Audit report, for the six months ended June 30, 1997, Gray Nursing Home, Medicaid provider no. 00082992A, Nursing Facility Services Program [June 30, 1997]

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1191 DEPARTMENT OF AUDITS AND ACCOUNTS Medicaid and Local Government Audits
AUDIT REPORT FOR THE SIXl\iONTHS ENDED JUNE 30, 1997
GRAYNURSINGHOME
MEDICAID PROVIDER NUMBER 00082992A NURSING FACILITY SERVICES PROGRAM

TABLE OF CONTENTS

LETTER OF TRANSMITTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . .. i

IN"TRODUCTION

1

FIN"DIN"GS AND RECOMMENDATIONS

4

Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 7

Schedule of Allowable Costs and Patient D.ay Statistics 8

Report Prepared By:
State ofGeorgia Department ofAudits and Accounts Medicaid and Local Govemment Audits Division 254 Washington Street, S.W, Suite 322
Atlanta, Georgia 30334-8400 (404) 656-2006
Michael A. Plant, Director

CLAUDE 1.. 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

September 7, 1998

Members of the Board of Medical Assistance, and The Honorable Dr. William R. Taylor, 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 of Gray Nursing Home, provider number 00082992A, a participant in the Nursing Facility Services Program for the six months ended June 30, 1997. This report is intended to be used solely in connection with the administration of the Georgia Department ofMedical Assistance Nursing Facility Services Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,
~--~
Claude L. Vickers State Auditor
CLV/bw

1997 Audit Report: Gray Nursing Borne

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 Facility 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

Gray Nursing Home, a 58-bed long-term health care facility located in Gray, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facility Services Program. The facility provides both skilled and intermediate care services to resident patients. The facility was

2

Nursing Facility Services Program

Audit Objectives

owned and operated as a component of Care More Management Co., Inc., a chain organization which filed a Home Office Cost Report with DMA for the six months ended June 30, 1997.

The purpose of this audit was to determine whether Gray Nursing Home maintained adequate documentation to support the allowable costs and patient day statistics reported in its Nursing Home Cost Report for the six months ended June 30, 1997; and to determine whether Gray Nursing Home complied with the federal and state laws, regulations, policies and procedures for the Nursing Facility 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 Facility 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.

1997 Audit Report: Gray 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 DMA Policies 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 Gray Nursing Home for the six months ended June 30, 1997. 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 Facility Services Program

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 ofMedical Assistance make the following adjustment to reclassify costs to the appropriate cost centers.
(DMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Pre-Employment Costs Special Services Cable Television Operation and Maintenance of Plant Cable Television Travel Expense Lease Expense Administrative and General Insurance Expense Travel Expense Pre-Employment Costs Property and Related Expenses Insurance Expense Lease Expense

$

$

(228)

(224)

(1,526)

$

369

224

476

$

(369)

1,526

(476) 228
(1,978)
1,069 1,157

Total Adjustment to Allowable Costs

$

o

1997 Audit Report: Gray Nursing Home

5

Finding No.2

Allocations from Home Office

The provider was a component of a chain organization for the six months ended June 30, 1997. 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 Allocation Statistics

$

(2,767)

(266)

Total Adjustment to Allowable Costs

$,==(=:3=,0:=33=)

Finding No.3

Patient Day Statistics
The provider stated on the cost report that it furnished 9,824 patient days of service. Census records examined during the audit showed that the patient days shown on the cost report were accurate
(HCFA Pub. 15-1 Section 2304)

Finding No.4

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

6

Nursing Facility Services Program

accounts receivable result from overpayments for services provided to its patients. The $1,802.84 shown in the following table represents an overpayment from the Department of Medical Assistance that had not been resolved as of April I?, 1998. 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.

Patient Name Stanley, Frances L.

Balance $=::::::::S:::!1.=80=2:=.8::::::4

1997 Audit Report: Gray Nursing Home

7

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

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

Administrative and General

1

Incorrect Expense Classifications

2

Allocations from Home Office

$

1,069

(3,033)

Property and Related Expenses

1

Incorrect Expense Classifications

Total Audit Findings Affecting Allowable Costs

$

(476) 228 (1,978)
(1,964) 1,157 (3,033)

8

Nursing Facility Services Program

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

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

COST REPORT TOTALS

FIELD AUDIT FINDINGS

AUDITED TOTALS

$ 324,607 $ 6,731 89,942
49,559 54,104 98,818 47,827

(476) $ 228
(1,978) (1,964) 1,157

324,131 6,959 89,942
49,559 52,126 96,854 48,984

Total Allowable Costs

$ 671,588 $ (3,033) $ 668,555

PATIENT DAY STATISTICS

9,824

9,824