Audit report, schedule of reimbursable costs and agency visit statistics, Americare Home Health of Savannah, Savannah, Georgia, Medical provider number 00336883A, for the year ended December 31, 1994, Georgia Department of Medical Assistance. [Dec. 31, 1994]

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

AUDIT REPORT SCHEDULE OF REIMBURSABLE COSTS
AND AGENCY VISIT STATISTICS AMERICARE HOME HEALTH OF SAVANNAH
SAVANNAH, GEORGIA MEDICAID PROVIDER NO. 00336883A FOR THE YEAR ENDED DECEMBER 31, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE
Report Prepared By: State a/Georgia
Departmelll ofAudiLs and Accounts Medicaid and Local Government Audits Division
254 Washington Street, S.W., Suite 322 Atlanta, Geargia 30334-8400 (404) 656-2006 Michael A. Plant, Director

AMERICARE HOME HEALTH OF SAVANNAH TABLE OF CONTENTS

AUDITOR'S REPORT

V

SCOPE OF THE AUDIT

SCHEDULE OF REIMBURSABLE COSTS

2

NOTES TO SCHEDULE

SUMMARY OF FIELD AUDIT ADJUSTMENTS

EXPLANATION OF FIELD AUDIT ADJUSTMENTS

APPENDIX

MANAGEMENT COMMENT LETTER

12

CLAUDE L VICKERS
STATE AUDITOR

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facsimile (404) 656-7535
July 2, 1995

Home Health Services Program Division ofNon-Institutional Reimbursement Georgia Department ofMedical Assistance 2 Peachtree Street, NW 25th Floor Atlanta, Georgia 30303-3 I59
Ladies and Gentlemen:
We have audited parts I and II of the Medicaid Cost Data Form filed with the Georgia Department of Medical Assistance under the Title XIX Medicaid Program by Americare Home Health Services, Inc., d/b/a Americare Home Health of Savannah for the year ended December 31, 1994, and have compiled ti,~ accompanying Schedule of Reimbursable Costs and Agency Visit Statistics based on our audit. The Medicaid Cost Data Form is the responsibility of the management of Americare Home Health Services, Inc., d/b/a Americare Home Health of Savannah. 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 of the Medicaid Cost Data Form, to the Georgia Department of Medical 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.
V

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 Medical Center, Inc. This report, and any adjustments to the costs allocated to Americare Home Health Services, Inc., d/b/a Americare Home Health of Savannah are the responsibility of the Medicare intermediary. The amount of adjustments, if any, are not i-'!1own to us and may be material.
As described in Note 1 ofthe Notes to Schedule, the accompanying Schedule of Reimbursable 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 of the assets, liabilities, revenues and expenses of Americare Home Health Services, Inc., d/b/a Americare Home Health of Savannah 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 Americare Home Health Services, Inc., d/b/a Americare Home Health of Savannah for the year ended December 31, 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,
~~~
Claude L. Vickers State Auditor
CLV/mau/by
vii

AMERICARE HOME HEALTH OF SAVANNAH SCOPE OF THE AUDIT
FOR THE YEAR ENDED DECEMBER 31, 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 (Dl'vfA) 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 disclosure, 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 Medical Center, 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 detennine 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 ofthe 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 strur,.ure. However, as a result of our audit, reportable conditions were identified in controls applicable to financial operations and in controls related to compliance with Medicaid policies, procedures, laws and/or regulations. These weaknesses are described in the management letter included in the Appendix of this report.

AMERICARE HOME HEALTH OF SAVANNAH SCHEDULE OF REIMBURSABLE COSTS AND AGENCY VISIT STATISTICS
FOR THE YEAR ENDED DECEMBER 31, 1994

REIMBURSABLE COSTS

PER COST DATAFORM
AS FILED

Skilled Nursing Care Physical Therapy Speech Therapy Occupational Therapy Home Health Aide

$

8,107,126

673,244

68,505

123,883

5 356 494

Total Reimbursable Costs $ 14 329 252

FIELD AUDIT ADWSTMENTS

$

(263,469)

(21,880)

(2,227)

(4,027)

(57 748}

$

(349 35))

ADWSTED TOTALS
$ 7,843,657 651,364 66,278 119,856
5 298 746
$ )3 979 90)

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

5,734 349 72 124
I 180
7 459

722

6,456

349

7-2

(8)

116

1 180

714

8 )73

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

106,403 6,140 622 964
164 775
278 9Q4

81 (2) 3 (8) 8 098
8 ]72

106,484 6,138 625 956
172 873
287 Q7fl

2

AMERICARE HOME HEALTH OF SAVANNAH NOTES TO SCHEDULE
FOR THE YEAR ENDED DECEMBER 31, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION
Americare Home Health of Savannah provides home health services to residents of Bryan, Chatham, Effingham, Liberty, and Long counties. The residents of this five county area are served through the provider's offices in Savannah, Georgia. The agency was operated by Memorial Medical Center, Inc., for the year ended December 31, 1994, 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 ofField 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.

AMERICARE HOME HEALTH OF SAVANNAH NOTES TO SCHEDULE
FOR THE YEAR ENDED DECEMBER 31, 1994

TOTAL AGENCY
COST

TOTAL AGENCY
VISITS

AGENCY COST
PF.R VIS[I

MEDICAID VJSITS

MEDICAID COST

MEDICAID VISITS

AGGREGATE COST
PER VISIT

Skilled Nursing Care $ Physical Therapy Speech Therapy Occupational Therapy Home Health Aide

7,843,657 651,364 66,278 119,856
5 298 746

,ls
Total

$ 13,979,9_Q!

106,484 $ 6,138 625 956
172 873
287,076

73.66 106.12 106.04 125.37 30.65

6,456 $ 349 72 116
1.180
8,173 $

475,549 37,036 7,635 14,543 36 167
570,930 _ _ _8,173 $

69.86

AMERICARE HOME HEALTH OF SAVANNAH SUMMARY OF FIELD AUDIT ADJUSTMENTS FOR THE YEAR ENDED DECEMBER 31, 1994

ADJUSTMENT NUMBER

REIIYIBURSABLE COSTS

SKILLED NURSING CARE

I

Step Down of General Service Costs

$ (208,517}

2

Costs Not Related to Patient Care

(48,570)

3

Lack of Sufficient Documentation

(6,242}

4

Accrual Basis of Accounting

(140)

PHYSICAL THERAPY

I

Step Down of General Service Costs

$ (17,316}

2

Costs Not Related to Patient Care

(4,034}

3

Lack of Sufficient Documentation

(518}

4

Accrual Basis of Accounting

(12)

SPEECH THERAPY

1

Step Down of General Service Costs

$ (I, 762)

2

Costs Not Related to Patient Care

(411}

3

Lack of Sufficient Documentation

(53)

4

Accrual Basis of Accounting

(I)

OCCUPATIO'~AL THERAPY

1

Step Down of General Service Costs

$ (3,187}

2

Costs Not Related to Patient Care

(743)

3

Lack of Sufficient Documentation

(95)

4

Accrual Basis of Accounting

(2)

HOME HEALTH AIDE

I

Step Down of General Service Costs

$ (85,810}

2

Costs Not Related to Patient Care

(32,090)

3

Lack of Sufficient Documentation

(4,125)

4

Accrual Basis of Accounting

(92)

5

Cost Report Adjustment Reversal

64 369

$ (263,469) (21,880) (2,227) (4,027) (57,748)

5

AMERICARE HOME HEALTH OF SAVANNAH SUMMARY OF FIELD AUDIT ADJUSTMENTS FOR THE YEAR ENDED DECEMBER 31, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS (continued}

ADMINISTRATIVE AND GENERAL

1

Step Down of General Service Costs

$ 132,714

2

Costs Not Related to Patient Care

(76,223)

3

Lack of Sufficient Documentation

(20,738)

4

Accrual Basis of Accounting

(215)

6

Incorrect Expense Classifications

(30,070)

7

Excess Depreciation

(5,468)

0

Net Adjustment to Reimbursable Costs

$ (349 351}

MEDICAID VISITS

8

Skilled Nursing Care

722

8

Occupational Therapy

(8)

Net Adjustment to Medicaid Visit Statistics

714

TOTAL AGENCY VISITS

9

Skilled Nursing Care

9

Physical Therapy

9

Speech Therapy

9

Occupational Therapy

9

Home Health Aide

Net Adjustment to Total Agency Visit Statistics

81 (2) 3 (8) 8 098
8 172

6

AMERICARE HOME HEALTH OF SAVANNAH EXPLANATION OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED DECEMBER 31, 1994

ADJUSTMENT NUMBER

EXPLANATION

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

Occupational Therapy

Home Health Aide

Administrative and General

Costs Not Related to Patient Care

$

Lack of Sufficient Documentation

Accrual Basis of Accounting

Incorrect Expense Classifications

Excess Depreciation

Net Adjustment to Reimbursable Costs (1)

$ (208,517) (17,316) (1,762) (3,187) (8~,810)

76,223

20,738

215

30,070

5 468

132 714

,m $

8Z8l

(1) A total of $183,878 was stepped down to other cost centers which do not receive Medicaid reimbursement and are, therefore, not included in this report.

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

7

ADJUSTMENT NUMBER

EXPLANATION <continued}

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, 2102.1, 2113.2, 2122.2, 2136.2, DMA Policies and Procedures Section 1001.2(b), (c), (f), (h))

Items Advertising Civic Organization Dues Lobbying Expenses National Association Dues (50%) Non-Allowable Travel Public Relations/Marketing Related Company Expenses Taxes

$

(3,330)

(2,642)

(400)

(2,887)

(25,166)

(112,330)

(195)

(15 889)

$ (]62 839)

COST CENTER Skilled Nursing Care Physical Therapy Speech Therapy Occupational Therapy Home Health Aide Administrative and General

$ (48,570) (4,034) (411) (743)
(32,090) (76 223)

Total Adjustment to Reimbursable Costs (1)

$ ()62 071)

(1) A total of $768 was included in other cost centers which do not receive Medicaid reimbursement and are, therefore, not included in this report.

3

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

8

ADJUSTMENT NUMBER

EXPLANATION (continued}

remove the undocumented expenses from reimbursable costs. (HCFA 15-2304)

COST CENTER Skilled Nursing Care Physical Therapy Speech Therapy Occupational Therapy Home Health Aide Administrative and General

$

(6,242)

(518)

(53)

(95)

(4,125)

(20,738)

Total Adjustment to Reimbursable Costs

$ {JI 77))

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)
Reimbursable Costs
Adjustments to Balance Sheet Accounts:

December 31, 1994 Balance Accounts Payable

$

/46?)

COST CENTER Skilled Nursing Care Physical Therapy Speech Therapy Occupational Therapy Home Health Aide Administrative and General
Net Adjustment to Reimbursable Costs
9

$

(140)

(12)

(1)

(2)

(92)

(215)

$

(46?)

ADJUSTMENT NUMBER
5

EXPLANATION (continued) COST REPORT ADJUSTMENT REVERSAL

An adjustment was made during the cost report preparation to remove costs associated with the Community Care Services Program. Documentation examined during the audit showed that the adjustment was not adequately documented. 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 the cost report adjustment. (HCFA 15-2304)

COST CENTER

Home Health Aide

$

6

INCORRECT EXPENSE CLASSIFICATIONS

Documentation examined during the audit showed that expenses for the cost of chargeable supplies 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 Administrative and General

$ (30 070}

(1) A total of$30,070 was reclassified to other cost centers which do not receive Medicaid reimbursement and are, therefore, not included in this report.

7

EXCESS DEPRECIATION

Documentation examined during the audit in support of fixed assets and depreciation showed that either the property was not included in the proper class or depreciation was not calculated in accordance with AHA guidelines. Federal regulations provide for the use of minimum required asset lives. This adjustment is

10

ADJUSTMENT NUMBER

EXPLANATION (continued}

made to reduce reimbursable costs claimed by the amount of depreciation expense claimed in excess of total allowable. (HCFA 15-104.17)

COST CENTER Administrative and General

$

(5 468)

8

MEDICAID VISIT STATISTICS

Visit logs examined during the audit showed that the provider made 8, 173 total visits applicable to Medicaid Home Health Services rather than the 7,459 shown on the cost dat,. form. An adjustment of 714 visits has been made to correct the statistical information.

MEDICAID VISITS BY DISCIPLINE

Skilled Nursing Care

722

Occupational Therapy

(8)

Net Adjustment to Medicaid Visit Statistics

714

9

TOTAL AGENCY VISIT STATISTICS

Visit logs examined during the audit showed that the provider made 287,076 total visits applicable to Medicaid reimbursable disciplines rather than the 278,904 shown on the cost data form. An adjustment of 8,172 visits has been made to correct the statistical information.

AGENCY VISITS BY DISCIPLINE Skilled Nursing Care Physical Therapy Speech Therapy Occupational Therapy Home Health Aide

81 (2) 3 (8) 8 098

Net Adjustment to Total Agency Visit Statistics

8 172

11

CLAUDE L VICKERS
STATE AUDITOR

DEPARTMENT OF AUDITS
MEDICAID AND LOCAL GOVERNMENT AUDITS
254 Washington Street, S.W., Suite 322 Atlanta, Georgia 30334-8400
Telephone (404) 6S6-2006 Facsimile (404) 656-7535
MANAGEMENT COMMENT LETTER

MICHAELA. PLANT
DIRECTOR

Georgia Department of Medical Assistance Home Health Services Program Atlanta, Georgia
and Management Officials of Americare Home Health of Savannah
We have audited the records and documentation supporting parts I and II of the Medicaid Cost Data Form filed by Americare Home Health of Savannah in connection with the Medicaid Home Health Services Program for the year ended December 31, 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, conditions were noted that we believe are weaknesses which should be addressed by management. In our audit we found that:
Operating costs were not adequately segregated between the home health care agency and related entities.
Many adjustments were made to the accounting records during the course of the year. Some of these adjustments were not adequately supported by workpapers documenting the nature and purpose of the adjustment.
Expenses claimed on the cost data form included items not related to patient care operations.

12

Some ofthe transactions with related parties were not properly accounted for or reported on the cost data form.
An excessive number, and amount, of audit adjustments were required to satisfactorily formulate an opinion on the Schedule of Reimbursable Costs and Agency Visit Statistics.
Accounts' receivable credit balances at December 31, 1994, totalling $3,776.45 had not been refunded to the Department ofMedical Assistance.
As a participant in the Medicaid Home Health Services Program, the Provider has the responsibility of compliance with program policies and procedures, particularly with provisions of the Federal Provider Reimbursement Manual. Section 2304 ofthis 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 noted during an audit ofParts I and II of the Medicaid Cost Data Form filed in connection with the Medicaid Home Health Services Program by Americare Home Health of Savannah for the year ended December 31, 1994. This letter and the related audit report are intended to be used solely in connection with the administration of the Medicaid Home Health Services Program.
GEORGIADEPARTMENTOF AUDITS
13