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Medicaid and Local GOvernrnent Audits 
 
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: .....   . .  . . AUDIT<REPORT 
 
FOR THE YEAR ;ENDED JUNE.30, 1995 
 
. 
 
 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