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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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