, U7 I AZ00.m4 RI ~iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~ c4g. /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) 10 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