (17,858) (1,070)

Recalculated Adjustment
$(126,657) 0
(18,383) (1,707)

Audit

Adjustment

$

12

21,277

(525)

(637)

$ 20,127

COST CENTER Special services

$ 20,127

7

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)

COST CENTER Administrative and General Pooled Costs Corporate West Southeastern Region

$

(891)

(314)

Total Adjustment to Allowable Costs

$ (1,205)

8

PATIENT DAY STATISTICS

Census records examined during the audit showed that the nursing home had 25,399 patient days of service rather than the 25,445 shown on the cost report. The adjustment of (46) days has been made to correct the statistical information.

10

DEPARTMENT OF AUDITS

MEDICAID AND LOCAL GOVERNMENT AUDITS DMSION

254 Washington Street, S.W., Suite 214

Atlanta, Georgia 30334-8400

ClAUDE L. VICKERS
STATE AUDITOR

MANAGEMENT COMMENT LETTER

(404) 656-2174

Georgia Department of Medical Assistance

Atlanta, Georgia

and

Management Officials of

Providence Health Care of Sparta

MICHAEL A. PLANT
DIRECTOR (404) 656-2006

We have audited the records and documentation supporting the cost report filed by Providence Health Care of Sparta 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 ancillary supply charges were not adequately documented.

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 findings 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 Providence Health Care of Sparta for the year ended June 30, 1994. This letter 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

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