(::,_P., . . A'bOO. ML\ Ri ~iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii;;;;;;.;;;;iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii--iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~ C,;49 11W-io DEPARTMENTOFAtJriITS.AND ACCOUNTS Medicaid . . a. .nd Local . Government ' . . Aud. itS . . . ' .. . . . '. ' . ,. AlJDIT REPORT' . FOR THE TEN MONTHS :ENDED JUNE 30, 1995 . CHATUGE REGIONAL NURSING HOME . .MEDICAID PROVIDERN1JMBER.00143338A, .NURSING"FACILITIES SERVICES PR()GR,AM . TABLE OF CONTENTS LETTER OF TRl\NSMITTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FINDINGS AND RECOMMENDATIONS ................... 5 Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 8 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) 656-2006 Facsimile (404) 656-7535 October 28, 1996 Members of the Board of Medical Assistance, and The Honorable Marge Smith, 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 Chatuge Regional Nursing Home, provider number 00143338A, a participant in the Nursing Facilities Services Program for the ten months ended June 30, 1995. This report is intended to be used solely in connection with the administration ofthe Georgia Department ofMedical Assistance Nursing Facilities Services Program and is not to be used or relied upon for any other purpose. CLV/ss/by a~ Respectfully Submitted, Claude L. Vickers State Auditor 1995 Audit Report: Chatuge Regional Nursing Home 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 Chatuge Regional Nursing Home, a 76-bed long-term health care facility located in Hiawassee, Georgia, is a provider in the Georgia Medicaid Nursing Facilities Services Program. The facility provides both skilled and intermediate care services to resident patients. The 2 Nursing Facilities Services Program Audit Objectives facility is owned and operated by Southern Health Corporation of Hiawassee, Inc., which operated both Chatuge Regional Hospital and Chatuge Regional Nursing Home in separate physical facilities during the year under review. The purpose ofthis audit was to determine whether Chatuge Regional Nursing Home maintained adequate documentation to support the allowable costs and patient day statistics reported in its Nursing Home Cost Report for the ten months ended June 30, 1995; and to determine whether Chatuge Regional Nursing Home 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 1995 Audit Report: Chatuge Regional Nursing Home 3 Scope and Methodology outlined in DMA 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 of the 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. Allowable costs reported on the Nursing Home Cost Report include both direct costs of the nursing facility and indirect costs allocated to it from Chatuge Regional Hospital. 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 Chatuge Regional Nursing Home for the ten months ended June 30, 1995. 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. 1995 Audit Report: Chatuge Regional Nursing Home 5 FINDINGS AND RECOMMENDATIONS Finding No.1 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 Proceduresfor Nursing Facility Services, Section 1002.1 (g). Finding No. 2 Incorrect Expense Classifications Documentation examined during the audit showed that some ofthe expenses were not classified in accordance with the Uniform Chart of Accounts prescribed by the Department ofMedical 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 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 Administrative Supplies Consulting Fees Employee Benefits Housekeeping Supplies Maintenance Supplies Medical Records Supplies Salaries Expense Repairs and Maintenance Taxes Telephone Expense Travel, Convention, and Education Utilities Waste Disposal $ (1,320) (924) (20,156) (2,063) (2,197) (308) (148,213) (2,750) (95) (1,231) (2,776) (51,284) (51340) $ (238,657) 6 Nursing Facilities Services Program Dietary Consulting Fees Laundry and Housekeeping Employee Benefits Housekeeping Supplies Salaries Expense Operation and Maintenance of Plant Maintenance Supplies Repairs and Maintenance Utilities Waste Disposal Administrative and General Administrative Supplies Employee Benefits Medical Records Supplies Salaries Expense Telephone Expense Travel, Convention, and Education Property and Related Expenses Taxes Total Adjustment to Allowable Costs $ 7,808 2,063 57 398 $ 2,197 2,750 51,284 5 340 $ 1,320 12,348 308 90,815 1,231 2 776 $ 924 67,269 61,571 108,798 95 Finding No.3 Costs Not Related to Patient Care Allowable costs claimed included payments for cable television in patients' rooms. These costs are 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 Section 2106.1) 1995 Audit Report: Chatuge Regional Nursing Home 7 COST CENTER Routine Services $=====(1!::2:8=::]~5==) Finding No.4 Patient Day Statistics Census records examined during the audit showed that the nursing home had 21,293 patient days of service rather than the 21,261 shown on the cost report. 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 accumulate accurate patient day statistics. We recommend that the J;)epartment of Medical Assistance make the adjustment of 32 days to correct the statistical information. (HCFAPub. 15-1 Section2304) Finding No.5 Patient Trust Funds Not in Interest Bearing Account Documentation examined during the audit showed that the provider manages funds belonging to its patients. Residents' personal funds in excess of $50 were maintained in a non-interest-bearing checking account. Federal law requires that all residents' personal funds in excess of $50 be maintained in an interest-bearing account. We recommend that the provider implement policies and procedures to ensure that patients' personal funds in excess of $50 are maintained in an interest-bearing account. We also recommend that the Department ofMedical Assistance ensure that the provider maintains the patients' personal funds in excess of $50 in an interestbearing account. (42 CAR483.I0C(3)(I)) 8 . Nursing Facilities Services Program SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS FINDING NUMBER ALLOWABLE COSTS Routine Services 2 Incorrect Expense Classifications 3 Costs Not Related to Patient Care Dietary 2 Incorrect Expense Classifications Laundry and Housekeeping 2 Incorrect Expense Classifications Operation and Maintenance ofPlant 2 Incorrect Expense Classifications Administrative and General 2 Incorrect Expense Classifications Property and Related Expenses 2 Incorrect Expense Classifications $ (238,657) (1,815) $ (240,472) 924 67,269 61,571 108,798 95 Total Audit Findings Affecting Allowable Costs $==(=1,=8=15=) 1995 Audit Report: Chatuge Regional Nursing Home 9 FINDING NUMBER PATIENT DAY STATISTICS 4 Increase in Patient Day Statistics 32 .~ SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS COST REPORT TOTALS NATT AUDIT FINDINGS (1) FIELD AUDIT FINDINGS AUDITED TOTALS ALLOWABLE COSTS Routine Services $ 887,277 $ (894) $ (240,472) $ 645,911 Special Services 14,241 14,241 Dietary 360,224 924 361,148 Laundry and Housekeeping 88,321 67,269 155,590 Operation and Maintenance of Plant 82,459 61,571 144,030 Administrative and General 284,311 108,798 393,109 Property and Related Expenses 221,015 95 221,110 I Total Allowable Costs $_1_,937,848_ $~ - - !894) $ {1,815) $ 1,935,139 IIi==~Q. =-n....~....... PATIENT DAY STATISTICS 21,261 32 21,291_ l!l r:n .~ ~.. n (I) A Nmse Aide Testing and Training (NATT) audit ofthe provider was petfonned before this field audit. The results of the NATT audit are included in this column for informational purposes. I~aI.Q, = a