Audit report, for the year ended June 30, 1996, Glenvue Nursing Home, Medicaid provider no. 00141171A, Nursing Facilities Services Program [June 30, 1996]

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DEPARTMENT OF AUDITS AND ACCOUNTS
Medicaid and Local Government Audits

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AUDIT REPORT

FOR THE YEAR ENDED JUNE 30, 1996

GLENVUE NURSING HOME

MEDICAID PROVIDERNUMBER 00141171A 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 8 Schedule of Allowable Costs and Patient Day Statistics 9

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 11, 1999

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
Ladies and Gentlemen:
This report provides the results of our audit of Glenvue Nursing Home, provider number 00141171A, 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.
Respectfully Submitted,
~~
Claude L. Vickers State Auditor
CLV/sw/bw

1996 Audit Report: Glenvue 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 ofGeorgia 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

Glenvue Nursing Home, a 160-bed long-term health care facility located in Glennville, 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

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Nursing Facilities Services Program

Audit Objectives

facility was operated as a freestanding nursing home by Dutton Enterprises, Inc., for the year ended June 30, 1996.

The purpose of this audit was to determine whether Glenvue 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, 1996; and to determine whether Glenvue 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; and



recommend appropriate action based on the results of

our audit.

1996 Audit Report: Glenvue Nursing Home

3

Scope and Methodology

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.
In accordance with Section 1002 of Policies and Procedures for Nursing Facility Services, the Department ofMedical Assistance has calculated the payment rate for Glenvue Nursing Home using a method often called the ''Dodge Index system". Under the Dodge Index system, reasonable construction and asset acquisition costs are used in calculating the payment rate rather than the actual costs incurred by the nursing home for property costs such as depreciation and amortization; capital-related interest expense; and lease expense. Because these property costs are not considered by the Department of Medical Assistance when calculating the payment rate for Glenvue Nursing Home, our audit did not include a review of these costs. However, because property taxes and insurance are used by the Department of Medical Assistance to calculate the provider's payment rate, we have reviewed those costs as part of our audit.

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Nursing Facilities Services Program

The Department ofAudits and Accounts is responsible for providing the Department ofMedical Assistance with information regarding the accuracy of cost and patient data for Glenvue Nursing Home 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 ofthe 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: Glenvue Nursing Home

5

FINDINGS AND RECOMMENDATIONS

Finding No.1

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 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 Consulting Services Linens Supplies Special Services Supplies Laundry and Housekeeping Linens Operation and Maintenance ofPlant Supplies Administrative and General Consulting Services Supplies

$

(270)

(3,615)

(3,620) $

$

3,620

270

(7,505) (130) 3,615 130
3,890

Total Adjustment to Allowable Costs

$

0

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

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Nursing Facilities Services Program

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, 2106.1)

ITEMS Cable Television Non-employee Christmas Bonus

$

(1,010)

(100)

$==(=1=,1=10=)

COST CENTER Special Services

$===(=1.=11=0==)

Finding No. 3

Accounts Receivable Credit Balances
Documentation examined during the audit showed that the provider had 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 $2,616.41 shown in the following table represents overpayments from the Department of Medical Assistance that had not been resolved as of June 30, 1996. We'recommend that the provider review its credit accounts receivable and refund overpayments to the appropriate party. We further recommend 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 of Medical Assistance review this matter and recover any overpayments identified.

1996 Audit Report: Glenvue Nursing Home

7

Patient Name
Bell, Lavauna Carroll, Ethleen Durrence, Opal Spivey, Vida
Total

Balance

$

23.00

2,533.00

7.52

52.89

$ 2l616.41

Patient Day Statistics

Finding No. 4

The provider stated on the cost report that it furnished 58,502 patient days of service. Census records examined during the audit showed that the patient days shown on the cost report were accurate.

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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

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

$

$

(130)

(1,110)

(7,505) (1,240)

Laundry and Housekeeping

1

Incorrect Expense Classifications

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

Administrative and General

1

Incorrect Expense Classifications

3,615 130
3,890

Total Audit Findings Affecting Allowable Costs

$

(1,110)

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

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1.0 1.0

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COST

OFFICE

FIELD

~

REPORT

AUDIT

AUDIT

AUDITED

"C 0

ALLOWABLE COSTS Routine Services Special Services

TOTALS FINDINGS FINDINGS TOTALS

$ 1,568,494 96,935

$ (7,505) $ 1,560,989

{1,240)

95,695

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Dietary Laundry and Housekeeping

503,973 229,156

3,615

503,973 232,771

(JQ
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Operation and Maintenance of Plant

161,268

130

161,398

Administrative and General

315,473 $ (10,333)

3,890

309,030

Property and Related Expenses

307,301

307,301

Total Allowable Costs

$ 3,182,600 $ (10,333) $ (1,110) $ 3,171,157

PATIENT DAY STATISTICS

58,502

58,502