<::,I\ . A.?:,OO,M4 f<.I .F55 I DEPARTMENT OF AIJDITS AND ACCOUNTS. Medicaid and Local Government Audits . . . . iuorr REPORT . FORTHE'YEA.RENDEllJUNE,30.1995 . . ' .. ' .. '.. '. .. : '. < ....... .. ': .. . . FITZGERALD NURSING HOME , M:F:1>1cim r&ovmt1i NUl\iB~RJ)o1409~5A . . . 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, ti'~~~ 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. 4 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]) 6 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 ........