(Jt\ A~oo,1114Ri 37 lflSQb DEPARTMENT OF AUDITS AND ACCOUNTS Medicaid and Local Government Audits AUDITREJ?0RT YEAR FOR THE ENDED JUNE 30, 1996 EFFINGHAM COUNTY EXTENDED CARE FACILITY .l\fEDICAIDPROVIDERNUMBER O0l40907A NURSING FACILITIES SERVICES PROGRAM . TABLE OF CONTENTS LETTER OF TRANSMITTAL i INTRODUCTION 1 II FINDINGS AND RECOMMENDATIONS 5 Summary of Audit 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 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 February 27, 1998 Members of the Board of Medical Assistance, and The Honorable Dr. William R. Taylor, Commissioner Department of Medical Assistance 2 Peachtree Street, N.W., Suite 27-100 Atlanta, Georgia 30303 Ladies and Gentlemen: This report provides the results of our audit of Effingham County Extended Care Facility, provider number 00140907A, 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. CLV/lcblbw Respectfully Submitted, ~~ Claude L. Vickers State Auditor 1996 Audit Report: Effingham County Extended Care Facility 1 INTRODUCTION General Information Provider 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 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. Effingham County Extended Care Facility, a I05-bed long-term health care facility located in Springfield, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facilities Services Program. The facility provides both skilled and intermediate care services to resident patients. The Hospital Authority of Effingham 2 Nursing Facilities Services Program Audit Objectives County operated both Effingham Hospital and Effingham County Extended Care Facility in the same physical facility during the year under review. The purpose of this audit was to detennine whether Effingham County Extended Care Facility 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 detennine whether Effingham County Extended Care Facility 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 ofthis audit were to: detennine 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 detennine if the patient day statistics are accurately reported; detennine if the provider meets the requirements for classification as a hospital-based nursing home outlined in DMA Policies and Procedures for, Nursing Facility Services, Section 1002.l(g); and 1996 Audit Report: Effingham County Extended Care Facility 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. Allowable costs reported on the Nursing Home Cost Report include both direct costs of the nursing facility and indirect costs allocated to it from Effingham 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 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 4 Nursing Facilities Services Program will be reflected in the Medicaid cost report in the year the Medicare cost report is final-settled. The Department ofAudits and Accounts is responsible for providing the Department ofMedical Assistance with infonnation regarding the accuracy of cost and patient data for Effingham County Extended Care Facility 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: Effingham County Extended Care Facility 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 Procedures/or Nursing Facility Services, Section 1002.1(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 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 Salaries and Employee Benefits Contracted Services Dues and Subscriptions Employee Benefits Lease Expense Medical Records Forms Recruiting Repairs and Maintenance Supplies Travel Expense $ (63,434) (63,809) (845) (6,123) (2,416) (193) (6,872) (2,287) (3,521) (2,395) $ (151,895) 6 Nursing Facilities Services Program Special Services Cable Television Travel Expense Dietary Tube Feeding Supplies Laundry and Housekeeping Employee Benefits Operation and Maintenance of PIant Cable Television Repairs and Maintenance Administrative and General Administrative Salaries and Employee Benefits Contracted Services Dues and Subscription Lease Expense Medical Records Forms Recruiting Expense Supplies Travel Expense Property and Related Expenses Lease Expense Tube Feeding Supplies Total Adjustments to Allowable Costs $ 209 (1,293) $ (209) 2,287 (1,084) 4,578 6,123 2,078 $ 63,434 63,809 .845 534 193 6,872 3,521 3,688 142,896 $ 1,882 (4,578) (2,696) $ 0 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 1996 Audit Report: Effingham County Extended Care Facility 7 adjustment to remove the non-patient care expenses from allowable costs. (HCFA Pub.15-1 Sections 2102.1, 2106.1, DMA Policies and Procedures Sections 902, 1002.1(k ITEMS Advertising Cable Television Hospital Costs Prescription Drugs $ (15,232) (806) (13,989) (29,279) $ (59,306) COST CENTER Routine Services Special Services Laundry and Housekeeping Operation and Maintenance of Plant Total Adjustment to Allowable Costs $ (27,114) (29,279) (2,107) (806) $====(5:=:9:=,30:=6:=:) Lack ofSufficient Documentation Finding No.4 Some of the expenses included in allowable costs were not 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 Sections 2304, 2313.2) 8 Nursing Facilities Services Program COST CENTER Routine Services $==(=:1=,6=27=) Patient Day Statistics Finding No.5 Census records examined during the audit showed that the nursing home had 37,804 patient days of service rather than the 37,710 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 Department of Medical Assistance make the adjustment of 94 days to correct the statistical information. (HCFA Pub. 15-1 Section 2304) 1996 Audit Report: Effingham County Extended Care Facility 9 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 4 Lack of Sufficient Documentation Special Services 2 Incorrect Expense Classifications 3 Costs Not Related to Patient Care Dietary 2 Incorrect Expense Classifications Laundry and Housekeeping 2 Incorrect Expense Classifications 3 Costs Not Related to Patient Care Operation and Maintenance ofPlant 2 Incorrect Expense Classifications 3 Costs Not Related to Patient Care Administrative and General 2 Incorrect Expense Classifications $ (151,895) (27,114) (1,627) $ (180,636) $ (1,084) (29,279) (30,363) 4,578 $ 6,123 (2,107) 4,016 $ 2,078 (806) 1,272 142,896 10 Nursing Facilities Services Program FINDING NUMBER ALLOWABLE COSTS Property and Related Expenses 2 Incorrect Expense Classifications Total Audit Findings Affecting Allowable Costs PATIENT DAY STATISTICS 5 Increase in Patient Day Statistics (2,696) $=====(=6=0,=9=3=3=) 94 1996 Audit Report: Effingham County Extended Care Facility 11 SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS ALLOWABLE COSTS COST REPORT TOTALS FIELD AUDIT FINDINGS AUDITED TOTALS Routine Services $ 1,505,895 $ (180,636) $ 1,325,259 Special Services 65,236 (30,363) 34,873 Dietary 558,468 4,578 563,046 Laundry and Housekeeping 233,763 4,016 237,779 Operation and Maintenance ofPlant 170,582 1,272 171,854 Administrative and General 331,998 142,896 474,894 Property and Related Expenses 304,341 (2,696) 301,645 Total Allowable Costs $ 3,170,283 $ (60,933) $ 3,109,350 PATIENT DAY STATISTICS 37,710 94 37,804