Audit report for the year ended June 30, 1995, Fitzgerald Nursing Home, Medicaid provider no.00140995A, Nursing Facilities Services Program

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DEPARTMENT OF AIJDITS AND ACCOUNTS.

Medicaid and Local Government Audits . .

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iuorr REPORT

. FORTHE'YEA.RENDEllJUNE,30.1995

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. FITZGERALD NURSING HOME

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. NURSING"FAGILITIES SERVICES .PROGRAM

TABLE OF CONTENTS
LETTER OF TRANSMITTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FINDINGS AND RECOMMENDATIONS ................... 4 Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 6 Schedule of Allowable Costs and Patient Day Statistics 7

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 ofMedical Assistance, and The Honorable Marge Smith, Commissioner Department ofMedical Assistance 2 Peachtree Street, N.W., 40th Floor Atlanta, Georgia 30303
Ladies and Gentlemen:
This report provides the results of our audit ofFitzgerald Nursing Home, provider number 00140995A, 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.

CLV/bc/by

Respectfully Submitted,
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Claude L. Vickers
State Auditor

1995 Audit Report: Fitzgerald 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

Fitzgerald Nursing Home, a 76-bed long-term health care facility located in Fitzgerald, 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

2

Nursing Facilities Services Program

Audit Objectives

facility was operated as a freestanding nursing home by Norkus, Inc., for the year ended June 30, 1995.

The purpose of this audit was to determine whether Fitzgerald 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 Fitzgerald 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 ifthe patient

day statistics are accurately reported; and



recommend appropriate action based on the results of

our audit.

1995 Audit Report: Fitzgerald Nursing Home

3

Scope and Methodology

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 DMAPolicies and Procedures for Nursing Facility Services.
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 Fitzgerald 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.

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Nursing Facilities Services Program

FINDINGS AND RECOMMENDATIONS

Finding No. I

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 Linen Dietary Repairs Laundry and Housekeeping Linen Operation and Maintenance ofPlant Repairs Administrative and General Telephone Property and Related Expenses Telephone

$ (1,207) (234) 1,207 234 1,834
(1,834)

Total Adjustment to Allowable Costs

$====0=

1995 Audit Report: Fitzgerald Nursing Home

5

Finding No.2

Costs Not Related to Patient Care

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 adjustment to remove the non-patient care expenses from allowable costs.
(HCFA Pub.15-1 Sections 2102.3, 2101.1; DMA Policies and Procedures Section 1002. l (k))

ITEMS Patient Gifts Physician Gifts

$

(720)

(751)

$

(J 47))

COST CENTER Special Services

$ ,1 47])

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Nursing Facilities Services Program

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

Special Services

2

Costs Not Related to Patient Care

Dietary

1

Incorrect Expense Classifications

Laundry and Housekeeping

1

Incorrect Expense Classifications

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

$

(1,207)

(1,471)

(234)

1,207

234

Administrative and General

1

Incorrect Expense Classifications

Property and Related Expenses

1

Incorrect Expense Classifications

Total Audit Findings Affecting Allowable Costs

1,834
(1,834) $==(=1=,4=71::6:)

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS Ii

COST

FIELD

,~UI
=>Q.

REPORT

AUDIT

AUDITED

TOTALS

FINDINGS

TOTALS

ALLOWABLE COSTS

Routine Services

$ 888,505

$

(1,207)

$

887,298

.,-tij

Special Services Dietary Laundry and Housekeeping

52,576 230,224 177,008

(1,471) (234) 1,207

51,105 229,990 178,215

Ii
-~

Operation and Maintenance ofPlant

151,216

234

151,450

rr

Administrative and General

246,287

1,834

248,121

Property and Related Expenses

142,826

(1,834)

140,992

Total Allowable Costs

$ IJ8_81__61_2

$

(1,471)

$ __J,8_8?) 71

PATIENT DAY STATISTICS

282260

28)60

........