bA NAioo.m4 ~iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~ G;3 ffl1~i DEPARTMENT OF AUDITS AND ACCOUNTS Medicaid and Local Government Audits AUDIT REPORT FOR THE YEAR ENDED JUNE 30~ 1995 GATEWAY HEALTH CARE CENTER MEDICAID PROVIDER NUMBER 00140786A . NURSING FACILITIES 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 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 January 27, 1998 Members of the Board ofMedical Assistance, and The Honorable Dr. William R. Taylor, Commissioner Department of Medical Assistance 2 Peachtree Street, N.W., 40th Floor Atlanta, Georgia 30303 JJ Ladies and Gentlemen: This report provides the results ofour audit of Gateway Health Care Center, provider number 00140786A, 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, L~ Claude L. Vickers State Auditor CLV/ja/bw 1995 Audit Report: Gateway Health Care Center 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 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. Provider Information Gateway Health Care Center, a 60-bed long-term health care facility located in Cleveland, 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 owned by Retirement Care Associates, Inc., and operated as a component of Capitol Care Management Company, Inc., a chain organization which filed a Home Office Cost Report with DMA for the year ended June 30, 1995. The purpose of this audit was to determine whether Gateway Health Care Center 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 Gateway Health Care Center 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; and recommend appropriate action based on the results of our audit. 1995 Audit Report: Gateway Health Care Center 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 DMA Policies and Procedures for Nursing Facility Services. The Department of Audits and Accounts is responsible for providing the Department ofMedical Assistance w!th information regarding the accuracy of cost and patient data for Gateway Health Care Center 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. J Lack ofSufficient Documentation 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 Section 2304) COST CENTER Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance of Plant Administrative and General Property and Related Expenses Total Adjustment to Allowable Costs $ (27,340) (10,055) (3,520) {5,163) (5,184) {4,734) (1,452) $======(=5=7'=44=8==) 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 of Medical Assistance for providers participating in the Medicaid Nursing Facilities Services Program. We recommend that the provider implement 1 1995 Audit Report: Gateway Health Care Center 5 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 Dietary Supplements Supplies Dietary Dietary Supplements Operation and Maintenance ofPlant Supplies Administrative and General Supplies $ (165) 113 $ (52) 165 (370) 257 Total Adjustment to Allowable Costs $=======0= Finding No.3 Fixed Asset Purchases Claimed as Expense Allowable costs claimed included the purchase of an air conditioning unit which is considered to be a capital addition to property under generally accepted accounting principles. The Uniform Chart of Accounts issued by OMA 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) 6 Nursing Facilities Services Program COST CENTER Operation and Maintenance ofPlant Cost ofFixed Equipment Property and Related Expenses Allowable Depreciation Expense Total Adjustment to Allowable Costs $ (2,678) 179 $==(=2=,4=99=) Finding No.4 Allocationsfrom Home Office The provider was a component of a chain organization for the year ended June 30, 1995. As a result of our audit of the home office cost report filed in connection with the Medicaid Nursing Home Facilities Program, we recommended that the Department ofMedical Assistance make adjustments to the allowable costs claimed by the home office. We recommend that the provider and its home office implement policies and procedures to ensure that only allowable costs are allocated from the home office to the provider. We recommend that the Department of Medical Assistance make the following adjustment to correct allowable costs to reflect the allocation of the adjustments made to the home office cost report. (HCFA Pub. 15-1 Section 2150) COST CENTER Administrative and General Pooled Costs Administrative Expenses $===(=6=21=) Finding No. 5 Patient Day Statistics Census records examined during the audit showed that the nursing home had 21,489 , patient days of service rather than the 21,522 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 1995 Audit Report: Gateway Health Care Center 7 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 33 days to correct the statistical information. (HCFA Pub. 15-1 Section 2304) 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 of the patient trust fund at June 30, 1995, totaled $1,041.54; patient trust fund liabilities were $633.58. 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 return these excess funds to the appropriate parties. We further recommend that the provider implement policies and procedures to maintain a balanced, reconciled patient trust fund. We also recommend that the Department ofMedical Assistance ensure that the provider returns the excess funds and implements the policies and procedures necessary to maintain a balanced, reconciled patient trust fund.. (42 CFR483.10C(4)) Finding No. 7 Accounts Receivable Credit Balances Documentation examined during the audit showed that the provider had numerous credit balances in its individual accounts receivable. Credit balances in the facility's accounts receivable result from overpayments for services provided to its patients. The $15,785.16 shown in the following table represents overpayments from the Department of Medical Assistance that had not been resolved as of September 30, 1997. We recommend that the provider review its credit accounts receivable and refund overpayments to the appropriate party. We further recommend 8 Nursing Facilities Services Program that the provider implement policies and procedures to ensure that overpayments on patients' accounts are promptly refunded to the payor. We also recommend that the Department ofMedical Assistance review this matter and recover any overpayments identified. Patient Name Adams, Willie Allen, Martha Allison, Ione Bailey, Olga Haynes, Hazel Iveste, Barbara Martin, Joan Morrison, Rosa Taylor, Evelyn Thompson, Clifford Total Balance $ 386.43 826.69 10,198.98 2,655.36 402.81 492.42 174.88 314.88 99.77 232.94 $ 152785.16 1995 Audit Report: Gateway Health Care Center 9 SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS FINDING NUMBER ALLOWABLE COSTS Routine Services 1 Lack of Sufficient Documentation 2 Incorrect Expense Classifications $ (27,340) (52) $ Special Services 1 Lack of Sufficient Documentation Dietary 1 Lack of Sufficient Documentation 2 Incorrect Expense Classifications $ (3,520) 165 Laundry and Housekeeping 1 Lack of Sufficient Documentation Operation and Maintenance ofPlant 1 Lack of Sufficient Documentation $ (5,184) 2 Incorrect Expense Classifications (370) 3 Fixed Asset Purchases Claimed As Expense (2,678) Administrative and General 1 Lack of Sufficient Documentation 2 Incorrect Expense Classifications 4 Allocations From Home Office $ (4,734) 257 (621) (27,392) (10,055) (3,355) (5,163) (8,232) (5,098) 10 Nursing Facilities Services Program FINDING NUMBER ALLOWABLE COSTS 1 Lack of Sufficient Documentation $ (1,452) 3 Fixed Asset Purchases Claimed As Expense 179 (1,273) Total Audit Findings Affecting Allowable Costs $ (60,568) PATIENT DAY STATISTICS 5 Decrease in Patient Day Statistics (33) SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS ........ COST REPORT TOTALS OFFICE AUDIT FINDINGS (1) NATT AUDIT FINDINGS (2) FIELD AUDIT FINDINGS AUDITED TOTALS ALLOWABLE COSTS Routine Services $ 703,602 $ 19,217 $ (27,392) $ 695,427 Special Services 45,430 (10,055) 35,375 Dietary 184,109 (3,355) 180,754 Laundry and Housekeeping 146,807 (5,163) 141,644 Operation and Maintenance of Plant 115?924 (8,232) 107,692 Administrative and General 161,929 (5,098) 156,831 Property and Related Expenses 169,626 $ (2,513) (1,273) 165,840 Total Allowable Costs $ 1,527,427 $ (2,513) $ 19,217 $ (60,568) $ 1,483,563 PATIENT DAY STATISTICS 21,522 (33) ===== 21,489 ( J) An office audit of the provider was performed before this field audit. The results of the office audit are included in this column for informational purposes. (2) A Nurse Aide Testing and Training (NATT) audit of the provider was performed before this field audit. The results of the NATT audit are included in this column for informational purposes.