Audit report, for the year ended June 30, 1999, Nursecare of Atlanta, Inc., Medicaid provider no. 00142183A, Nursing Facilities Services Program [June 30, 1999]

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:l~4~-~EPARTMENT OF AUDITS AND ACCOUNTS

Medicaid and Local Government Audits.

.

.

AUDIT REPORT

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FOR THE YEAR ENDED JUNE 30, 1999 .

NURSECARE Olr ATLANTA,INC.

. MEDICAID PROVIDERNUMBER 00142183A NURSING FACILITY SERVICES PROGRAM .

1999 Audit Report: Nursecare of Atlanta. Inc.

1

INTRODUCTION

General Information

The Georgia Medical Assistance Program (Medicaid) is administered by the Department of Community Health 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 Community Health 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 Community Health or its agents. In an agreement with the Department of Community Health, 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 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, 1999.

2

Nursing Facility Services Program

Audit Objectives

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, 1999; and to determine whether Nursecare of Atlanta, Inc., 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

1999 Audit Report: Nursecare of Atlanta, Inc.

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 Care Financing Administration Provider Reimbursement Manual (HCFA Pub. 15-1) and DCH Policies and Procedures for Nursing Facility Services.

The Department of Audits and Accounts is responsible for providing the Department of Community Health with information regarding the .accuracy of cost and patient data for Nursecare of Atlanta, Inc., for the year ended June 30, 1999. If the Department of Community Health 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 Community Health 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 ofthis 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 ofthe expenses were not classified in accordance with the Uniform Chart of Accounts prescribed by the Department of Community Health 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 Community Health make the following adjustment to reclassify costs to the appropriate cost centers.
(DCH Policies and Procedures, Appendix D)

COST CENTER
Routine Services Insurance Expense Supplies
Special Services Insurance Expense Salaries and Employee Benefits
Dietary Insurance Expense
Laundry and Housekeeping Insurance Expense Supplies
Operation and Maintenance of Plant Insurance Expense
Administrative and General Insurance Expense Salaries and Employee Benefits
Property and Related Expenses Insurance Expense
Total Adjustment to Allowable Costs

$ (10,443) (11,303) $

(21,746)

$ (1,125) (71,942)

(73,067)

(1~285)

$ (1,446) 11,303

9,857

(321)

$ 10,037 71,942

81,979

4,583

$- - - - -0

1999 Audit Report: Nursecare of Atlanta, Inc.

5

Costs Not Related to Patient Care

Finding No. 2

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 Community Health make the following adjustment to remove the non-patient care expenses from allowable costs.
(HCFA Pub.15-1 Sections 203, 2102.3, OCH Policies and Procedures Section 1002.l(k))

ITEMS Advertisements Alcoholic Beverages Interest Expense Lab fees and X-ray Expense

(18,349) (365)
(26,410) (11,868)

$=======(=5=6=,=9=9=2==)

COST CENTER Routine Services Special Services Administrative and General Property and Related Expenses
Total Adjustment to Allowable Costs

$

(11,868)

(7,757)

(10,957)

(26,410)

$======(=5=6=,=9=9=2=)

Finding No. 3

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

'

6

Nursing Facility Services Program

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 Community Health 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:
June 30, 1999 Balance Inventory

Allowable Costs
$_ _ _(5_,3__84_)

COST CENTER Routine Services Dietary Operation and Maintenance of Plant Administrative and General
Total Adjustment to Allowable Costs

$

(957)

(660)

(100)

(3,667)

$====(5=,3=84==)

Recalculation ofAncillary Services Cost Adjustment

Finding No. 4

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-lA of the cost report. Documentation examined during the audit showed that certain corrections were necessary to amounts reported on Schedule B-lA as total cost per books, total charges, and Medicaid charges. These findings required the recalculation of Schedule B-lA. A copy of this recalculation has been furnished to the provider. We recommend that the provider implement policies and procedures to ensure that all information

1999 Audit Report: Nursecare of Atlanta. Inc.

7

used to calculate the ancillary services cost adjustment is correct. We recommend that the Department of Community Health make the following adjustment to increase allowable costs for the net effect ofthe recalculation.
(General Instructions to the Cost Report)

Ancillary Services
Physical Therapy Speech Therapy Oxygen Occupational Therapy
COST CENTER Special Services

Adjustment Per Cost Report

Recalculated Adjustment Audit Finding

$ (199,252) $ (198,254) $

(93,184)

(93,492)

(6,815)

(6,789)

(170,961)

(169,843)

998 (308)
26 1,118

$ (470,212) $ (468,378) $

1,834

$

1,834

Expense Reimbursements

Finding No. 5

Documentation examined during the audit showed that amounts shown on the cost report as revenues were from sales of materials and/or services, the cost of which were included in allowable costs claimed. Federal regulations provide that amounts received for discounts, allowances, refunds and rebates are not to be considered a form of income but should be used to reduce the specific costs to which they apply. We recommend that the provider implement policies and procedures to ensure that allowable costs claimed are reduced by any expense reimbursements received.

8

Nursing Facility Services Program

We recommend that the Department of Community Health make the following adjustment to reduce allowable costs cl~med by expense reimbursements shown as revenues.
(HCFA Pub. 15-1 Section 800)

COST CENTER Dietary

$_ _ _(3_08...).

Allocation ofIndirect Expenses to Non-Patient Care Areas

Finding No. 6

The provider uses a portion of its building for purposes which are not related to patient care. Indirect expenses related to the non-patient care use of the building are calculated on Schedule B-5 of the cost report. Documentation examined during the audit showed that certain corrections were necessary to amounts reported on Schedule B-5 as allowable costs and square footage. These findings required the recalculation of Schedule B-5. A copy of this recalculation has been furnished to the provider. We recommend that the provider implement policies and procedures to ensure that all information used to allocate indirect expenses to non-patient care areas is correct. We recommend that the Department of Community Health make the following adjustment to decrease allowable costs for the net effect of the recalculation.
(HCFA Pub. 15-1 Section 2102.3; General Instructions to the Cost Report)

COST CENTER Laundry and Housekeeping Operation and Maintenance of Plant Property and Related Expenses
Total Adjustment to Allowable Costs

$

(1,362)

(1,382)

(1,431)

$=====-==(4=-,=1=7=5=)

1999 Audit Report: Nursecare of Atlanta. Inc.

9

Lack ofSufficient Documentation

Finding No. 7

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 Community Health make the following adjustment to remove the undocumented expenses from allowable costs.
(HCFA Pub. 15-1 Section2304)

COST CENTER Administrative and General

$_ _ _(2_00_)

Excess Compensation

Finding No. 8

Allowable costs claimed included compensation to employees which exceeded DCH maximum limitations. The Department of Community Health annually calculates allowable salary ceilings for various positions as well as maximum fees allowable for medical and corporate directors. We recommend that the provider implement policies and procedures to ensure that compensation to its employees which exceeds the DCH maximum limitations is excluded from allowable costs claimed. We recommend that the Department of Community Health make the following adjustment to reduce allowable costs by the amount of compensation paid in excess of the DCH guidelines, plus related employer's share of payroll taxes.
(DCH Compensation Ceilings; HCFA 15-906)

10

Nursing Facility Services Progr.am

Position Title Administrator Assistant Administrator
Payroll Taxes Accounting Supervisor
Payroll Taxes Directors

Total

Guideline

ComEensation Ceiling (A)

$

89,991 $

84,803 $

60,608

50,271

4,407

3,846

40,799

34,562

3,045

2,644

12,000

1,618

Excess (5,188)
(10,337) (561)
(6,237) (401)
(10,382)

$

210,850 $ 177,744 $

(33,106)

COST CENTER Administrative and General

(33,106)

Cost Report Adjustment Reversal

Finding No. 9

An adjustment was made during cost report preparation to reduce Administrative and General costs. Documentation examined during the audit showed that the provider adjustment exceeded amount required by Department of Community Health Policies and Procedures. 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 adjustments made during cost report preparation are accurate. We recommend that the Department of Community Health make the following adjustment to reverse a portion of the provider adjustment.
(HCFA Pub. 15-1 Section 2304)

COST CENTER Administrative and General

$- - - - -875

1999 Audit Report: Nursecare of Atlanta. Inc.

11

Accounts Receivable Credit Balances

Finding No. 10

Documentation examined during the audit showed that the provider had credit balances in its individual accounts receivable. Credit balances in the facility's accounts receivable result from overpayments for services provided to its patients. Overpayments from the Department of Community Health totaling $2,808 had not been resolved as of February 8, 2000. 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 Community Health review this matter and recover any overpayments identified.

Patient Day Statistics
Finding The provider stated on the. cost report that it furnished 75,015 patient days of No. 11 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. 12

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, 1997, totaled $58,636; patient trust fund liabilities were $62,034. 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 implement policies and procedures to maintain a balanced, reconciled patient trust fund. A deposit was made by the provider during our audit to reimburse the patient trust fund for this shortage.
(42 CFR483.IOC(4))

12

Nursing Facility Services Program

Accounts Payable Not Reconciled

Finding No. 13

Documentation examined during the audit showed that the accounts payable ledger could not be reconciled to the general ledger. Federal regulations provide that cost information as developed by the provider must be current, accurate, and sufficiently detailed to support payments made for services rendered to beneficiaries. We recommend that the provider implement policies and procedures necessary to maintain a reconciled accounts payable ledger.
(HCFA Pub 15-1 Section 108: OCH Policies and Procedures, Appendix D)

1999 Audit Report: Nursecare of Atlanta3Inc.

13

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

3

Accrual Basis ofAccounting

$

(21,746)

(11,868)

(957) $

Special Services

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

4

Ancillary Service Adjustment

$

(73,067)

(7,757)

1,834

Dietary

1

Incorrect Expense Classifications

3

Accrual Basis ofAccounting

5

Expense Reimbursements

$

(1,285)

(660)

(308)

Laundry and Housekeeping

1

Incorrect Expense Classifications

6

Allocation of Indirect Expenses to

Non-Patient care areas

$

9,857

(1,362)

(34,571) (78,990)
(2,253) 8,495

14

Nursing Facility Services Program

FINDING
NUMBER

ALLOWABLE COSTS

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

3

Accrual Basis of Accounting

6

Allocation of Indirect Expenses to

Non-Patient care areas

$

(321)

(100)

(1,382)

Administrative and General

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

3

Accrual Basis of Accounting

7

Lack of Sufficient Documentation

8

Excess Compensation

9

Cost Report Adjustment Reversal

$

81,979

(10,957)

(3,667)

(200)

(33,106)

875

(1,803) 34,924

Propertv and Related Expenses

1

Incorrect Expense Classifications

2

Costs Not Related To Patient Care

6

Allocation of Indirect Expenses to

Non-Patient care areas

$

4,583

(26,410)

(1,431)

(23,258)

Total Audit Findings Affecting Allowable Costs

$ (97,456)

1999 Audit Report: Nursecare of Atlanta. Inc.

15

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

ALLOWABLE COSTS

COST REPORT TOTALS

Routine Services

$ 3,199,473

Special Services

369,235

Dietary

863,537

Laundry and Housekeeping

471,378

Operation and Maintenance ofPlant

488,722

Administrative and General Property and Related Expenses

709,112 527,222

FIELD AUDIT FINDINGS

AUDITED TOTALS

$

(34,571) $ 3,164,902

(78,990)

290,245

(2,253)

861,284

8,495

479,873

(1,803)

486,919

34,924 (23,258)

744,036 503,964

Total Allowable Costs

$ 6,628,679 $

(97,456) $ 6,531,223

PATIENT DAY STATISTICS

75,015

75,015

1999 Audit Report: Nursecare of Atlanta. Inc.

1

INTRODUCTION

General Information

The Georgia Medical Assistance Program (Medicaid) is administered by the Department of Community Health 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 Community Health 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 Community Health or its agents. In an agreement with the Department of Community Health, 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 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, 1999.

2

Nursing Facility Services Program

Audit Objectives

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, 1999; and to determine whether Nursecare of Atlanta, Inc., 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

1999 Audit Report: Nursecare of Atlanta, Inc.

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 Care Financing Administration Provider Reimbursement Manual (HCFA Pub. 15-1) and DCH Policies and Procedures for Nursing Facility Services.

The Department of Audits and Accounts is responsible for providing the Department of Community Health with information regarding the .accuracy of cost and patient data for Nursecare of Atlanta, Inc., for the year ended June 30, 1999. If the Department of Community Health 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 Community Health 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 ofthis 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 ofthe expenses were not classified in accordance with the Uniform Chart of Accounts prescribed by the Department of Community Health 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 Community Health make the following adjustment to reclassify costs to the appropriate cost centers.
(DCH Policies and Procedures, Appendix D)

COST CENTER
Routine Services Insurance Expense Supplies
Special Services Insurance Expense Salaries and Employee Benefits
Dietary Insurance Expense
Laundry and Housekeeping Insurance Expense Supplies
Operation and Maintenance of Plant Insurance Expense
Administrative and General Insurance Expense Salaries and Employee Benefits
Property and Related Expenses Insurance Expense
Total Adjustment to Allowable Costs

$ (10,443) (11,303) $

(21,746)

$ (1,125) (71,942)

(73,067)

(1~285)

$ (1,446) 11,303

9,857

(321)

$ 10,037 71,942

81,979

4,583

$- - - - -0

1999 Audit Report: Nursecare of Atlanta, Inc.

5

Costs Not Related to Patient Care

Finding No. 2

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 Community Health make the following adjustment to remove the non-patient care expenses from allowable costs.
(HCFA Pub.15-1 Sections 203, 2102.3, OCH Policies and Procedures Section 1002.l(k))

ITEMS Advertisements Alcoholic Beverages Interest Expense Lab fees and X-ray Expense

(18,349) (365)
(26,410) (11,868)

$=======(=5=6=,=9=9=2==)

COST CENTER Routine Services Special Services Administrative and General Property and Related Expenses
Total Adjustment to Allowable Costs

$

(11,868)

(7,757)

(10,957)

(26,410)

$======(=5=6=,=9=9=2=)

Finding No. 3

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

'

6

Nursing Facility Services Program

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 Community Health 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:
June 30, 1999 Balance Inventory

Allowable Costs
$_ _ _(5_,3__84_)

COST CENTER Routine Services Dietary Operation and Maintenance of Plant Administrative and General
Total Adjustment to Allowable Costs

$

(957)

(660)

(100)

(3,667)

$====(5=,3=84==)

Recalculation ofAncillary Services Cost Adjustment

Finding No. 4

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-lA of the cost report. Documentation examined during the audit showed that certain corrections were necessary to amounts reported on Schedule B-lA as total cost per books, total charges, and Medicaid charges. These findings required the recalculation of Schedule B-lA. A copy of this recalculation has been furnished to the provider. We recommend that the provider implement policies and procedures to ensure that all information

1999 Audit Report: Nursecare of Atlanta. Inc.

7

used to calculate the ancillary services cost adjustment is correct. We recommend that the Department of Community Health make the following adjustment to increase allowable costs for the net effect ofthe recalculation.
(General Instructions to the Cost Report)

Ancillary Services
Physical Therapy Speech Therapy Oxygen Occupational Therapy
COST CENTER Special Services

Adjustment Per Cost Report

Recalculated Adjustment Audit Finding

$ (199,252) $ (198,254) $

(93,184)

(93,492)

(6,815)

(6,789)

(170,961)

(169,843)

998 (308)
26 1,118

$ (470,212) $ (468,378) $

1,834

$

1,834

Expense Reimbursements

Finding No. 5

Documentation examined during the audit showed that amounts shown on the cost report as revenues were from sales of materials and/or services, the cost of which were included in allowable costs claimed. Federal regulations provide that amounts received for discounts, allowances, refunds and rebates are not to be considered a form of income but should be used to reduce the specific costs to which they apply. We recommend that the provider implement policies and procedures to ensure that allowable costs claimed are reduced by any expense reimbursements received.

8

Nursing Facility Services Program

We recommend that the Department of Community Health make the following adjustment to reduce allowable costs cl~med by expense reimbursements shown as revenues.
(HCFA Pub. 15-1 Section 800)

COST CENTER Dietary

$_ _ _(3_08...).

Allocation ofIndirect Expenses to Non-Patient Care Areas

Finding No. 6

The provider uses a portion of its building for purposes which are not related to patient care. Indirect expenses related to the non-patient care use of the building are calculated on Schedule B-5 of the cost report. Documentation examined during the audit showed that certain corrections were necessary to amounts reported on Schedule B-5 as allowable costs and square footage. These findings required the recalculation of Schedule B-5. A copy of this recalculation has been furnished to the provider. We recommend that the provider implement policies and procedures to ensure that all information used to allocate indirect expenses to non-patient care areas is correct. We recommend that the Department of Community Health make the following adjustment to decrease allowable costs for the net effect of the recalculation.
(HCFA Pub. 15-1 Section 2102.3; General Instructions to the Cost Report)

COST CENTER Laundry and Housekeeping Operation and Maintenance of Plant Property and Related Expenses
Total Adjustment to Allowable Costs

$

(1,362)

(1,382)

(1,431)

$=====-==(4=-,=1=7=5=)

1999 Audit Report: Nursecare of Atlanta. Inc.

9

Lack ofSufficient Documentation

Finding No. 7

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 Community Health make the following adjustment to remove the undocumented expenses from allowable costs.
(HCFA Pub. 15-1 Section2304)

COST CENTER Administrative and General

$_ _ _(2_00_)

Excess Compensation

Finding No. 8

Allowable costs claimed included compensation to employees which exceeded DCH maximum limitations. The Department of Community Health annually calculates allowable salary ceilings for various positions as well as maximum fees allowable for medical and corporate directors. We recommend that the provider implement policies and procedures to ensure that compensation to its employees which exceeds the DCH maximum limitations is excluded from allowable costs claimed. We recommend that the Department of Community Health make the following adjustment to reduce allowable costs by the amount of compensation paid in excess of the DCH guidelines, plus related employer's share of payroll taxes.
(DCH Compensation Ceilings; HCFA 15-906)

10

Nursing Facility Services Progr.am

Position Title Administrator Assistant Administrator
Payroll Taxes Accounting Supervisor
Payroll Taxes Directors

Total

Guideline

ComEensation Ceiling (A)

$

89,991 $

84,803 $

60,608

50,271

4,407

3,846

40,799

34,562

3,045

2,644

12,000

1,618

Excess (5,188)
(10,337) (561)
(6,237) (401)
(10,382)

$

210,850 $ 177,744 $

(33,106)

COST CENTER Administrative and General

(33,106)

Cost Report Adjustment Reversal

Finding No. 9

An adjustment was made during cost report preparation to reduce Administrative and General costs. Documentation examined during the audit showed that the provider adjustment exceeded amount required by Department of Community Health Policies and Procedures. 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 adjustments made during cost report preparation are accurate. We recommend that the Department of Community Health make the following adjustment to reverse a portion of the provider adjustment.
(HCFA Pub. 15-1 Section 2304)

COST CENTER Administrative and General

$- - - - -875

1999 Audit Report: Nursecare of Atlanta. Inc.

11

Accounts Receivable Credit Balances

Finding No. 10

Documentation examined during the audit showed that the provider had credit balances in its individual accounts receivable. Credit balances in the facility's accounts receivable result from overpayments for services provided to its patients. Overpayments from the Department of Community Health totaling $2,808 had not been resolved as of February 8, 2000. 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 Community Health review this matter and recover any overpayments identified.

Patient Day Statistics
Finding The provider stated on the. cost report that it furnished 75,015 patient days of No. 11 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. 12

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, 1997, totaled $58,636; patient trust fund liabilities were $62,034. 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 implement policies and procedures to maintain a balanced, reconciled patient trust fund. A deposit was made by the provider during our audit to reimburse the patient trust fund for this shortage.
(42 CFR483.IOC(4))

12

Nursing Facility Services Program

Accounts Payable Not Reconciled

Finding No. 13

Documentation examined during the audit showed that the accounts payable ledger could not be reconciled to the general ledger. Federal regulations provide that cost information as developed by the provider must be current, accurate, and sufficiently detailed to support payments made for services rendered to beneficiaries. We recommend that the provider implement policies and procedures necessary to maintain a reconciled accounts payable ledger.
(HCFA Pub 15-1 Section 108: OCH Policies and Procedures, Appendix D)

1999 Audit Report: Nursecare of Atlanta3Inc.

13

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

3

Accrual Basis ofAccounting

$

(21,746)

(11,868)

(957) $

Special Services

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

4

Ancillary Service Adjustment

$

(73,067)

(7,757)

1,834

Dietary

1

Incorrect Expense Classifications

3

Accrual Basis ofAccounting

5

Expense Reimbursements

$

(1,285)

(660)

(308)

Laundry and Housekeeping

1

Incorrect Expense Classifications

6

Allocation of Indirect Expenses to

Non-Patient care areas

$

9,857

(1,362)

(34,571) (78,990)
(2,253) 8,495

14

Nursing Facility Services Program

FINDING
NUMBER

ALLOWABLE COSTS

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

3

Accrual Basis of Accounting

6

Allocation of Indirect Expenses to

Non-Patient care areas

$

(321)

(100)

(1,382)

Administrative and General

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

3

Accrual Basis of Accounting

7

Lack of Sufficient Documentation

8

Excess Compensation

9

Cost Report Adjustment Reversal

$

81,979

(10,957)

(3,667)

(200)

(33,106)

875

(1,803) 34,924

Propertv and Related Expenses

1

Incorrect Expense Classifications

2

Costs Not Related To Patient Care

6

Allocation of Indirect Expenses to

Non-Patient care areas

$

4,583

(26,410)

(1,431)

(23,258)

Total Audit Findings Affecting Allowable Costs

$ (97,456)

1999 Audit Report: Nursecare of Atlanta. Inc.

15

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

ALLOWABLE COSTS

COST REPORT TOTALS

Routine Services

$ 3,199,473

Special Services

369,235

Dietary

863,537

Laundry and Housekeeping

471,378

Operation and Maintenance ofPlant

488,722

Administrative and General Property and Related Expenses

709,112 527,222

FIELD AUDIT FINDINGS

AUDITED TOTALS

$

(34,571) $ 3,164,902

(78,990)

290,245

(2,253)

861,284

8,495

479,873

(1,803)

486,919

34,924 (23,258)

744,036 503,964

Total Allowable Costs

$ 6,628,679 $

(97,456) $ 6,531,223

PATIENT DAY STATISTICS

75,015

75,015