Audit report, for the year ended June 30, 1996, Chattooga Medical Center, Long Term Care, Medicaid provider no. 00142238A, Nursing Facilities Services Program

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/o/JS~?b DEPARTMENT OF AUDITS AND ACCOUNTS

Medicaid and Local Government Audits

AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 1996
CHATTOOGA MEDICAL CENTER,
LONG TERM CARE
MEDICAID PROVIDER NUMBER 00142238A NURSING FACILITIESSERVICES PROGRAM

TABLE OF CONTENTS
LETTER OF TRANSMITTAL .............................. i
INTRODUCTION ......................................... 1
FINDINGS AND RECOMMENDATIONS .................... 5 Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 9 Schedule of Allowable Costs and Patient Day Statistics 10

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
STATE AUDITOR

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
Telephone (404) 6S6-2006 Facsimile (404) 6S6-7S3S

October 30, 1997

Members of the Board of Medical Assistance, and The Honorable Dr. William R. Taylor, Acting Commissioner Department ofMedical Assistance 2 Peachtree Street, N.W., Suite 27-100 Atlanta, Georgia 30303
Ladies and Gentlemen:
This report provides the results of our audit of Chattooga Medical Center - Long Term Care, provider number 00142238A, 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,

CLV/rs/bw

Claude L. Vickers State Auditor

1996 Audit Report: Chattooga Medical Center-Long Term Care

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 ofGeorgia 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 ofMedical 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

Chattooga Medical Center - Long Term Care, a 151-bed long-term health care facility located in Summerville, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facilities Services Program. The facility provides both skilled and intermediate care

2

Nursing Facilities Services Program

Audit Objectives

services to resident patients. The facility is owned and operated by Chattooga County Hospital Authority which operated both Chattooga Medical Center and Chattooga Medical Center - Long Term Care in the same physical facility during the year under review.

The purpose of this audit was to determine whether Chattooga Medical Center - Long Term Care 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 Chattooga Medical Center - Long Term Care 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;



determine if the provider meets the requirements for

classification as a hospital-based nursing home

1996 Audit Report: Chattooga Medical Center- Long Term Care

3

Scope and Methodology

outlined in OMA Policies and Procedures for Nursing Facility Services, Section 1002.l(g); and



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 OMA Policies and Procedures for Nursing Facility Services.
Allowable costs reported on the Nursing Home Cost Report include both direct costs of the nursing facility and indirect costs allocated to it from Chattooga Medical Center. These indirect cost allocations result from the step-down of general service costs from the hospital as shown on the hospital's Medicare cost report. 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

4

Nursing Facilities Services Program

Medicare cost report worksheets. These costs are subject to audit by the Medicare intermediary. Any audit findings by the Medicare intermediary related to indirect costs that impact the nursing facility will be reflected in the Medicaid cost report in the year the Medicare cost report is final-settled.
The Department of Audits and Accounts is responsible for providing the Department ofMedical Assistance with information regarding the accuracy of cost and patient data for Chattooga Medical Center Long Term Care for the year ended June 30, 1996. Ifthe Department ofMedical 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: Chattooga Medical Center - Long Term Care

5

FINDINGS AND RECOMMENDATIONS

Finding No. J

Hospital-Based Status
The provider was in compliance with the Department of Medical Assistance's requirements for classification as a hospital-based nursing home as specified in DMA Policies and Procedures for Nursing Facility Services, Section 1002.l(g).

Incorrect Expense Classifications

Finding No.2

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 expenses are classified in the appropriate cost centers. We recommend that the Department ofMedical Assistance make the following adjustment to reclassify costs to the appropriate cost centers.
(DMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Advertising Communication Expense Dietary Supplements Maintenance Raw Food Recruitment Expense Subscriptions Supplies Travel and Education Expense Utilities Expense

$ (1,727) (160)
(10,652) (62)
(2,957) (1,800)
(31) (7,634) (6,111) (135,813) $

(166,947)

6

Nursing Facilities Services Program

Dietary Dietary Supplements Raw Food
Laundry and Housekeeping Supplies
Operation and Maintenance ofPlant Maintenance Utilities
Administrative and General Advertising Communication Expense Recruitment Expense Subscriptions Supplies Travel and Education Expense
Total Adjustment to Allowable Costs

$ 10,652 2,957

$

62

135,813

$

1,727

160

1,800

31

2,504

6,111

$

13,609 5,130 135,875
12,333 0

Accrual Basis ofAccounting

Finding No.3

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. We recommend that the provider implement policies and procedures to ensure that costs are recorded in the period in which they are incurred. We recommend that the Department of Medical Assistance make the following adjustment to decrease allowable costs claimed for expenses applicable to the year under review.
(HCFA Pub. 15-1 Section 2302.1)

1996 Audit Report: Chattooga Medical Center - Long Term Care

7

Adjustments to Balance Sheet Accounts: June 30, 1995 Balance
Accounts Payable
COST CENTER Routine Services

Allowable Costs
$===1=3=51=
$==(==1=,3=51=)

Nurse Aide Testing and Training Costs

Finding No. 4

Documentation examined during the audit showed that the provider did not remove nurse aide testing and training costs from allowable costs claimed as required by the Department of Medical Assistance in General Instructions to Cost Report. We recommend that the provider implement policies and procedures to ensure that nurse aide testing and training costs are not included in allowable costs. We recommend that the Department of Medical Assistance make the following adjustment to decrease allowable costs by the amount of nurse aide testing and training costs.
(DMA General Instructions to Cost Report)

COST CENTER Routine Services

$==='==8=73=)

Patient Trust Fund Not in Balance

Finding No. 5

Documentation examined during the audit showed that the provider manages funds belonging to its patients. The assets of the patient trust fund at June 30, 1996, totaled $11,425.60; patient trust fund liabilities were $9,126.08. Federal law requires that

8

Nursing Facilities Services Program

the provider establish and maintain a system that assures a full and complete and separate accounting, according to generally accepted accounting principles, of each resident's personal funds. We recommend that the provider return these excess funds to the appropriate parties. We further recommend that the provider implement policies and procedures to maintain a balanced, reconciled patient trust fund. We also recommend that the Department ofMedical Assistance ensure that the provider returns the excess funds and implements the policies and procedures necessary to maintain a balanced, reconciled patient trust fund.
(42 CFR 483.10C(4))

1996 Audit Report: Chattooga Medical Center-Long Term Care

9

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

$ (166,947)

2

Accrual Basis of Accounting

(1,351)

3

Nurse Aide Testing and Training Costs

(873) $ (169,171)

Dietary

1

Incorrect Expense Classifications

13,609

Laundry and Housekeeping

1

Incorrect Expense Classifications

5,130

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

135,875

Administrative and General

Incorrect Expense Classifications

12,333

Total Audit Findings Affecting Allowable Costs

$

(2,224)

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Nursing Facilities Services Program

SCHEDULE OF ALLOWABLE COSTS AND PATIE;NT DAY STATISTICS

COST REPORT TOTALS

FIELD AUDIT FINDINGS

AUDITED TOTALS

ALLOWABLE COSTS

Routine Services

$ . 2,521,222 $ (169,171) $ 2,352,051

Special Services

49,919

49,919

Dietary

665,175

13,609

678,784

Laundry and Housekeeping

331,778

5,130

336,908

Operation and Maintenance of Plant

148,500

135,875

284,375

Administrative and General

293,686

12,333

306,019

Property and Related Expenses

412,015

412,015

Total Allowable Costs

$ 4,422,295 $ (2,224) $ 4,420,071

PATIENT DAY STATISTICS

54,280

54,280