Audit report, schedule of reimbursable patient day statistics, Snellville Nursing & Rehabilitation Center, Inc., Snellville, Georgia, Medicaid provider no. 00169199A, for the year ended June 30, 1994, Georgia Department of Medical Assistance [June 30, 1994]

GA ~800 ;Rl
STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA, GEORGIA 30334

AUDIT REPORT SCHEDULE OF REIMBURSABLE COSTS AND
PATIENT DAY STATISTICS SNELLVILLE NURSING & REHABILITATION
CENTER, INC. SNELLVILLE, GEORGIA MEDICAID PROVIDER NO. 00169199A FOR THE YEAR ENDED JUNE 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE

SNELLVILLE NURSING & REHABILITATION CENTER, INC. - 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

4

EXPLANATION OF FIELD AUDIT ADJUSTMENTS

6

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
December 16, 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 Snellville Nursing & Rehabilitation Center, Inc., 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 Snellville Nursing & Rehabilitation Center, Inc. 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 l 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 Snellville Nursing & Rehabilitation Center, Inc., on the basis described.

V

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 Snellville Nursing & Rehabilitation Center, Inc., 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.

CLV/mdj/by

Claude L. Vickers State Auditor

vi

SNELLVILLE NURSING & REHABILITATION CENTER, INC. 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.
1

SNELLVILLE NURSING & REHABILITATION CENTER, SCHEDULE OF REIMBURSABLE COSTS AND PATIENT DAY STATISTICS FOR THE YEAR ENDED JUNE 30, 1994

INC.

REIMBURSABLE COSTS

PER COST REPORT
AS FILED

OFFICE

FIELD

AUDIT

AUDIT

ADJUSTMENTS ADJUSTMENTS

ADJUSTED TOTALS

Routine Services

$2,097,024

$ (12,077) $2,084,947

Special Services

139,408

(4,697)

134,711

Dietary

501,281

7,295

508,576

Laundry and Housekeeping

195,428

(3,339)

192,089

Operation and Maintenance of Plant

250,198

(15,345)

234,853

Administrative and General 349,047

(24,174)

324,873

Property and Related Expenses

482,364

(7,651)

474,713

Total Reimbursable Costs $4,014,750

$ (59,988) $3,954,762

PATIENT DAY STATISTICS

57,408

57,408

2

SNELLVILLE NURSING & REHABILITATION CENTER, INC. NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES EHTITY INFORMATION
Snellville Nursing & Rehabilitation Center, Inc., is a 167-bed long-term health care facility located in Snellville, Georgia. The facility provides both skilled and intermediate care services to resident patients. The facility was operated as a freestanding nursing home 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 2: 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.
3

SNELLVILLE NURSING & REHABILITATION CENTER, INC. SUMMARY OF FIELD AUDIT ADJUSTMENTS FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS

ROUTINE SERVICES

1

Incorrect Expense Classifications

$ (6,432)

2

Expense Reimbursements

(1,860)

3

Non-Vesting Sick Leave Costs

(3,785) $ (12,077)

SPECIAL SERVICES

3

Non-Vesting Sick Leave Costs

$ (2,722)

4

Costs Not Related to Patient Care

(1,975)

(4,697)

DIETARY

1

Incorrect Expense Classifications

$ 7,769

3

Non-Vesting Sick Leave Costs

(474)

7,295

LAUNDRY AND HOUSEKEEPING

1

Incorrect Expense Classifications

$

( 519)

3

Non-Vesting Sick Leave Costs

(2,715)

4

Nurse Aide Testing and Training Costs

(105)

(3,339)

OPERATION AND MAINTENANCE OF PLANT

1

Incorrect Expense Classifications

$

644

3

Non-Vesting Sick Leave Costs

(5,861)

4

Costs Not Related to Patient Care

(2,520)

6

Excess Compensation

(3,735)

7

Lack of Sufficient Documentation.

(375)

8

Fixed Asset Purchases Claimed As Expense

(3,498)

(15,345)

ADMINISTRATIVE AND GENERAL

1

Incorrect Expense Classifications

$

258

3

Non-Vesting Sick Leave Costs

7,284

4

Costs Not Related to Patient Care

(9,086)

5

Nurse Aide Testing and Training Costs

(299)

6

Excess Compensation

(13,775)

7

Lack of Sufficient Documentation

(2,994)

8

Fixed Asset Purchases Claimed As Expense

(2,674)

9

Accrual Basis of Accounting

(3,797)

10

Costs Misclassified as Nurse Aide

Testing and Training Costs

909

(24,174)

4

SNELLVILLE NURSING & REHABILITATION CENTER, INC. SUMMARY OF FIELD AUDIT ADJUSTMENTS FOR THE YEAR ENDED JUNE 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS (continued)

PROPERTY AND RELATED EXPENSES

1

Incorrect Expense Classifications

$ (1,720)

7

Lack of Sufficient Documentation

(2,738)

8

Fixed Asset Purchases Claimed As Expense

479

11

Excess Depreciation

(3,672)

(7,651)

Net Adjustment to Reimbursable Costs

$ (59,988)

5

ADJUSTMENT NUMBER
1

SNELLVILLE NURSING & REHABILITATION CENTER, INC. 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. (OMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Dietary Supplements Nursing Supplies Dietary Dietary Supplements Laundry and Housekeeping Housekeeping Supplies Laundry Supplies Nursing Supplies Operation and Maintenance of Plant Housekeeping Supplies Maintenance Contract Nursing Supplies Administrative and General Communications Laundry Supplies Lease Expense Maintenance Contract Property and Related Expenses Communications Lease Expense

$ (7,769) 1[337 $ (6,432)

7,769

$

560

72

(1[151}

(519)

$

(560)

1,390

186}

644

$ 1,964

(72)

(244)

(1[390}

258

$ (1,964) 244

L720}

Net Adjustment to Reimbursable Costs

$

0

2

EXPENSE REIMBURSEMENTS

Documentation examined during the audit showed that amounts shown on the cost report as revenues were from sales of materials and/or services, the cost of which were included in reimbursable costs claimed. Federal regulations provide that amounts received for discounts, allowances, refunds and rebates are not to be considered a form of income but should be used to reduce the specific costs to which they apply. This adjustment

6

ADJUSTMENT NUMBER

EXPLANATION (continued)

is made to reduce reimbursable costs claimed by expense reimbursements shown as revenues. (HCFA 15-800)

COST CENTER Routine Services

$ (1,860)

3

NON-VESTING SICK LEAVE COSTS

Documentation examined during the audit showed that reimbursable costs claimed included the cost of sickpay earned by, but not paid to employees. Federal regulations provide that the reasonable cost of sick leave taken by an employee is recognized as a fringe benefit and includable in allowable cost in the cost reporting period when paid. This adjustment is made to decrease reimbursable costs for the changes in actual expense applicable to the period. (HCFA 15-2144.SA)

Accrued Sick Leave Costs, 6/30/93 Accrued Sick Leave Costs, 6/30/94

$108,652 (116,925)

Changes in Actual Expense

$ (8,273)

COST CENTER Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance of Plant Administrative and General
Net Adjustment to Reimbursable Costs

$ (3,785) (2,722) (474) (2,715) (5,861) 7,284
$ (8,273)

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, 2139; DMA Policies and Procedures Section 1002.l(k))

7

ADJUSTMENT NUMBER

EXPLANATION (continued)
Items Advertising Civic Organization Dues Donations Legal Fees Personal Automobile Expenses Physician Services Political Contributions

COST CENTER Special Services Operation and Maintenance of Plant Administrative and General
Total Adjustment to Reimbursable Costs

$ (6,385) (113) (50)
(2,562) (2,426) (1,862)
(183)
$ (13,581)
$ (1,975) (2,520) (9,086)
$ (13,581)

5

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. (OMA General Instructions to Cost Report)

COST CENTER Laundry and Housekeeping Administrative and General

$

(105)

(299)

Net Adjustment to Reimbursable Costs

$

(404)

6

EXCESS COMPENSATION

Reimbursable costs claimed on the cost report included compensation to employees which exceeded DMA maximum limitations. The Department of Medical Assistance annually calculates allowable salary ceilings for various positions as well as maximum fees allowable for medical and corporate directors. This adjustment is made to reduce reimbursable costs by the amount of compensation paid in excess of the OMA guidelines, plus related employer's share of payroll taxes. (DMA Compensation Ceilings; HCFA 15-906)

8

ADJUSTMENT NUMBER

EXPLANATION (continued)

Position Title

Total compensation

Guideline Ceiling

Maintenance Supervisor Payroll Taxes
Administrator Payroll Taxes

$ 40,286 3,081
90,005 5,062

$ 36,816 2,816
76,427 4,865

Excess
$ (3,470) (265)
(13,578) (197)

$138,434

$120,924

$ (17,510)

COST CENTER Operation and Maintenance of Plant Administrative and General
Total Adjustment to Reimbursable Costs

$ (3,735) (13,775)
$ (17,510)

7

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)

COST CENTER Operation and Maintenance of Plant Administrative and General Property and Related Expenses

$

(375)

(2,994)

(2,738)

Total Adjustment to Reimbursable Costs

$ (6,107)

8

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)

9

ADJUSTMENT NUMBER

EXPLANATION (continued)
COST CENTER Operation and Maintenance of Plant Cost of Fixed Equipment Administrative and General Cost of Major Moveable Equipment Property and Related Expenses Allowable Depreciation Expense
Net Adjustment to Reimbursable Costs

$ (3,498) (2,674) 479
$ (5,693)

9

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

$ (3,797)

COST CENTER Administrative and General

$ (3,797)

10

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 Administrative and General

$

909

10

ADJUSTMENT NUMBER
11

EXPLANATION (continued)

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 DMA guidelines. DMA Policies and Procedures require the use of minimum required asset lives. This adjustment is made to reduce reimbursable costs claimed by the amount of depreciation expense claimed in excess of total allowable. (DMA Depreciation Guidelines, DMA Policies and Procedures Section 1002.l(k))

COST CENTER Property and Related Expenses

$ (3,672)

11