Audit report, schedule of reimbursable costs and patient day statistics, Southwestern Developmental Center, Bainbridge, Georgia, Medicaid provider no. 00190484A, 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

RECEIVED
MAY 111995 .uP~AMLEIBNRATRSIES

AUDIT REPORT SCHEDULE OF REIMBURSABLE COSTS AND
PATIENT DAY STATISTICS SOUTHWESTERN DEVELOPMENTAL CENTER
BAINBRIDGE, GEORGIA MEDICAID PROVIDER NO. 00190484A FOR THE YEAR ENDED JUNE 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE

SOUTHWESTERN DEVELOPMENTAL CENTER - TABLE OF CONTENTS -

AUDITOR'S REPORT

SCOPE OF THE AUDIT

1

SCHEDULE OF REIMBURSABLE COSTS AND PATIENT DAY STATISTICS

2

NOTES TO SCHEDULE

3

EXPLANATION OF FIELD AUDIT ADJUSTMENT

5

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 29, 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 the Georgia Department of Human Resources d/b/a Southwestern Developmental 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 the Georgia Department of Human Resources d/b/a Southwestern Developmental 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. 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. Except as described in the following paragraph, we believe our audit provides a reasonable basis for our report.
Our audit did not include tests of the indirect expenses allocated from the Georgia Department of Human Resources and its Division of Mental Health, Mental Retardation and Substance Abuse, or tests of the costs reported in the Property and Related Expenses cost center. The amount of adjustments required in these areas, if any, are not known to us and may be material.

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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 the Georgia Department of Human Resources d/b/a Southwestern Development Center 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 the Georgia Department of Human Resources d/b/a Southwestern Developmental 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,
~~
Claude L. Vickers State Auditor CLV/abs/by
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SOUTHWESTERN DEVELOPMENTAL 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 (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 to Statement of Operating Expenses, is based upon both direct costs of the nursing facility and indirect costs allocated to it from the Georgia Department of Human Resources and its Division of Mental Health, Mental Retardation and Substance Abuse. These indirect cost allocations result from the step-down of general service costs using a hospital cost finding procedure. Our audit did not include tests of these indirect costs since the Department of Medical Assistance has determined that this area is not within the scope of our audit.
Property and related expenses reported in the cost report are not used by the Department of Medical Assistance to determine property cost reimbursement. For this reason, our audit did not include tests of those costs (See Note 4).
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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SOUTHWESTERN DEVELOPMENTAL 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

$5,789,144

$5,789,144

Special Services

2,093,421

2,093,421

Dietary

1,331,621

1,331,621

Laundry and Housekeeping

415,890

415,890

Operation and Maintenance of Plant

528,121

528,121

Administrative and General 2,205,368

$ (8,770) 2,196,598

Property and Related Expenses

457,254

(5,806)

451,448

Total Reimbursable Costs $12,820,819

$ (14,576) $12,806,243

PATIENT DAY STATISTICS

71,067

71,067

2

SOUTHWESTERN DEVELOPMENTAL CENTER NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION
Southwestern Developmental Center is a 216-bed long-term health care facility located in Bainbridge, Georgia. The facility provides intermediate care services to resident patients that are mentally retarded. The facility was operated as a unit of Southwestern State Hospital under the management of the Georgia Department of Human Resources, Division of Mental Health, Mental Retardation and Substance Abuse 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 required for DMA to determine the healthcare provider's Medicaid reimbursement rate.
In addition, expenditures and the related liability are recognized in the accounting records when a purchase order is issued rather than upon receipt of *he goods or services. This practice is not in accordance with generally accepted accounting principles but is required by the laws of the State of Georgia to ensure that encumbered obligations do not exceed resources allocated.
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: 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 effe.ct of adjustments made during the cost report field audit process. The audit adjustment made as a result of this audit is explained in the Explanation of Field Audit Adjustment.
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SOUTHWESTERN DEVELOPMENTAL CENTER NOTES TO SCHEDULE
FOR THE YEAR ENDED JUNE 30, 1994 NOTE 4: PROPERTY COST REIMBURSEMENT
Depreciation claimed in the cost report was based on an appraisal of property rather than historical costs. The appraisal has not been approved by the Department of Medical Assistance as an acceptable determination of property cost. Therefore, DMA allows this provider to be reimbursed for property costs under the Dodge Index system. Our audit did not include tests of the costs claimed for property and related expenses since these costs are not used to determine property cost reimbursement under the Dodge Index system.
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ADJUSTMENT NUMBER
1

SOUTHWESTERN DEVELOPMENTAL CENTER EXPLANATION OP FIELD AUDIT ADJUSTMENT
FOR THE YEAR ENDED JUNE 30, 1994

EXPLANATION

RECALCULATION OF STEP-DOWN COST ALLOCATION

Documentation examined during the audit showed that not all costs claimed on the Hospital Cost Finding Procedure (HCFP) were allowable and that some of the costs were incorrectly classified among general service and/or direct cost centers. As a result, the step-down of costs on Worksheet C of the HCFP was recalculated to reflect the removal of unallowable costs and the reclassification of costs incorrectly classified among cost centers. This adjustment is made to change reimbursable costs based on the recalculation of the step-down of costs on
Worksheet c.
(HCFA 15-2304)

COST CENTER Administrative and General Property and Related Expenses

$ (8,770) (5,806}

Net Adjustment to Reimbursable Costs

$ (14,576)

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