Audit report, for the year ended June 30, 1995, Nursecare of Atlanta, Inc., Medicaid provider no. 00142183A, Nursing Facilities Services Program

GA
Aioo,M4
RI . &;iiaiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii:iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii:iiiiiiiiiiii:iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii:iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii:iiiiiiiiiiii:iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~
N75
ifff4;,9s . DEPARTMENT OF AUDITS AND ACCOUNTS .
. Medicaid and LocalGovernment Audits

.

AUDIT REPORT .

. FOR THE YEAR :ENDED JUNE 30, 1995

.NURSECARE OF ATLANtA, INC.

. MEDiCAIDPROVIDERNUMBER 00142183A

NURSING FACILITIES$ERVICESPROGRAM

TABLE OF CONTENTS
LETTER OF TRANSMITTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
IN"TRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FIN"DINGS AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . 4 Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 8 Schedule ofAllowable Costs and Patient Day Statistics 10

Report Prepared By:
State ofGeorgia Department ofAudits and Accounts Medicaid andLocal 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 10, 1997

Members ofthe 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 ofNursecare of Atlanta, Inc., provider number 00142183A, 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 Setvices Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,

CLV/rr/by

Claude L. Vickers State Auditor

1995 Audit Report: Nursecare of Atlanta, Inc.

1

INTRODUCTION

General Informati.on

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 in_dividuals 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

Nursecare of Atlanta, Inc., a 220-bed long-term health care facility located in Atlanta, 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

2

Nursing Facilities Services Program

Audit Objectives

facility was operated as a freestanding nursing home for the year ended June 30, 1995.

The purpose of this audit was to determine whether Nursecare of Atlanta, Inc., 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 Nursecare of Atlanta, Inc., 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: Nursecare of Atlanta, Inc.

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 disclosure~ 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 Nursecare of Atlanta, Inc., 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

Nm-sing Facilities Services Program

FINDINGS AND RECOMMENDATIONS

Finding No.1

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. I5-1 Section 2304)

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

$

(5,923)

(457)

(883)

(860)

(133)

(1,861)

Total Adjustment to Allowable Costs

$===(]!!:::!:0!:2:J:!:J!:::7=)

Finding No.2

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.
(OMA Policies and Procedures, Appendix D)

199S Audit Report: Nursecare of Atlanta, Inc.

5

COST CENTER Routine Services Communication Expense Dietary Supplements Housekeeping Supplies Telephone Order Forms Dietary Copier Supplies Dietary Supplements Holiday Meal Housekeeping Supplies Laundry and Housekeeping Housekeeping Supplies Operation and Maintenance ofPlant Copier Supplies Administrative and General Communication Expense Copier Supplies Holiday Meal Liability Insurance Mortgage Loan Amortization Telephone Order Forms Vehicle Tag Fee Property and Related Expenses Communication Expense Liability Insurance Mortgage Loan Amortization Vehicle Tag Fee
Total Adjustment to Allowable Costs

$

(187)

(142)

(3,739)

(118) $

$

(41)

142

505

(147)

$

875

2,791

(505)

21,933

(6,420)

118

(61)

$

(688)

(21,933)

6,420

61

$

(4,186)
459 3,886 (2,750)
18,731
06,140)
Q

Finding No. 3

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

6

Nursing Facilities Services Program

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 902.2, 2I02.1, 2102.3; DMA Policies and Procedures Section I002.l (k))

ITEMS
Advertising Alcoholic Beverages Owner Compensation Reimbursement to Patients Tax Penalties and Late Fees

$

{8,530)

(553)

(780)

(838)

(4,734)

$===(]!:::=5:t:4::!:=3~5=)

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

$

{2,698)

{I, 186)

(359)

(64)

(11,128)

$ ,15 435)

Finding No. 4

Office Audit Adjustment Reversal
An adjustment was made during the office audit to increase allowable costs related to advertising by $3,639. Documentation examined during the audit showed that this adjustment should not have been made. We recommend that the Department of Medical Assistance make the following adjustment to reverse the office audit adjustment.

COST CENTER Administrative and General

$.====='3=6~3==9=)

1995 Audit Report: Nursecare of Atlanta, Inc.

7

Finding No. 5

Excess Depreciation

Documentation examined during the audit in support of fixed assets and depreciation showed that either the property was not included in the proper class or depreciation was not calculated in accordance with OMA guidelines. OMA Policies and Procedures require the use ofminimum required asset lives. We recommend that the provider implement policies and procedures to ensure that depreciation expense is calculated in accordance with OMA guidelines. We recommend that the Department of Medical Assistance make the following adjustment to reduce allowable costs claimed by the amount of depreciation expense claimed in excess of the total allowable.
(DMA Depreciation Guidelines, DMA Policies and Procedures Section l002. l (k))

COST CENTER Property and Related Expenses

$==::::::!c!(J=:8!:!::!6=:!]::z:::}

Finding No. 6

Patient Trust Fund Not in Balance
Documentation examined during the audit showed that the provider manages funds belonging to its patients. The assets ofthe patient trust fund at June 30, 1995, totaled $39,187.76; patient trust fund liabilities were $40,841.30. 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 reimburse the patient trust fund for this shortage. 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 reimburses the shortage in the patient trust fund and implements the policies and procedures necessary to maintain a balanced, reconciled patient trust fund.
(42 CFR483.I0C(4))

8

Nursing Facilities Services Program

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

I

Lack of Sufficient Documentation

2

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

Special Services

I

Lack of Sufficient Documentation

Dietary

I

Lack of Sufficient Documentation

2

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

Laundry and Housekeeping

I

Lack of Sufficit:mt Documentation

2

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

Operation and Maintenance o(Plant

I

Lack of Sufficient Documentation

2

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

$

(5,923)

(4,186)

(2,698) $

$

(883)

459

(1,186)

$

(860)

3,886

(359)

$

(133)

(2,750)

(64)

(12,807) (457)
(1,610) 2,667 (2,947)

1995 Audit Report: Nursecare of Atlanta, Inc.

9

FINDING NUMBER

ALLOWABLE COSTS

Administrative and General

I

Lack of Sufficient Documentation

2

Incorrect Expense Classifications

3

Costs Not Related to Patient Care

4

Office Audit Adjustment Reversal

$

(1,861)

18,731

(11,128)

(3,639)

2,103

Propertv and Related Expenses

2

Incorrect Expense Classifications

5

Excess Depreciation

$ (16,140) (1,861)

(18,001)

Total Audit Findings Affecting Allowable Costs

$====(3=1=,0=52=)

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

= ~

COST REPORT TOTALS

OFFICE AUDIT
FINDINGS ill

FIELD AUDIT FINDINGS

AUDITED TOTALS

ALLOWABLE COSTS

Routine Services

$ 2,796,263 $

(952) $ (12,807) $ 2,782,504

Special Services

260,137

(793)

(457)

258,887

Dietary

675,756

(63)

(1,610)

674,083

Laundry and Housekeeping

423,182

(1,167)

2,667

424,682

Operation and Maintenance of Plant

404,768

(237)

(2,947)

401,584

Administrative and General

650,773

(66,571)

2,103

586,305

Property and Related Expenses

594,350

(36,937)

(18,001)

539,412

21!
C
~s

Total Allowable Costs

$ 5,8Q5,229 $ (106,720) $ (31,052) $ 5,636,405

PATIENT DAY STATISTICS

78~61

78!261

a:~ -n--1

00

t'D

:-n !

~

(I) An office audit of the provider was perfonned before this field audit. The results of the office audit are included in this column for infonnational purposes.

d'"=

rQ

~ a