Audit report, for the year ended June 30, 1995, Emanuel County Nursing Home, Medicaid provider no. 00140929A, Nursing Facilities Services Program

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''l'lli-'l DEPARTMENT OF AUDITS AND ACCOUNTS Medicaid and Local Government Audits
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AUDIT REPORT . FOR THE YEAR ENDED JUNE 30, 1995
EMANUEL COUNTY NURSING HOME
MEDICAID PROVIDER NUMBER 00140929A NURSING FACILITIES SERVICES 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.
Stale 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

LAUDE 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

May 21, 1997

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 Emanuel County Nursing Home, provider number 00140929A, a participant in the Nursing Facilities Services Program for the year ended June 30, 1995. This report is intended to be used solely in connection with the administration of the Georgia Department ofMedical Assistance Nursing Facilities Services Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,

CLV/lcb/by

Claude L. Vickers State Auditor

1995 Audit Report: Emanuel County 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

Emanuel County Nursing Home, a 49-bed long-term health care facility located in Swainsboro, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facilities Services Program. The facility provides both skilled and intermediate care services to resident

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Nursing Facilities Services Program

Audit Objectives

patients. Emanuel County Hospital Authority operated both Emanuel County Hospital and Emanuel County Nursing Home in the same physical facility during the year under review.

The purpose ofthis audit was to determine whether Emanuel County Nursing Home 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, 1995; and to determine whether Emanuel County 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

outlined in DMA Policies and Procedures for Nursing

Facility Services, Section 1002.1 (g); and

1995 Audit Report: Emanuel County Nursing Home

3

Scope and Methodology



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
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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 Emanuel County 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

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Nursing Facilities Services Program

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 Emanuel County Nursing Home for the year 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: Emanuel County 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 Procedures for Nursing Facility Services, Section 1002.1 (g).

Finding No.2

Incorrect Expense 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 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 Salaries and Employee

Benefits

$ (20,440)

Maintenance Salaries and Employee

Benefits

(14,964)

Supplies

29 196 $

Special Services

Contracted Services

$

5,001

Supplies

2 648

Laundry and Housekeeping

Supplies

$

486

Linen

26,136

(6,208) 7,649 26,622

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Nursing Facilities Services Program

Operation and Maintenance of Plant

Contracted Services

$ (2,400)

Maintenance Salaries and Employee

Benefits

14 964

Administrative and General

Administrative Salaries and Employee

Benefits

$ 20,440

Contracted Services

(2,601)

Linen

(26,136)

Supplies

(32,330)

12,564 (40,627)

Total Adjustment to Allowable Costs

$====~

Finding No. 3

Fixed Asset Purchases Claimed as Expense
Allowabie costs claimed included purchases of assets which are considered to be capital additions to property under generally accepted accounting principles. The Uniform Chart of Accounts issued by DMA provides for inclusion of such assets in property accounts. We recommend that the provider implement policies and procedures to ensure that all purchases of fixed assets are shown on the cost report as capital additions. We recommend that the Department of Medical Assistance make the following adjustment to reduce allowable costs by the amount of purchased assets claimed as expense and to increase allowable costs by depreciation allowable.
(HCFA Pub. 15-1 Section 108; DMA Policies and Procedures, Appendix D)

COST CENTER Operation and Maintenance of Plant Cost of Fixed Equipment Cost of Leasehold Improvements Property and Related Expenses Allowable Depreciation Expense
Total Adjustment to Allowable Costs

$ (12,660) (8,728) $

(21,388)

544

$.====::!,(~20~84:!::::4!::i!:::)

1995 Audit Report: Emanuel County Nursing Home

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Finding No. 4

Costs Not Related to Patient Care

Allowable costs claimed included payments for state association dues, 50% of the cost of which was 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 2102.3, 2102.1; DMA Policies and Procedures Section 1002.1 (k))

COST CENTER Administrative and General

$===='~5:!:!:3:::!::1~>

Finding No. 5

Patient Trust Funds Commingled with Provider Funds
Documentation examined during the audit showed that the provider manages funds belonging to its patients. This documentation also showed that the patient trust funds had been commingled with the provider's funds. Federal law requires that the system for accounting for residents' personal funds must preclude any commingling of resident funds with facility funds or with the funds of any person other than another resident. We recommend that the provider implement policies and procedures to ensure that patients' personal funds are not commingled with other funds. We also recommend that the Department of Medical Assistance ensure that the provider separates the patients' personal funds from all other funds.
(42 CFR 483.10C(4)(I))

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Nursing Facilities Services Program

Finding No. 6

Patient Trust Fund Not in Balance
Documentation examined during the audit showed that the provider manages funds belonging to its patients. The assets ofthe patient trust fund at June 30, 1995, totaled $1,689.48; patient trust fund liabilities were $1,741.28. Federal law requires that 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 reimburse the patient trust fund for this shortage. We further recommend that the provider implement policies and procedures to maintain a balanced, reconciled patient trust fund. We also recommend that the Department of Medical Assistance ensure that the provider reimburses the shortage in the patient trust fund and implements the policies and procedures necessary to maintain a balanced, reconciled patient trust fund.
(42 CFR 483. I0C(4))

1995 Audit Report: Emanuel County Nursing Home

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SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER.

ALLOWABLE COSTS

Routine Services

2

Incorrect Expense Classifications

$

Special Services

2

Incorrect Expense Classifications

Laundry and Housekeeping

2

Incorrect Expense Classifications

Operation and Maintenance ofPlant

2

Incorrect Expense Classifications

$

12,564

,,
:)

Fixed Asset Purchases Claimed as Expense

(21,388)

Administrative and General

2

Incorrect Expense Classifications

4

Costs Not Related to Patient Care

$ (40,627) (531)

Property and Related Expenses

3

Fixed Asset Purchases Claimed as Expense

Total Audit Findings Affecting Allowable Costs

$

(6,208) 7,649 26,622
(8,824)
(41,158) 544
(21,375)

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Nursing Facilities Services Program

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

ALLOWABLE COSTS Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance ofPlant Administrative and General Property and Related Expenses

COST REPORT TOTALS

FIELD AUDIT FINDINGS

AUDITED TOTALS

$ 974,056 $ (6,208) $ 967,848

0

7,649

7,649

225,699

225,699

189,709

26,622

216,331

107,525

(8,824)

98,701

264,996

(41,158)

223,838

96,914

544

97,458

Total Allowable Costs

$ 1,858,899 $ (21,375) $ 1,837,524

PATIENT DAY STATISTICS

17,699

17,699