Audit report for the year ended June 30, 1998, Wellstar Paulding Nursing Center, Medicaid provider no.00142359A, Nursing Facilities Services Program [June 30, 1998]

TABLE OF CONTENTS

LETTER OF TRANSMITTAL

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FIN"][)IN"GS ANI) RE4::0MMEl'l][)ATI0 l'lS

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Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics... ..9

Schedule of Allowable Costs and Patient Day Statistics 10

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

RUSSELL W. HINTON
STATE AUDITOR

DEPARTMENT OF AUDITS AND ACCOUNTS
MEDICAID AND LOCAL GOVERNMENT AUDITS
254 Washington Street, S.W., Suite0322 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facsimile (404) 656-7535

MICHAEL A. PLANT
DIRECTOR

August 3, 1999

Members of the Board of Community Health, and The Honorable Russ Toal, Commissioner Georgia Community Health 2 Peachtree Street, N.W., 40th Floor Atlanta, Georgia 30303
Ladies and Gentlemen:
This report provides the results of our audit of Wellstar Paulding Nursing Center, provider number 00142359A, a participant in the Nursing Facility Services Program for the year ended June 30, 1998. This report is intended to be used solely in connection with the administration of the Georgia Department of Medical Assistance Nursing Facility Services Program and is not to be used or relied upon for any other purpose.
Respectfully Submitted,
~4' J20 LJ. ~~ Russell W. Hinton State Auditor
RWH/clw/ds

1998 Audit Report: Wellstar Paulding 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 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 Medical 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

Wellstar Paulding Nursing Center, a 169-bed long-term health care facility located in Dallas, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facility Services Program. The facility provides both skilled and intermediate care services to resident patients. The facility is owned and operated . by Wellstar Health System, which operated both Promina Paulding Hospital and Wellstar

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Nursing Facility Services Program

Paulding Nursing Center in separate physical facilities during the year under review.

Audit Objectives

The purpose of this audit was to detennine whether Wellstar Paulding Nursing Center maintained adequate documentation t~ support the allowable costs and patient day statistics reported in its Nursing Home Cost Report for the year ended June 30, 1998; and to detennine whether Wellstar Paulding 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



determine if the provider meets the requirements for

classification as a hospital-based nursing home

outlined in DMA Policies and Procedures for

Nursing Home-Facility Services, Section 1002.1(g);

and

1998 Audit Report: Wellstar Paulding Nursing Center

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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
o
audit. We interviewed provider personnel and e~amined 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 a~d Procedures for Nursing Facility Services.
In accordance with Section 1002 of Policies and Procedures for Nursing Facility Services, the Department of Medical Assistance has calculated the payment rate for Wellstar Paulding Nursing Center using a method often called the "Dodge Index System". Under the Dodge Index System, reasonable construction and asset acquisition costs are used in. calculating the payment rate rather than the actual costs incurred by the nursing home for property costs such as depreciation and amortization; capital-related interest expense; and lease expense. Because these property costs are not considered by the Department of Medical Assistance when calculating the payment rate for Wellstar Paulding Nursing Center, our audit did not include a

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Nursing Facility Services Program

review of these costs. However, because property taxes and insurance are used by the Department of Medical Assistance to calculate the provider's payment rate, we have reviewed those costs as part of our audit.
Allowable costs reported on the Nursing Home Cost Report include both direct costs of the nursing facility and indirect costs allocated to it from Promina Paulding Hospital. These indirect CDst allocations result from the step-down of general service costs from the hospital as shown on the hospital's Medicare cost report. Our audit did not include tests of either these indirect costs or the reclassifications and adjustments made to determine net expenses for cost allocation on the Medicare cost report worksheets. These costs are subject to audit by the Medicare intermediary. Any audit findings by the Medicare intermediary related to indirect costs that impact the nursing facility will be reflected in the Medicaid cost report in the year the Medicare cost report is fmal-settled.
The Department of Audits and Accounts is responsible for providing the Department of Medical Assistance with information regarding the accuracy of cost and patient data for Wellstar Paulding Nursing Center for the year ended June 30, 1998. 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 fmdings. For this reason, we have not included a response from the provider in our report. However, we have discussed the contents of

1998 Audit Report: Wellstar Paulding Nursing Center

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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.

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Nursing Facility Services Program

FINDINGS AND RECOMMENDATIONS

Hospital-Based Status

Finding No.1

The provider was in compliance with the Department of Medical Assistance's requirements for classification as a hospital-based nursing home as specified in DMA Policies and Procedures/or Nursing Facility Services, Section 1002.1 (g).

Incorrect Expense Classifications

Finding No.2

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 Association Dues Raw Food Repairs Supplies Travel Expense
Dietary Raw Food Supplies
Operation and Maintenance ofPlant Repairs Supplies

$ (3,774) (25,892) (768) (4,472) (266) $

$ 25,892 2,923

$

768

(409)

(35,172) 28,815
359

1998 Audit Report: Wellstar Paulding Nursing Center

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Administrative and General Association Dues Supplies Travel Expense
Total Adjustment to Allowable Costs

$

3,774

1,958

266

5,998

$====O~

Costs Not Related to Patient Care

Finding No.3

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

ITEMS Donations Non-Emergency Transportation Services
Total Adjustment to Allowable Costs

$

(340)

(628)

$_ _...(9.;.;,6~8)

COST CENTER Administrative and General

$._ _--..:(9;.;:;.6~8)

Patient Day Statistics
Finding Census records examined during the audit showed that the nursing home had No.4 59,281 patient days of service rather than the 5.9,087 shown on the cost report.

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Nursing Facility Services Program

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 194 days to correct the statistical information. (HCFA Pub. 15-1 Section 2304)

1998 Audit Report: Wellstar Paulding Nursing Center

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SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

2

Incorrect Expense Classifications

Dietary

2

Incorrect Expense Classification

Operation and Maintenance ofPIant

2

Incorrect Expense Classifications

Administrative and General

2

Incorrect Expense Classifications

$

3

Costs Not Related to Patient Care

Total Adjustment to Allowable Costs

$
5,998 (968)
$

(35,172) 28,815
359
5,030 (968)

PATIENT DAY STATISTICS

4 Patient Day Statistics

194

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Nursing Facility Services Program

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

ALLOWABLE COSTS

COST REPORT TOTALS

FIELD AUDIT FINDINGS

AUDITED TOTALS

Routine Services

$ 3,803,295 $

(35,172) $ 3,768,123

Special Services

19,698

19,698

Dietary

1,537,388

28,815

1,566,203

Laundry and Housekeeping

718,253

718,253

Operation and Maintenance of Plant

345,561

359

345,920

Administrative and General

614,007

5,030

619,037

Property and Related Expenses

938,860

938,860

Total Allowable Costs

$ 7,977,062 $

(968) $' 7,976,094

PATIENT DAY STATISTICS

59,087

194

59,281