Audit report, for the year ended June 30, 1998, Memorial Nursing Home, Medicaid provider no. 00141941A, Nursing Facilities Services Program [June 30, 1998]

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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, 1998

.MEMORIAL NURSINGHOME

.. MEDICAID PROVIDER NUMBER. 00141941A

NURSING FACiLITY.SERVICESPR.OGRAM

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TABLE OF CONTENTS
LETTER OF TRANSMITTAL .............................................................. i
INTRODUCTION ................................................................................... ~1
FINDINGS AND RECOMMENDATIONS ......................................... 4
Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 7 Schedule ofAllowable Costs and Patient Day Statistics ........................................... 8

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

RUSSELL W. HINTON
STATE AUDITOR

DEPARTMENT OF AUDITS AND ACCOUNTS
MEDICAID AND LOCAL GOVERNMENT AUDITS
254 Washington Street, S.W., Suite 322 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facsimile (404) 656-7535

MICHAEL A. PLANT
DIRECTOR

July 16, 1999

Members of the Board of Medical 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 Memorial Nursing Home, provider number 00141941A, a participant in the Nursing Facility Services Program fC?r the year ended June 30, 1998. This report is intended to be used solely in connection with the administration of the Georgia Department of Medical Assistance Nursing Facility Services Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,
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Russell W. Hinton State Auditor
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1998 Audit Report: Memorial 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
0
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

Memorial Nursing Home, a I 00-bed long-term health care facility located in Macon, 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 operated as a freestanding nursing home for the year ended June 30, 1998.

2

Nursing Facility Services Program

Audit Objectives

The purpose of this audit was to determine whether Memorial 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, 1998; and to determine whether Memorial 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.

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

1998 Audit Report: Memorial Nursing Home

3

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
Q
Care Financing Administration Provider Reimbursement Manual (HCFA Pub. 15-1) and OMA Policies and Procedures for Nursing Facility Services.
The Department of Audits and Accounts is responsible for providing the Department of Medical Assistance with information regarding the accuracy of cost and patient data for Memorial Nursing Home for the year ended June 30, 1998. 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

Incorrect Expense Classifications

Finding No. 1

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 Dietary Supplements Linens Subscription Service Supplies Dietary Dietary Supplements Supplies Laundry and Housekeeping Linens Operation and Maintenance ofPlant Rental Expense Supplies Administrative and General Insurance Expense Subscription Service Property and Related Expenses Insurance Expense Rental Expense
Total Adjustment to Allowable Costs

$ (32,574) (436) (500)
(4,498) $

(38,008)

$ 32,574 685

33,259

436

$

(166)

3,813

3,647

$

2,541

500

3,041

$

(2,541)

166

(2,375)

$

0

=====

1998 Audit Report: Memorial Nursing Home

5

Lack ofSufficient Documentation

Finding No. 2

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 Administrative and General Property and Related Expenses
Total Adjustment to Allowable Costs

$

(325)

(350)

(1,500)

$_ _ _(2_,_1_7_5_)

Costs Not Related to Patient Care

Finding No. 3

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 Section 2102.3)

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Nursing Facility Services Program

ITEMS Legal Fees Non-Emergency Transportation Expense
COST CENTER Operation and Maintenance of Plant Administrative and General Total Adjustment to Allowable Costs.

$

(611)

(500)

$

(1,111)

$

(500)

(611)

$

(1,111)

Patient Day Statistics

Finding No. 4

The provider stated on the cost report that it furnished 33,337 patient days of service. Census records examined during the audit showed that the patient days shown on the cost report were accurate.

Patient Trust Fund Not in Balance

Finding No. 5

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, 1998, totaled $10,303.25; patient trust fund liabilities were $5,630.48. 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 of Medical 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))

1998 Audit Report: Memorial Nursing Home

7

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

2

Lack of Sufficient Documentation

$

(38,008)

(325) $

Dietary

1

Incorrect Expense Classifications

Laundry and Housekeeping

1

Incorrect Expense Classifications

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

$

3,647

(500)

Administrative and General

1

Incorrect Expense Classifications

2

Lack of Sufficient Documentation

3

Costs Not Related to Patient Care

$

3,041

(350)

(611)

Propertv and Related Expenses

1

Incorrect Expense Classifications

2

Lack of Sufficient Documentation

$

(2,375)

(1,500)

Total Audit Findings Affecting Allowable Costs

$

(38,333) 33,259
436 3,147
2,080 (3,875) (3,286)

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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 ofPlant

Administrative and General

Property and Related Expenses

COST REPORT TOTALS

FIELD AUDIT FINDINGS

AUDITED TOTALS

1,177,621 $ 126,668 312,340 174,424 160,326 114,100 233,005

(38,333) $
33,259 436
3,147 2,080 (3,875)

1,139,288 126,668 345,599 174,860 163,473 116,180 229,130

Total Allowable Costs

$

2,298,484 $

(3,286) $ 2,295,198

PATIENT DAY STATISTICS

33,337

33,337