Audit report, for the year ended June 30, 1995, Muscogee Manor, Medicaid provider no. 00142117A, Nursing Facilities Services Program

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DEPARTMENT OF AUDITS AND ACCOUNTS Medicaid and Local Government Audits

.

. . . AUDIT .REPORT

FORTHE YEAR ENDED JUNE 30, 1995

MUSCOGEE MANOR

MEDICAID PROVIDERNUMBER00l42117A 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 11 Schedule of Allowable Costs and Patient Day Statistics 13

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 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

July 1, 1997

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 of Muscogee Manor, provider number

00142117A, 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.

Re,d~~

Claude L. Vickers State Auditor

CLV/kr/by

1995 Audit Report: Muscogee Manor

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

Muscogee Manor, a 242-bed long-term health care facility located in Columbus, 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 facility was

2 Audit Objectives

Nursing Facilities Services Program
operated by the Hospital Authority of Columbus, Georgia as a freestanding nursing home for the year ended June 30, 1995.

The purpose ofthis audit was to determine whether Muscogee Manor 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 Muscogee Manor 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: Muscogee Manor

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 OMA 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 Muscogee Manor 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 Employee Benefits Liability Insurance Expense Supplies Special Services Employee Benefits Supplies Dietary Employee Benefits Liability Insurance Expense Laundry and Housekeeping Employee Benefits Liability Insurance Expense Supplies Operation and Maintenance ofPlant Employee Benefits Gasoline Maintenance Contracts Administrative and General Employee Benefits Gasoline Liability Insurance Expense Maintenance Contracts Pagers Supplies

$

2,988

(554)

85 541 $

$

355

(1261175}

$

1,338

(82}

$

484

(102)

39 185

$

927

(1,169)

31222

$ (3,407) 1,039 2,630 (2,863) 1,274 1 288

87,975 (125,820)
1,256 39,567 2,980
(39)

1995 Audit Report: Muscogee Manor

5

Property and Related Expenses Employee Benefits Liability Insurance Expense Pagers

$ (1,510) (2,221) (1,434)

(5,165)

Total Adjustment to Allowable Costs

$===::!::::!75==4=

(1) A total of $754 was reclassified from a personal care home which does not receive Medicaid reimbursement and, therefore, was not included in this report.

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.IS-I Sections 2102.1, 2102.3, 2122.2, 2136.2; DMA Policies and Procedures Section 1002.l(k))

ITEMS Advertising Association Dues (50%) Donations Flowers Personal Care Home Repairs Tax Penalty

$

1,664

228

133

58

3,001

134

194

$

5 412

6

Nursing Facilities Services Program

COST CENTER Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance ofPlant Administrative and General
Total Adjustment to Allowable Costs

$

(1,565)

(195)

(242)

(263)

(208)

(2,939)

$==='11::=5:=4:::::1!::!!!2~}

Finding No.3

Expenses Recorded by a Related Facility

Costs reported by a related personal care home included workers' compensation insurance expense applicable to this provider. Federal regulations provide that cost infonnation 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 and the related personal care home implement policies and procedures to ensure that all costs are included in allowable costs of the facility to which they apply. We recommend that the Department of Medical Assistance . make the following adjustment to increase allowable costs by the amount of expense applicable to this provider which was recorded by the related personal care home.
(HCFA Pub. 15-1 Section 2304)

COST CENTER Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance of Plant Administrative and General

$

14,852

1,835

2,596

2,550

671

127

Total Adjustment to Allowable Costs

$==~2:!::2!:::6!:!::3::!]=

1995 Audit Report: Muscogee Manor

7

Finding No.4

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 Administrative and General

$

(231)

(2,691)

Total Adjustment to Allowable Costs

Finding No. 5

Recalculation ofAncillary Services Cost Adjustment
The provider received revenues from the sale of ancillary services to patients; therefore, allowable costs for special services are limited to the maximum allowable cost calculated on Schedule B-1 A ofthe cost report. Documentation examined during the audit showed that certain corrections were necessary to amounts reported on Schedule B-IA as total cost per books, total charges, Medicaid charges, total patient days, and Medicaid patient days. These findings required the recalculation of Schedule B-IA. A copy ofthis recalculation has been furnished to the provider. We recommend that the provider implement policies and procedures to ensure that all information used to calculate the ancillary services cost adjustment is correct. We recommend that the Department ofMedical Assistance make the following adjustment to increase allowable costs for the net effect of the recalculation.
(General Instructions to the Cost Report)

8

Nursing Facilities Services Program

Ancillary Services Physical Therapy Medical Supplies
COST CENTER Special Services

Adjustment Per Cost Report

Recalculated Adjustment Audit Finding

$ (165,952) $ (169,522) $

(13,893)

(8,804)

(3,570) 5,089

$ (]79 845) $ ()78 326) $

1 519

$

1 519

Finding No. 6

Accrual Basis ofAccounting

Documentation examined during the audit showed that amounts recorded for certain expenses did not reflect actual amounts incurred for the period under review. Federal regulations provide that expenditures ... are recorded in the period in which they are incurred, regardless of when they are paid. We recommend that the provider implement policies and procedures to ensure that costs are recorded in the period in which they are incurred. We recommend that the Department of Medical Assistance make the following adjustment to decrease allowable costs claimed for expenses not applicable to the year under review.
(HCFA Pub. 15-1 Section 2302.1)

Adjustments to Balance Sheet Accounts:

Allowable Costs

June 30, 1994 Balance Interest Payable

$==='2~5~5=:!9::c)

June 30, 1995 Balance Inventory
Total Adjustment to Allowable Costs

$====='5:!::!6:!::!:0::c) $.===(3====11!::=9::::c)

1995 Audit Report: Muscogee Manor

9

COST CENTER Laundry and Housekeeping Property and Related Expenses
Total Adjustment to Allowable Costs

$

(560)

(2,559)

$==='!ic=:3::=J:!:::::J!::::!:9::c)

Finding No. 7

Excess Vehicles

Documentation examined during the audit showed that expenses were claimed for five vehicles for the year under review. DMA guidelines allow a maximum of four vehicle for nursing homes of the size operated by the provider. We recommend that the provider implement policies and procedures to ensure that any costs incurred operating vehicles in excess of the maximum number allowable are excluded from reimbursable costs claimed. We recommend that the Department of Medical Assistance make the following adjustment to reduce allowable costs claimed for the depreciation, insurance, taxes, interest and operating expenses of vehicles operated in excess of the maximum number allowable.
(DMA Vehicle Guidelines)

COST CENTER Operation and Maintenance ofPlant Repairs and Maintenance Administrative and General Operating Expenses Property and Related Expenses Allowable Depreciation Expense

$

(600)

(107)

(1,575)

Total Adjustment to Allowable Costs

$===':!:!'12 ~2~82~)

Finding No. 8

Fixed Asset Purchases Claimed as Expense
Allowable costs claimed included purchases of assets which are considered to be capital additions to property under generally accepted accounting principles. The

10

Nursing Facilities Services Program

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 offixed assets are shown on the cost report as capital additions. We recommend that the Department ofMedical 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. I5-1 Section I08; DMA Policies and Procedures, Appendix D)

COST CENTER Administrative and General Cost ofMajor Moveable Equipment Property and Related Expenses Allowable Depreciation Expense

$

(589)

69

Total Adjustment to Allowable Costs

$.===:::!c(5~2~0==)

1995 Audit Report: Muscogee Manor

11

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

$

87,975

2

Costs Not Related to Patient Care

(1,565)

3

Expenses Recorded by a Related Facility

14,852

4

Lack of Sufficient Documentation

(231) $

Special Services

1

Incorrect Expense Classifications

$ (125,820)

2

Costs Not Related to Patient Care

(195)

3

Expenses Recorded by a Related Facility

1,835

5

Recalculation of Ancillary Services Cost

Adjustment

1 519

Dietary

1

Incorrect Expense Classifications

$

1,256

2

Costs Not Related to Patient Care

(242)

3

Expenses Recorded by a Related Facility

2 596

Laundry and Housekeeping

1

Incorrect Expense Classifications

$

39,567

2

Costs Not Related to Patient Care

(263)

3

Expenses Recorded by a Related Facility

2,550

6

Accrual Basis of Accounting

(560}

101,031 (122,661)
3,610 41,294

12

Nursing Facilities Services Program

FINDING NUMBER

ALLOWABLE COSTS

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

$

2,980

2

Costs Not Related to Patient Care

(208)

3

Expenses Recorded by a Related Facility

671

7

Excess Vehicles

(600)

Administrative and General

1

Incorrect Expense Classifications

$

(39)

2

Costs Not Related to Patient Care

(2,939)

3

Expenses Recorded by a Related Facility

127

4

Lack of Sufficient Documentation

(2,691)

7

Excess Vehicles

(107)

8

Fixed Asset Purchases Claimed as Expense

(589)

Property and Related Expenses

1

Incorrect Expense Classifications

$

(5,165)

5

Accrual Basis ofAccounting

(2,559)

7

Excess Vehicles

(1,575)

8

Fixed Asset Purchases Claimed as Expense

69

Total Audit Findings Affecting Allowable Costs

$

2,843
(6,238) (9,230) IO 649

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

OFFICE
AUDIT
FINDINGS ill.

NATT AUDIT FINDINGS (2}

FIELD AUDIT FINDINGS

AUDITED TOTALS

$ 2,757,333 362,262 848,454 $ 511,738 445,621 751,737 375,723

$ (7,539)
(761)

3,958 $ 101,031 $ 2,862,322

(122,661)

239,601

3,610

844,525

41,294

553,032

2,843

448,464

(6,238)

745,499

(9,230)

365,732

Ii UI > C
~ ~
I 0 l"'l

Total Allowable Costs

$ 6,052,868 $

(8,300) $

3,958 $ 10,649 $~059,175

PATIENT DAY STATISTICS

85,028

85!028

(I) 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.
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