UP PI~O[), rnt\RI W35~ ICfjb17 DEPARTMENT OF AUDITS AND ACCOUNTS Medicaid and Local Government Audits AUDIT REPORT FOR THE YEARENDEDJIJNE30,1997 WARNER. ROBINS NURSING CENTER MEDICAID PROVIDERNUMBER 00141303A NURSING 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 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 w., 254 Washington Street, S. 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 June 22, 1998 Members of the Board ofMedical Assistance, and The Honorable Dr. William R. Taylor, Commissioner Department of Medical Assistance 2 Peachtree Street, N.W., 40th Floor Atlanta, Georgia 30303 Ladies and Gentlemen: This report provides the results of our audit of Warner Robins Nursing Center, provider number 00141303A, a participant in the Nursing Facility Services Program for the year ended June 30, 1997. This report is intended to be used solely in connection with the administration of the 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 CLV/prlbw 1997 Audit Report: Warner Robins Nursing Center 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 Warner Robins Nursing Center, a 126-bed long-term health care facility located in Warner Robins, 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 by Personacare of Warner Robins, Inc., and operated as a component of TheraTx, Inc., a chain organization which filed a Home Office Cost Report with DMA for the year ended December 31, 1996. The purpose of this audit was to determine whether Warner Robins Nursing Center 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, 1997; and to determine whether Warner Robins Nursing Center 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: Warner Robins Nursing Center 3 Scope and Methodology To accomplish these objectives, we perfonned 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 detennine 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 for Nursing Facility Services. The Department of Audits and Accounts is responsible for providing the Department ofMedical Assistance with infonnation regarding the accuracy of cost and patient data for Warner Robins Nursing Center for the year 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 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 Nursing Facility 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. 15-1 Section 2304) COST CENTER Routine Services Special Services Dietary Laundry and Housekeeping Operation and Maintenance ofPlant Administrative and General Total Adjustment to Allowable Costs $ (3,723) (133) (3,070) (864) (8,090) (8,166) $====(2==:4=,0:::::=46=) Finding No.2 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 1997 Audit Report: Warner Robins Nursing Center 5 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 Nursing Supplies Laundry and Housekeeping Laundry Supplies Operation and Maintenance ofPlant Lease Expense Nursing Supplies Software Maintenance Administrative and General Laundry Supplies Liability Insurance Software Maintenance Property and Related Expenses Lease Expense Liability Insurance $ $ (2,422) (103) (3,900) $ (160) 11,826 3,900 $ 2,422 (11,826) 103 160 (6,425) 15,566 (9,404) Total Adjustment to Allowable Costs $====0= Finding No.3 Allocation ofIndirect Expenses to Non-Patient Care Areas 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 amo"!IDts reported on Schedule B-5 as allowable costs and square footage. These findings required the recalculation of Schedule B-5. A copy ofthis 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 Medical Assistance make the 6 Nursing Facility Services Program 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 ofPlant Property and Related Expenses $ (816) (440) (1,390) Total Adjustment to Allowable Costs $==(=2=,64:::::::6:=) Finding No.4 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 2102.1, 2102.3, 2104.3; DMA Policies and Procedures Section 1002.1(k)) ITEMS Association Dues (50%) Civic Organization Dues Golf Fees $ (64) (349) (95) $ (508) COST CENTER Administrative and General $===(=5:=08::f:) 1997 Audit Report: Warner Robins Nursing Center 7 Finding No.5 Allocations from Home Office The provider was a component of a chain organization for the year ended June 30, 1997. As a result of our audit ofthe 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 Administrative and General Functionally Allocated Costs Pooled Costs Administrative Expenses $ (741) (11,796) Total Adjustment to Allowable Costs $====(1=2:=,5=37:=:) Finding No.6 Patient Day Statistics Census records examined during the audit showed that the nursing home had 44,312 patient days of service rather than the 44,309 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 3 days to correct the statistical information. (HCFA Pub. 15-1 Section 2304) 8 Nursing Facility 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 $1,627.97 shown in the following table represents overpayments from the Department ofMedical Assistance that had not been resolved as ofMay 4, 1998. 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 Medical Assistance review this matter and recover any overpayments identified. Patient Name Howell, Myrtle Seefeld, Johanna Stone, Drucilla Wood,Anna Total Balance $ 983.60 71.66 489.61 83.10 $ 1,627.97 1997 Audit Report: Warner Robins Nursing Center 9 SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS FINDING NUMBER ALLOWABLE COSTS Routine Services 1 Lack of Sufficient Documentation $ 2 Incorrect Expense Classifications Special Services 1 Lack of Sufficient Documentation Dietary 1 Lack of Sufficient Documentation Laundry and Housekeeping 1 Lack of Sufficient Documentation $ 2 Incorrect Expense Classifications 3 Allocation ofIndirect Expenses to Non-Patient Care Areas Operation and Maintenance ofPlant 1 Lack of Sufficient Documentation $ 2 Incorrect Expense Classifications 3 Allocation of Indirect Expenses to Non-Patient Care Areas (3,723) 103 $ (864) 160 (816) (8,090) (6,425) (440) (3,620) (133) (3,070) (1,520) (14,955) 10 Nursing Facility Services Program FINDING NUMBER ALLOWABLE COSTS Administrative and General 1 Lack of Sufficient Documentation 2 Incorrect Expense Classifications 4 Costs Not Related to Patient Care 5 Allocations from Home Office $ (8,166) 15,566 (508) (12,537) (5,645) ProperfJ' and Related Expenses 2 Incorrect Expense Classifications $ (9,404) 3 Allocations of Indirect Expenses to Non-Patient Care Areas (1,390) (10,794) Total Audit Findings Affecting Allowable Costs $====(3=9=,7=37=) PATIENT DAY STATISTICS 6 Patient Day Statistics 3 1997 Audit Report: Warner Robins Nursing Center 11 SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS ALLOWABLE COSTS COST REPORT TOTALS FIELD AUDIT FINDINGS AUDITED TOTALS Routine Services $ 1,478,419 $ (3,620) $ 1,474,799 Special Services 43,615 (133) 43,482 Dietary 468,257 (3,070) 465,187 Laundry and Housekeeping 274,057 (1,520) 272,537 Operation and Maintenance of Plant 212,147 (14,955) 197,192 Administrative and General 527,419 (5,645) 521,774 Property and Related Expenses 504,099 (10,794) 493,305 Total Allowable Costs $ 3,508,013 $ (39,737) $ 3,468,276 PATIENT DAY STATISTICS 44,309 3 44,312