Audit report, for the six months ended June 30, 1997, Riverside Nursing Center of Thomaston, Medicaid provider no. 00140346A, Nursing Facility Services Program [June 30, 1997]

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DEPARTMENT OF AUDITS AND ACCOUNTS Medicaid and Local Government Audits

AUDIT REPORT FORTHESIXIVIONTHS ENDED JUNE 30,1997 RIVERSIDEiNURSING CENTER OF THOMASTON
MEDICMD PROVIDER NUMBER00140346A NUR$ING FACILITY 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 8

Schedule of Allowable Costs and Patient Day Statistics 9

Report Prepared By:
State ofGeorgia Department ofAudits and Accounts Medicaid and Local Government Audits Division 254 Washington Street, S. Jr., Suite 322
Atlanta, Georgia 30334-8400 (404) 656-2006
Michael A. Plant, Director

CLAUDE L. VICKERS
STATEAUDITOR

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

September 8, 1998

Members of the Board of Medical Assistance, and The Honorable Dr. William R. Taylor, 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 Riverside Nursing Center of Thomaston, provider number 00140346A, a participant in the Nursing Facility Services Program for the six months ended June 30, 1997. This report is intended to be used solely in connection with the administration ofthe Georgia Department ofMedical Assistance Nursing Facility Services Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,
~~
Claude L. Vickers State Auditor
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1997 Audit Report: Riverside Nursing Center of Thomaston

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 ofGeorgia 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 ofMedical Assistance 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 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

Riverside Nursing Center of Thomaston, a 73-bed long-term health care facility located in Thomaston, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facility Services Program. The facility provides both skilled and intermediate care services to

2

Nursing Facility Services Program

Audit Objectives

resident patients. The facility was owned and operated as a component of Care More Management Co., Inc., a chain organization which filed a Home Office Cost Report with DMA for the six months ended June 30, 1997.

The purpose of this audit was to determine whether Riverside Nursing Center ofThomaston maintained adequate documentation to support the allowable costs and patient day statistics reported in its Nursing Home Cost Report for the six months ended June 30, 1997; and to determine whether Riverside Nursing Center of Thomaston 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.

1997 Audit Report: Riverside Nursing Center of Thomaston

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 DMA Policies and Procedures/or 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 Riverside Nursing Center of Thomaston for the six months ended June 30, 1997. 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 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

Finding No.1

Incorrect Expense Classifications

Documentation examined during the audit showed that some of the expenses were not classified in accordance with the Uniform Chart of Accounts prescribed by the Department of Medical 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 Workers Compensation Expense Dietary Workers Compensation Expense Laundry and Housekeeping Workers Compensation Expense Administrative and General Insurance Expense Lease Expense Workers Compensation Expense Property and Related Expenses Insurance Expense Lease Expense

$

$

513

(270)

1,149

$

(513)

270

(959) (93) (97)
1,392 (243)

Total Adjustment to Allowable Costs

$=====o=

Finding No.2

Self-insurance Reserve Fund
Documentation examined during the audit showed that allowable costs claimed included contributions to a self-funded trust for workers' compensation insurance.

1997 Audit Report: Riverside Nursing Center of Thomaston

5

Federal regulations provide that the amount oflosses paid by the fiduciary ofthe selfinsurance fund plus expenses related to these losses are allowable. We recommend that the provider implement policies and procedures to ensure that allowable expenses of the self-insurance reserve fund are included in the cost report. We recommend that the Department of Medical Assistance make the following adjustment to increase allowable costs that were paid by the self-insurance reserve fund.
(HCFA Pub. 15-1 Sections 2161, 2162)

COST CENTER Routine Services Dietary Laundry and Housekeeping Administrative and General

$

395

53

56

20

Total Adjustment to Allowable Costs

$=====5=24=

Finding No.3

Excess Compensation
Allowable costs claimed included compensationto employees which exceeded DMA maximum limitations. The Department of Medical Assistance 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 DMA maximum limitations is excluded from allowable costs claimed. We recommend that the Department of Medical Assistance make the following adjustment to reduce allowable costs by the amount of compensation paid in excess of the DMA guidelines, plus related employer's share of payroll taxes.
(DMA Compensation Ceilings; HCFA 15-906)

6

Nursing Facility Services Program

Position Title
Administrator Payroll Taxes

Total

Guideline

Compensation Ceiling (A)

Excess

$

35,782 $ 31,917 $

(3,865)

2,740

2,444

(296)

$

38,522 $ 34.361 $

(4,161)

(A) Ceilings have been adjusted to percentage of full-time, where applicable.

COST CENTER Administrative and General

(4,161)

Finding No.4

Allocationsfrom Home Office

The provider was a component of a chain organization for the six moths ended June 30, 1997. 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 ofMedical 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 Administrative and General Pooled Costs Administrative Expenses Allocation Statistics

$

(3,694)

(438)

Total Adjustment to Allowable Costs

(4,132)

1997 Audit Report: Riverside Nursing Center of Thomaston

7

Finding No.5

Patient Day Statistics
The provider stated on the cost report that it furnished 13,118 patient days ofservice. Census records examined during the audit showed that the patient days shown on the cost report were accurate.

8

Nursing Facility Services Program

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

2

Self-insurance Reserve Fund

$

(959)

395 $

Dietary

1

Incorrect Expense Classifications

2

Self-insurance Reserve Fund

$

(93)

53

Laundry and Housekeepine

1

Incorrect Expense Classifications

2

Self-insurance Reserve Fund

$

(97)

56

Administrative and General

1

Incorrect Expense Classifications

2

Self-insurance Reserve Fund

3

Excess Compensation

4

Allocation From Home Office

$

1,392

20

(4,161)

(4,132)

Property and Related Expenses

1

Incorrect Expense Classifications

Total Audit Findings Affecting Allowable Costs

$

(564) (40) (41)
(6,881) (243)
(7,769)

1997 Audit Report: Riverside Nursing Center of Thomaston

9

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

ALLOWABLE COSTS

COST REPORT TOTALS

FIELD AUDIT FINDINGS

AUDITED TOTALS

Routine Services

$ 471,686 $

(564) $ 471,122

Special Services

9,940

9,940

Dietary

117,011

(40)

116,971

Laundry and Housekeeping

80,275

(41)

80,234

Operation and Maintenance of Plant

77,795

77,795

Administrative and General

131,025

(6,881)

124,144

Property and Related Expenses

93,752

(243)

93,509

Total Allowable Costs

$ 981,484 $ (7,769) $ 973,715

PATIENT DAY STATISTICS

13,118

13,118