Audit report, for the year ended June 30, 1995, Pulaski Nursing Home, Medicaid provider no. 00142656A, Nursing Facilities Services Program

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: ..... . . . . AUDIT<REPORT

FOR THE YEAR ;ENDED JUNE.30, 1995

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PULASKI NURSING HOME>

MEDICAID PROVIDER NUMBER 00142656A NURSING FACILlTIESSERVICES PROGRAM

TABLE OF CONTENTS
LETTER OF TRANSMITTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FINDINGS AND RECOMMENDATIONS ................... 3 Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 9 Schedule of Allowable Costs and Patient Day Statistics 11

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

CLAUDE L. VICKERS
STATE AUDITOR

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facsimile (404) 656-7535
April 16, 1996

Members of the Board of Medical Assistance, and The Honorable Marge Smith, Commissioner Department ofMedical Assistance 2 Peachtree Street, N.W., Suite 27-100 Atlanta, Georgia 30303
Ladies and Gentlemen:
This report provides the results of our audit of Pulaski Nursing Home, provider number 00142656A, 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.
Respectfully Submitted,
~
Claude L. Vickers State Auditor
CLV/mo/by

1995 Audit Report: Pulaski Nursing Home

1

INTRODUCTION

Provider Information

Pulaski Nursing Home is an 89-bed long-term health care facility located in Pulaski, Georgia. The facility provides both skilled and intermediate care services to resident patients. The facility was owned by TT&B Enterprises and operated as a component of Taylor & Bird Incorporated, a chain organization which filed a Home Office Cost Report with OMA for the year ended June 30, 1995.

Audit Objectives

The purpose of this audit was to determine whether Pulaski Nursing Home, a provider enrolled in the Georgia Medicaid Nursing Facilities Services (NFS) Program, 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 Pulaski Nursing Home complied with the federal and state laws, regulations, policies and procedures for the NFS 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;

2
Scope and Methodology

Nursing Facilities Services Program



determine if patient day statistics included in the cost

report are accurately reported; and



recommend appropriate action based on the results of

our audit.

To accomplish these objectives, 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 performed a limited review of the provider's internal control structure to the extent necessary to plan our audit. 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 DMA Policies and Procedures for Nursing Facility Services.

1995 Audit Report: Pulaski Nursing Home

3

Finding No. I

FINDINGS AND RECOMMENDATIONS

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 Contracted Services Workers' Compensation Insurance Expense Working Capital Interest Expense Dietary Repairs and Maintenance Workers' Compensation Insurance Expense Laundry and Housekeeping Workers' Compensation Insurance Expense Operation and Maintenance of Plant Contracted Services Repairs and Maintenance Workers' Compensation Insurance Expense Administrative and General Contracted Services Liability Insurance Expense Repairs and Maintenance Workers' Compensation Insurance Expense Working Capital Interest Expense

$

(235)

(976) (772} $

$

(293)

1 093

$

505

794

14

$

(270)

1,759

(501)

(189) 772

(1,983) 800 58
1,313
1,571

4

Nursing Facilities Services Program

Property and Related Expenses Liability Insurance Expense
Net Adjustment to Allowable Costs

(1,759) $========

Finding No.2

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.
(HCFAPub. 15-1 Section2302.l)

Adjustments to Balance Sheet Accounts:

Allowable Costs

June 30, 1994 Balance Accounts Payable
June 30, 1995 Balance Prepaid Expenses
Total Adjustment to Allowable Costs

$=====(3=7==9:=:6:i!:::)
$===4=4:!::!:!5= $ = = = ' ~ 3:!!: 35==]==)

1995 Audit Report: Pulaski Nursing Home

5

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

$

(2,809)

(427)

(337)

389

(167)

$==='~3::t:!3~5::::::!1::,!::)

Finding No.3

Allocationsfrom Home Office

The provider was a component of a chain organization for the year ended June 30, 1995. As a result of our audit of the home office cost report filed in connection with the Medicaid Nursing Home Facilities Program, we recommended that the Department of Medical Assistance make adjustments to the allowable costs claimed by the home office. We recommend that the provider and its home office implement policies and procedures to ensure that only allowable costs are allocated from the home office to the provider. We recommend that the Department of Medical Assistance make the following adjustment to correct allowable costs to reflect the allocation of the adjustments made to the home office cost report.
(HCFA Pub. 15-1 Section 2150)

COST CENTER Routine Services Directly Allocated Costs Dietary Directly Allocated Costs Laundry and Housekeeping Directly Allocated Costs Operation and Maintenance of Plant Directly Allocated Costs

$

8,799

1,249

1,058

266

6

Nursing Facilities Services Program

Administrative and General Directly Allocated Costs Pooled Costs Allocation Statistics Administrative Expenses Non-Capital Related Interest Expense
Property and Related Expenses Allocation Statistics Pooled Capital Related Interest Expense
Net Adjustment to Allowable Costs

$

74

(18,149) (467)

(251}

$

(571)

(741}

$

(18,793)
(1,312} (8 133)

Finding No.4

Costs Misclassified as Nurse Aide Testing and Training Costs
An adjustment was made during cost report preparation to remove nurse aide testing and training expenses from allowable costs. Documentation examined during the audit showed that some ofthese costs were not incurred to provide nurse aide testing and training services. 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 costs shown on the cost report as nurse aide testing and training expenses were incurred to provide nurse aide testing and training services. We recommend that the Department of Medical Assistance make the following adjustment to reverse a portion of the provider's adjustment.
(HCFA Pub. 15-1 Section 2304)
COST CENTER Routine Services

1995 Audit Report: Pulaski Nursing Home

7

Finding No. 5

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.15-1 Sections 2102.3, 2139; DMA Policies and Procedures Section 1002.1 (k))

ITEMS Association Dues (50%) Charitable Contributions Penalties Political Contributions

$

(43)

(50)

(1,158)

(133)

$

(J 384)

COST CENTER Administrative and General

$

(] 384)

Finding No. 6

Patient Day Statistics
Census records examined during the audit showed that the nursing home had 29,059 patient days of service rather than the 28,989 shown on the cost report. 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 accumulate accurate patient day statistics. We recommend that the Department of Medical Assistance make the adjustment of 70 days to correct the statistical information.
(HCFA Pub. 15-1 Section 2304)

8

Nursing Facilities Services Program

Finding No. 7

Accounts Receivable Credit Balances
Documentation examined during the audit showed that the provider had numerous credit balances in its individual accounts receivable. Credit balances in the facility's accounts receivable result from overpayments for services provided to its patients. The $6,744.14 shown in the following table represents overpayments from the Department of Medical Assistance that had not been resolved as of February 16, 1996. 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 payer. We also recommend that the Department ofMedical Assistance review this matter and recover any overpayments identified.

Patient Name
Beard, Thomas W. Cadle, Mize Gilliland, Alma Godbee, Mary Hines, Sidney Hood, J. W. Hutcheson, James Jackson, John P. Johnson, Marie Kennedy, Durward Little, William McCormick, Charlie Mercer, Clem Rich, Henry Ross, Mabel Suton, Jerry
Total

Balance

$

434.96

217.96

35.56

1,000.93

245.00

2,591.77

108.98

217.72

109.76

163.47

304.60

1,253.27

36.16

1.00

12.00

11.00

$ 6144 14

1995 Audit Report: Pulaski Nursing Home

9

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

$

(1,983)

2

Accrual Basis of Accounting

(2,809)

3

Allocations from Home Office

8,799

4

Costs Misclassified as Nurse Aide Testing and

Training Costs

6 262 $

Dietary

1

Incorrect Expense Classifications

2

Accrual Basis of Accounting

3

Allocations from Home Office

$

800

(427)

1 249

Laundry and Housekeeping

1

Incorrect Expense Classifications

2

Accrual Basis of Accounting

3

Allocations from Home Office

$

58

(337)

1 058

Operation and Maintenance o[Plant

1

Incorrect Expense Classifications

2

Accrual Basis of Accounting

3

Allocations from Home Office

$

1,313

389

266

10,269 1,622
779 1,968

Nursing Facilities Services Program

FINDING NUMBER

ALLOWABLE COSTS

Administrative and General

1

Incorrect Expense Classifications

2

Accrual Basis of Accounting

3

Allocations from Home Office

4

Costs Not Related to Patient Care

$

1,571

(167)

(18,793)

(1,384)

(18,773)

Property and Related Expenses

1

Incorrect Expense Classifications

2

Allocations from Home Office

$

(1,759)

(1,312)

(3,071)

Net Audit Findings Affecting Allowable Costs

$==:::::!:::(::7:=,2=0=6=)=

PATIENT DAY STATISTICS

5 Increase in Patient Day Statistics

70

1995 Audit Report: Pulaski Nursing Home

11

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

AUDIT FINDINGS

AUDITED TOTALS

$ 746,624 $

10,269 $ 756,893

47,482

47,482

207,826

1,622

209,448

100,213

779

100,992

107,573

1,968

109,541

273,110

(18,773)

254,337

72,836

(3,071)

69,765

Total Allowable Costs

$ 1,555,664 $

(7,206) $ 1,548,458

PATIENT DAY STATISTICS

28,989

70

29,059