Audit report, for the year ended June 30, 1996, Brentwood Terrace Health Care Center, Medicaid provider no. 00140071A, Nursing Facilities Services Program [June 30, 1996]

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DEPARTMENT OF AUDITS AND ACCOUNTS.

Medicaid and Local Government Audits .









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. A.UDITREPORT

. _ FOR THE YEAR ENDED JUNE .30, 1996 .

. BRENTWOOD TERRA.CE.HEALTH CARE CENTER

. _ MEDICAID P:ROVIDER.NUMBER 00140071~ . .NURSINGFACILITIES SERVICES PROGRAM

TABLE OF CONTENTS
LETTER OF TRANSMITTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
INTRODUCTION ........................................ 1
FINDINGS AND RECOMMENDATIONS .................... 5
Summary ofAudit Findings Affecting Allowable Costs and Patient Day Statistics 9 Schedule of Allowable Costs and Patient Day Statistics 11

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

w. RUSSELL HINTON
STATE AUDITOR

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

MICHAEL A. PLANT
DIRECTOR

June 16, 1999

Members of the Board of Medical Assistance, and The Honorable Dr. William R. Taylor, Commissioner Department of Medical Assistance 2 Peachtree Street, N.W., 40th Floor Atlanta, Georgia 30303
Ladies and Gentlemen:
This report provides the results of our audit of Brentwood Terrace Health Care Center, provider number 00140071A, a participant in the Nursing Facilities Services Program for the year ended June 30, 1996. This report is intended to be used solely in connection with the administration of the Georgia Department of Medical Assistance Nursing Facilities Services Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,
4,dl.W~
Russell W. Hinton State Auditor
RWH/rs/bw

1996 Audit Report: Brentwood Terrace Health Care Center

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 Facilities 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

Brentwood Terrace Health Care Center, a 103-bed long-term health care facility located in Waynesboro, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facilities Services Program. The

2

Nursing Facilities Services Program

Audit Objectives

facility provides both skilled and intermediate care services to resident patients. The facility was owned by Health Care South, Inc., and operated as a component ofGolden Age Properties Management Company, a chain organization which filed a Home Office Cost Report with DMA for the year ended _June 30, 1996.

The purpose of this audit was to determine whether Brentwood Terrace Health Care Center 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, 1996; and to determine whether Brentwood Terrace Health Care Center complied with the federal and state laws, regulations, policies and procedures for the Nursing Facilities Services Program in effect for that period. The specific objectives of this 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 Facilities 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

1996 Audit Report: Brentwood Terrace Health Care Center

3

Scope and Methodology



recommend appropriate action based on the results of

our audit.

To accomplish these objectives, we performed a limited review ofthe provider's internal control structure to the extent necessary to plan' our audit. We interviewed provider personnel and examined records and 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 ofMedical Assistance has calculated the payment rate for Brentwood Terrace Health Care Center 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 ofMedical Assistance when calculating the payment rate for Brentwood Terrace Health Care Center, our audit did not

4

Nursing Facilities Services Program

include a review ofthese 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 of our audit.
The Department ofAudits and Accounts is responsible for providing the Department ofMedical Assistance with information regarding the accuracy of cost and patient data for Brentwood Terrace Health Care Center for the year ended June 30, 1996. 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.

1996 Audit Report: Brentwood Terrace Health Care Center

5

FINDINGS AND RECOMMENDATIONS

Finding No.1

Incorrect Expefl,se 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 Facilities Services Program. We recommend that the provider implement policies and procedures to ensure that all of its experises 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.
(OMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Administrative Expenses Administrative Forms and Services Dietary Supplies Housekeeping Supplies Oxygen Special Services Administrative Expenses Oxygen stove Dietary Administrative Expenses Dietary Supplies Stove Laundry and Housekeeping Administrative Expenses Housekeeping Supplies Operation and Maintenance of Plant Administrative Expenses Copier Usage

$ (1,527) (2,952) (132) (461) (85) $

$

(638)

85

(381)

$

(145)

132

381

$

(99)

461

$

(719)

(737)

(5,157) (934). 368 362
(1,456)

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Nursing Facilities Services Program

Administrative and General

Administrative Expenses

$

3,128

Administrative Forms and Services

2,952

Copier Usage

737

6 817

Total Adjustment to Allowable Costs

$=====0=

Finding No. 2

Costs Not Related to Patient Care

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 2102.1, 2102.3; OMA Policies and Procedures Section 902)

ITEMS Personal Use of Vehicle Prescription Drugs

$

(l,673)

(310)

COST CENTER Routine Services Administrative and General Property and Related Expenses
Total Adjustment to Allowable Costs

$

(310)

(1,056)

(617)

$.=====(J!::t::9=!8=3==)

1996 Audit Report: Brentwood Terrace Health Care Center

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Finding No. 3

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 allowable costs claimed. Federal regulations provide that amounts received for discounts, allowances, refunds and rebates are not to be considered a
0
form of income but should be used to reduce the specific costs to which they apply, We recommend that the provider implement policies and procedures to ensure that allowable costs claimed are reduced by any expense reimbursements received. We recommend that the Department of Medical Assistance make the following adjustment to reduce allowable costs claimed by expense reimbursements shown as revenues.
(HCFA Pub. 15-1 Section 800)

COST CENTER Administrative and General

$======(7!::!:0!::!:]::a!::)

Finding No. 4

Allocations from Home Office
The provider was a component of a chain organization for the year ended June 30, 1996. As a result of our audit ofthe home office cost report filed in connection with the Medicaid Nursing Home Facilities Program, we recommended that the Department ofMedical Assistance make adjustments to the allowable costs claimed by the home office. We recommend that the provider and its home office implement policies and procedures to ensure that only allowable costs are allocated from the home office to the provider. We recommend that the Department of Medical Assistance make the following adjustment to correct allowable costs to reflect the allocation of the adjustments made to the home office cost report.
(HCFA Pub. 15-1 Section 2150)

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Nursing Facilities Services Program

COST CENTER Administrative and General Pooled Costs Administrative Expenses

$==='=3!:!!5:::4!=::0::i!:::)

Finding No. 5

Patient Day Statistics
The provider stated on the cost report that it furnished 37,393 patient days of service. Census records examined during the audit showed that the patient days shown on the cost report were accurate.

Finding No. 6

Accounts Receivable Credit Balances
Documentation examined during the audit showed that the provider had numerous credit balances in its individual accounts receivable. Credit balances in the facility's accounts receivable result from overpayments for services provided to its patients. The $274.42 shown in the following table represents overpayments from the Department of Medical Assistance that had not been resolved as of October 24, 1998. We recommend that the provider review its credit accounts receivable and refund overpayments to the appropriate party. We further recommend that the provider implement policies and procedures to ensure that overpayments on patients' accounts are promptly refunded to the payor. We also recommend that the Department of Medical Assistance review this matter and recover any overpayments identified.

Patient Name
Jones, Moses Simpson, Tom
Total

Balance

$

170.38

'104.04

$

22442

1996 Audit Report: Brentwood Terrace Health Care Center

9

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

Special Services

1

Incorrect Expense Classifications

Dietary

1

Incorrect Expense Classifications

Laundry and Housekeeping

1

Incorrect Expense Classifications

Operation and Maintenance efPlant

1

Incorrect Expense Classifications

Administrative and General

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

3

Expense Reimbursements

4

Allocations from Home Office

$

(5,157)

(310) $

$

6,817

(1,056)

(701)

(3:540)

0
(5,467) (934) 368 362
(1,456)
1,520

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Nursing Facilities Services Program

FINDING NUMBER

ALLOWABLE COSTS

Property and Related Expenses

2

Costs Not Related to Patient Care

Total Audit Findings Affecting Allowable Costs

(617)
$=====(6=,2=2=4=)

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS Ii

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COST

OFFICE

FIELD

~

ALLOWABLE COSTS Routine Services

REPORT

AUDIT

NATT AUDIT AUDIT

AUDITED

0

"'1

TOTALS FINDINGS .ill. FINDINGS (2) FINDINGS TOTALS

=tt
"'1

$ 1,212,285

$

19 $ (5,467) $ 1,206,837

In=i>

Special Services Dietary Laundry and Housekeeping Operation and Maintenance of Plant Administrative and General

96,384 277,396 173,454 169,885 308,672 $

(10,426)

0c=,.

(934)

95,450

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n>

368

277,764

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="'1
n

362 (1,456) 1,520

173,816 168,429 299,766

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Property and Related Expenses

226,462

(797)

(617)

225,048

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n>

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Total Allowable Costs

$ 2,464,538 $

{11,2231 $

19 $ {6,224) $ 2,447,110

PATIENT DAY STATISTICS

371393

37!393

(1) An office audit of the provider was performed before this field audit. The results of the office audit are included in this column for informational purposes.
(2) A Nurse Aide testing and Training (NATT) audit of the provider was performed before this field audit. The results of the NATT audit are included in this column for informational purposes. ,,--..,,..