Audit report, for the year ended June 30, 1998, Bethany Home Nursing Center of Vidalia, Medicaid provider no. 00140258A, Nursing Facilities Services Program [June 30, 1998]

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. - DEPARTMENT OF AUllITS AND ACCOUNTS Medicaid a11d Local GovernmentAudits

. .

. . AUDIT REPORT

. FORT~YEARENDEDJUNE30, 1998

BETHANYHOME NORSINGCENTE:ROF VIDALIA

. MEDICAID PROVIl):ER NUMBER 00140258A . NURSING FACILITY SERVICES PROGRAM

. 01.J=.'.==================================::::::::::=::==========\,

TABLE OF CONTENTS
LETTER OF TRA.NSMITTAL .............................................................. i
INTRODUCTION ................................................................................... ~1
FINDINGS AND RECOMMENDATIONS ......................................... 5
Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics ......... 11 Schedule of Allowable Costs and Patient D~y Statistics ......................................... 13

Report Prepared By:
State ofGeorgia Department ofAudits and Accounts Medicaid and Local Government Audits Division 254 Washington Street, S. W., Suite 322
Atlanta, Georgia 30334-8400 (404) 656-2006
Michael A. Plant, Director

CLAUDE L. VICKERS
SrAnAuonoa

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 322 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facsimile (404) 656-7535

May 5, 1999

Members of the Board of Medical Assistance, and The Honorable Dr. William R. Taylor, Commissioner Department ofMedical Assistance 2 Peachtree Street, N.W., 40th Floor Atlanta, Georgia 30303
Ladies and Gentlemen:
This report provides the results of our audit of Bethany Home Nursing Center of Vidalia, provider number 00140258A, a participant in the Nursing Facility Services Program for the year ended June 30, 1998. This report is intended to be used solely in connection with the adminis~ation of the Georgia Department of Medical Assistance Nursing Facility Services Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,
d
Claude L. Vickers State Auditor

CLV/kec/bw

1998 Audit Report: Bethany Home Nursing Center of Vidalia

1

INTRODUCTION

General Information

The Georgia Medical Assistance Program (Medicaid) is administered by the Georgia Department of Medical Assistance and is jointly funded by the State of Georgia and the federal government. Medicaid pays health care providers for furnishing health care services to individuals or families with low income and limited resources. The Department of Medical Assistance has established specific payment guidelines and limitations for each covered medical service.

Through the Nursing Facility Services Program, Medicaid pays for care in institutional settings for recipients who are unable to remain at home or in the community. Nursing homes are paid for this service using rates calculated from Nursing Home Cost Reports submitted by each provider. These cost reports include financial, patient census, and other information. Information included in the Nursing Home Cost Report is subject to audit by the Department of Medical Assistance or its agents. In an agreement with the Department of Medical Assistance, the Department of Audits and Accounts has accepted the responsibility of auditing Medicaid providers.

Provider Information

Bethany Home Nursing Center of Vidalia, a 168-bed long-term health care facility located in Vidalia, Georgia, is a provider enrolled in the G~orgia Medicaid Nursing Facility Services Program. The facility provides both skilled and intermediate care services to resident patients. The facility was operated as a freestanding nursing home by Bethany Home, Inc., for the year ended June 30, 1998,

2

Nursing Facility Services Program

Audit Objectives

The purpose of this audit was to determine whether Bethany Home Nursing Center of Vidalia maintained adequate documentation to support the allowable costs and patient day statistics reported in its Nursing Home Cost Report for the year ended June 30, 1998; and to determine whether Bethany Home Nursing Center of Vidalia complied with the federal and state laws, regulations, policies and procedures for the Nursing Facility Services Program in effect for that period. The specific objectives ofthis audit were to:
determine if allowable costs reported in the Nursing Home Cost Report are reasonable and allowable, in all material respects, in accordance with federal and state laws, regulations, policies and procedures governing the Georgia Nursing Facility Services Program;
compare patient day statistics included in the cost report to provider records to determine if the patient ,day statistics are accurately reported; and
recommend appropriate action based on the results ofour audit.

Scope and Methodology

To accomplish these objectives, we performed a limited review of the provider's internal control structure to the extent necessary to plan our audit. We interviewed provider personnel and examined records and

1998 Audit Report: Bethany Home Nursing Center of Vidalia

3

documentation to determine the adequacy of amounts and disclosures included in the Nursing Home Cost Report. We also reviewed, on a test basis, evidence supporting these amounts and disclosures and assessed the accounting principles used and significant estimates made by management. We evaluated the tested transactions and accounts for compliance with cost reporting principles included in the Health Care Financing Administration Provider Reimbursement Manual (HCFA Pub. 15-1) and DMA Policies and Procedures for Nursing Facility Services.
In accordance with Section 1002 of Policies and Procedures for Nursing Facility Services, the Department of Medical Assistance has calculated the payment rate for Bethany Home Nursing Center of Vidalia using a method often called the "Dodge Index system". Under the Dodge Index system, reasonable construction and asset acquisition costs are used in calculating the payment rate rather than the actual costs incurred by the nursing home for property costs such as depreciation and amortization; capital-related interest expense; and lease expense. Because these property costs are not considered by the Department of Medical Assistance when calculating the payment rate for Bethany Home Nursing Center of Vidalia, our audit did not include a review of these costs. However, because property taxes and insurance are used by the Department of Medical Assistance to calculate the provider's payment rate, we have reviewed those costs as part ofour audit.

4

Nursing Facility Services Program

The Department of Audits and Accounts is responsible for providing the Department of Medical Assistance with information regarding the accuracy of cost and patient data for Bethany Home Nursing Center of Vidalia for the year ended June 30, 1998. If the Department of Medical Assistance implements the recommendations in this report by adjusting the allowable costs and/or patient day statistics used in calculating the provider's billing rate, the provider may appeal to the Department of Medical Assistance for reconsideration of the audit findings. For this reason, we have not included a response from the provider in our report. However, we have discussed the contents of this report with the provider and have considered its responses when preparing the report. In all other respects, this audit was conducted in accordance with generally accepted government auditing standards.

1998 Audit Report: Bethany Home Nuning Center of Vidalia

5

FINDINGS AND RECOMMENDATIONS

Incorrect Expense Classifications

Finding No. 1

Documentation examined during the audit showed that some ofthe expenses were not classified in accordance with the Uniform Chart ofAccounts prescribed by the Department of Medical Assistance for providers participating in the Medicai'd Nursing Facilities Services Program. We recommend that the provider implement policies and procedures to ensure that all of its expenses are classified in the appropriate cost centers. We recommend that the Department of Medical Assistance make the following adjustment to reclassify costs to the appropriate cost centers.
(DMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Dietary Supplements Employee Benefits Laundry Supplies Mattresses Medical Records Expense Recliners Refrigerators Tube Feeding Supplies Special Services Employee Benefits Dietary Dietary Supplements Employee Benefits .Tube Feeding Supplies Vending Machine Revenue Offset

$

(3,301)

(1,249)

(1,143)

(4,200)

(5,340)

2,475

998

(1,679) $

$

3,301

1,750

1,679

(5,689)

(13,439) (53)
1,041

6

Nursing Facility Services Program

Laundry and Housekeeping Employee Benefits Laundry Supplies Mattresses
Operation and Maintenance ofPlant Employee Benefits Maintenance Expense Refrigerators
Administrative and General Employee Benefits Maintenance Expense Medical Records Expense Recliners Vending Machine Revenue Offset
Total Adjustment to Allowable Costs

$

(159)

1,143

4,200

$

(84)

209

(998)

$

(205)

(209)

5,340

(2,475)

5,689

$

5,184
(873)
' 8,140
0

Lack ofSufficient Documentation

Finding No. 2

Some of the expenses included in allowable costs were n~t 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. We recommend that the provider implement policies and procedures to ensure that all expenses shown on the cost report are supported by sufficient documentation. We recommend that the Department of Medical Assistance make the following adjustment to remove the undocumented expenses from allowable costs.
{HCFA Pub. 15-1 Section 2304)

1998 Audit Report: Bethany Home Nursing Center of Vidalia
COST CENTER Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance ofPlant Administrative and General
Total Adjustment to Allowable Costs

7

$

{2,042)

(87)

(357)

(261)

(137)

(334)

$

(3,218)

Costs Not Related to Patient Care

Finding No. 3

Allowable costs claimed 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 allowable costs. We recommend that the provider implement policies and procedures to ensure that expenses claimed in the cost report do not include items not related to patient care. We recommend that the Department of Medical Assistance make the following adjustment to remove the non-patient care expenses from allowable costs.
(HCFA Pub.15-1 Sections 2102.3, 2106.1, DMA Policies and Procedures Section 1002.l(k))

ITEMS Cable Television Expense Tickets to Sporting Events

$

(777)

(355)

Total Adjustment to Allowable Costs

$

(1,132)

8

Nursing Facility Services Program

COST CENTER Special Services Administrative and General
Total Adjustment to Allowable Costs

$

(777)

(355)

$

(1,132)

Excess Compensation

Finding No. 4

Allowable costs claimed 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. We recommend that the provider implement policies and procedures to ensure that compensation to its employees which exceeds the OMA maximum limitations is excluded from allowable costs claimed. We recommend that the Department of Medical Assistance make the following adjustment to reduce allowable 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)

Position Title

Total Compensation

Guideline Ceiling

Excess

Medical Director

$

24,000 $

22,014 $

1,986

=====

COST CENTER Special Services

$

{1,986)

1998 Audit Report: Bethany Home Nursing Center of Vidalia

9

Recalculation ofAncillary Services Cost Adjustment

Finding No. 5

The provider received revenues from the sale of ancillary services to patients; therefore, allowable costs for special services are limited to the maximum allowable cost calculated on Schedule B-lA of the cost report. Documentation examined during the audit showed that certain corrections 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 findings required the recalculation of Schedule B-:iA. A copy of this recalculation has been furnished to the provider. We recommend that the provider implement policies and procedures to ensure that all information used to calculate the ancillary services cost adjustment is correct. We recommend that the Department of Medical Assistance make the following adjustment to decrease allowable costs for the net effect of the recalculation.
(General Instructions to the Cost Report)

Ancillary Services Tube Feeding

Adjustment Per Cost Report

Recalculated Adjustment

Audit Finding

$ (35,687) $ (37,366) $

(1,679)

COST CENTER
Dietary

$ =====(=1=,6=79=)

Excess Vehicles

Finding No. 6

Documentation examined during the audit showed that expenses were claimed for five vehicles for the year under review. OMA guidelines allow a maximum of two vehicles for nursing homes of the size operated by the provider. We recommend that the provider implement policies and procedures to ensure that any costs incurred operating vehicles in excess of the maximum number allowable are excluded from reimbursable costs claimed. We recommend that the

10

Nursing Facility Services Program

Department of Medical Assistance make the following adjustment to reduce allowable costs claimed for the depreciation, insurance, taxes, interest and operating expenses of vehicles operated in excess of the maximum number allowable.
(DMA Vehicle Guidelines)

COST CENTER Operation and Maintenance ofPlant Repairs and Maintenance Administrative and General Operating Expenses Property and Related Expenses Insurance Expense
Total Adjustment to Allowable Costs

$

(3,242)

(53)

(1,601)

$

(4,896)

Patient Day Statistics

Finding No. 7

The provider stated on the cost report that it furnished 61,196 patient days of service. Census records examined during the audit showed that the patient days shown on the cost report were accurate.

1998 Audit Report: Bethany Home Nursing Center of Vidalia

11

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1 Incorrect Expense Classifications 2 Lack of Sufficient Documentation

$ {13,439) (2,042) $ (15,481)

Special Services
1 Incorrect Expense Classifications 2 Lack of Sufficient Documentation 3 Costs Not Related to Patient Care 4 Excess Compensation

$

(53)

(87)

(777)

(1,986)

(2,903)

Dieta01

1 Incorrect Expense Classifications

$

2 Lack of Sufficient Documentation

5 Recalculation ofAncillary Services Cost Adjustment

1,041 (357) {1,679)

(995)

Laundzy and Housekeeping
1 Incorrect Expense Classifications 2 Lack of Sufficient Documentation

$

5,184

(261)

4,923

Nursing Facility Services Program

FINDING NUMBER

ALLOWABLE COSTS

Operation and Maintenance efPlant

1 Incorrect Expense Classifications 2 Lack of Sufficient Documentation 6 Excess Vehicles

$

(873)

(137)

(3,242)

(4,252)

. Administrative and General
1 Incorrect Expense Classifications 2 Lack of Sufficient Documentation 3 Costs Not Related to Patient Care 6 Excess Vehicles

$

8,140

(334)

(355)

(53)

7,398

PropertJ? and Belated
6 Excess Vehicles

(1,601)

Tota/, Adjustment to Allowable Costs

$

(12,911)