Audit report, schedule of reimbursable costs and agency visit statistics, Taylor Home Health Care, Hawkinsville, Georgia, Medical provider number 00383215A, for the year ended April 30, 1994, Georgia Department of Medical Assistance. [Apr. 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 AGENCY VISIT STATISTICS TAYLOR HOME HEALTH CARE
HAWKINSVILLE, GEORGIA MEDICAID PROVIDER NO. 00383215A FOR THE YEAR ENDED APRIL 30, 1994 GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE
Report Prepared By: State oJGeorgia
Department ofAudits and Accounts Medicaid and Local Govemment Audits Division
254 Washington Street, S.W., Suite 322 Adan/a, Georgia 30334-8400 (404) 656-2006 Michael A. Plant, Director

TAYLOR HOME HEALTH CARE -TABLE OF CONTENTS -

AUDITOR'S REPORT

iii

SCOPE OF 1HE AUDIT

SCHEDULE OF REIMBURSABLE COSTS

2

NOTES TO SCHEDULE

SUMMARY OF FIELD AUDIT ADJUSTMENTS

EXPLANATION OF FIELD AUDIT ADJUSTMENTS

APPENDIX

MANAGEMENT COMMENT LETTER

II

CLAUDE L VICKERS
STATE AUDITOR

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facslmlle (404) 656-7535
July 20, 1995

Home Health Services Program Division ofNon-Institutional Reimbursement Georgia Department ofMedical Assistance 2 Peachtree Street, NW 25th Floor Atlanta, Georgia 30303-3159
Ladies and Gentlemen:
We have audited parts I and II of the Medicaid Cost Data Form filed with the Georgia Department ofMedical Assistance under the Title XIX Medicaid Program by R. J. Taylor Memorial Hospital, Inc., d/b/a Taylor Home Health Care for the year ended April 30, 1994, and have compiled the accompanying Schedule of Reimbursable Costs and Agency Visit Statistics based on our audit. The Medicaid Cost Data Form is the responsibility of the management ofR. J. Taylor Memorial Hospital, Inc., d/b/a Taylor Home Health Care. 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 ofour audit, including any required adjustments to parts I and II of the Medicaid Cost Data Form, to the Georgia Department ofMedical 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.
iii

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 R. J. Taylor Memorial Hospital, Inc., d/b/a Taylor Regional Hospital. This report, and any adjustments to the costs allocated to R. J. Taylor Memorial Hospital, Inc., d/b/a Taylor Home Health Care are the responsibility of the Medicare intermediary. The amount of adjustments, if any, are not known to us and may be material.
As described in Note I ofthe Notes to Schedule, the accompanying Schedule ofReimbursable 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 ofR. J. Taylor Memorial Hospital, Inc., d/b/a Taylor Home Health Care 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 ofR. J. Taylor Memorial Hospital, Inc., d/b/a Taylor Home Health Care for the year ended April 30, 1994, on the basis of accounting described in Note I.
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/kr/by
V

TAYLOR HOME HEALTH CARE SCOPE OF THE AUDIT
FOR THE YEAR ENDED APRIL 30, 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 (DMA) 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 disclosures 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 ofthe Medicaid Cost Data Form include indirect costs allocated to the home health agency from Taylor Regional 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.
Costs reported in Part II ofthe Medicaid Cost Data Form also include the direct costs of the 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 structure. However, as a result of our audit, a reportable condition was identified 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.

TAYLOR HOME HEALTH CARE SCHEDULE OF RETMBURSABLE COSTS
AND AGENCY VISIT STATISTICS FOR THE YEAR ENDED APRIL 30, 1994

REIMBURSABLE COSTS
Skilled Nursing Care Physical Therapy Home Health Aide
Total Reimbursable Costs
MEDICAID VISITS
Skilled Nursing Care Physical Therapy Home Health Aide
Total Medicaid Visits
TOTAL AGENCY VISITS
Skilled Nursing Care Physical Therapy Home Health Aide
Total Agency Visits

PER COST DATAFORM
ASFILED

$

286,735

26,929

191 965

$

505 6?9

FIELD AUDIT ADJUSTMENTS

ADJUSTED TOTALS

$

(26,278) $

260,457

684

27,613

4 878

196 843

$

(?O 716) $

484 913

6,934 387
5 937
13 258

(5,623) (221)
(5 550}
() 1 394)

1,311 166 387
1864

7,147 387
5 937
13471

(213) (9)
1 371
1149

6,934 378
7 308
14 6?0

2

TAYLOR HOME HEALTH CARE NOTES TO SCHEDULE
FOR THE YEAR ENDED APRIL 30, 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION
Taylor Home Health Care provides home health services to residents ofBleckley, Houston, and Pulaski counties. The residents ofthis three county area are served through the provider's office in Hawkinsville, Georgia. The agency was operated by R. J. Taylor Memorial Hospital, Inc., d/b/a Taylor Regional Hospital 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.
3

TAYLOR HOME HEALTH CARE NOTES TO SCHEDULE
FOR THE YEAR ENDED APRIL 30, 1994

TOTAL AGENCY
COST

TOTAL AGENCY
VISITS

AGENCY COST
PER VISIT

MEDICAID VISITS

MEDICAID COST

MEDICAID VISITS

AGGREGATE COST
PER VISIT

Skilled Nursing Care $ Physical Therapy Home Health Aide

260,457 27,613 196 843

Total

$

484,913

,I:.

6,934 $ 378
7 308
14,620

37.56 73.05 26.94

1,311 $ 166 387
1,864 $

49,241 12,126 10426
71,793

1,864 $

38.52

TAYLOR HOME HEALTH CARE SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED APRIL 30, 1994

ADJUSTMENT NUMBER

REIMBURSABLE COSTS

SKILLED NURSING CARE

I

Step Down of General Service Costs

$ (5,176)

2

Incorrect Expense Classifications

(21,102)

PHYSICAL THERAPY

Step Down of General Service Costs

HOME HEALTH AIDE

Step Down of General Service Costs

ADMINISTRATIVE AND GENERAL

I

Step Down of General Service Costs

$ (12,404)

2

Incorrect Expense Classifications

15,970

3

Prior Year Audit Adjustments

581

4

Costs Not Related to Patient Care

(4,147)

$ (26,278) 684
4,878
0

Net Adjustment to Reimbursable Costs

$ (207]6)

MEDICAID VISITS

5

Skilled Nursing Care

5

Physical Therapy

5

Home Health Aide

Total Adjustment to Medicaid Visit Statistics

(5,623) (221)
(5 550)
(] J 394)

5

ADJUSTMENT
NUMBER

TAYLOR HOME HEALTH CARE SUMMARY OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED APRIL 30, 1994
TOTAL AGENCY VISITS

6

Skilled Nursing Care

6

Physical Therapy

6

Home Health Aide

Net Adjustment to Total Agency Visit Statistics

(213) (9)
1 371
1 149

6

TAYLOR HOME HEALTH CARE EXPLANATION OF FIELD AUDIT ADJUSTMENTS
FOR THE YEAR ENDED APRIL 30, 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 B ofthe 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 1728)

COST CENTER Skilled Nursing Care Physical Therapy Home Health Aide Administrative and General Incorrect Expense Classifications Prior Year Audit Adjustments Costs Not Related to Patient Care

$ (5,176) 684
4,878

$ (15,970) (581) 4147

(12 404)

Net Adjustment to Reimbursable Costs (1)

$ OZ QJ 8}

(1) A total of $12,018 was stepped down to other cost centers which do not receive Medicaid reimbursement and are, therefore, not included in this report.

2

INCORRECT EXPENSE CLASSIFICATIONS

Documentation examined during the audit showed that some of the expenses 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 I 5-2304; Instructions to Cost Report)

7

ADJUSTMENT NUMBER

EXPLANATION (continued}

COST CENTER

Skilled Nursing Care

Director ofNursing's Salary and

Employee Benefits

$

Industrial Nurse's Salary and

Employee Benefits

Administrative and General

Director ofNursing's Salary and

Employee Benefits

$

Medical Supplies

Mileage Reimbursement

(17,930) {3 172) $
17,930 (671)
{1289)

(21,102) 15 970

Net Adjustment to Reimbursable Costs (1)

$

(5 132)

(I) A total of$5,132 was reclassified to other cost centers which do not receive Medicaid reimbursement and are, therefore, not included in this report.

3

PRIOR YEAR AUDIT ADJUSTMENTS

Documentation examined during the audit showed that adjustments made to the prior year cost report that affected current year costs were not reflected in the cost report for the period under review. This adjustment is made to increase reimbursable costs for the effect ofthose prior year audit adjustments.

COST CENTER Administrative and General Depreciation Expense - Asset Capitalized in Prior Year Audit

$

58]

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

8

ADJUSTMENT NUMBER

EXPLANATION (continued}

reimbursable costs. This adjustment is made to remove the non-patient care expenses from reimbursable costs. (HCFA 15-2102.3, DMA Policies and Procedures Section 1001.2, (f), (h))

Items Advertising Association Dues (50%) Hospital Costs Project Help Costs

$

(250)

(700)

(1,084)

(2.113)

$

(4 147)

COST CENTER Administrative and General

$

(4 147)

5

MEDICAID VISIT STATISTICS

Visit logs examined during the audit showed that the provider made 1,864 total visits applicable to Medicaid Home Health Services rather than the 13,258 shown on the cost data form. An adjustment of 11,394 visits has been made to correct the statistical information.

MEDICAID VISITS BY DISCIPLINE Skilled Nursing Care Physical Therapy Home Health Aide

(5,623) (221)
(5,550)

Total Adjustment to Medicaid Visit Statistics

() J 394)

6

TOTAL AGENCY VISIT STATISTICS

Visit logs examined during the audit showed that the provider made 14,620 total visits applicable to Medicaid reimbursable disciplines rather than the 13,471 shown on the cost data form. An adjustment of 1,149 visits has been made to correct the statistical information.

9

ADJUSTMENT
NUMBER

EXPLANATION <continued)

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

Total Adjustment to Total Agency Visit Statistics

(213) (9)
1 371
I 149

10

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) 656-2006 Facshnlle (404) 656-7535
MANAGEMENT COMMENT LETTER

MICHAELA. PLANT DIRECTOR

Georgia Department of Medical Assistance Home Health Services Program Atlanta, Georgia
and Management Officials of Taylor Home Health Care
We have audited the records and documentation supporting parts I and II of the Medicaid Cost Data Form filed by Taylor Home Health Care in connection with the Medicaid Home Health Services Program for the year ended April 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 expenses were not properly classified in accordance with the instructions to the Medicare cost report causing numerous reclassification adjustments.
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 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,
II

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 of Parts I and II of the Medicaid Cost Data Form filed in connection with the Medicaid Home Health Services Program by Taylor Home Health Care for the year ended April 30, 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.
GEORGIA DEPARTMENT OF AUDITS
12