Audit report, for the year ended June 30, 1996, Westbury Medical Care Home, Inc., Medicaid provider no. 00143514A, Nursing Facilities Services Program [June 30, 1996]

DEPARTMENT'"OF AlIDITSAM>,'ACCOUNTS

Medicaid

a

n .

d

Local

GovernmentAudits

.

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 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

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

December 9, 1997

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 ofWestbury Medical Care Home, Inc., provider number 00143514A, a participant in the Nursing Facilities Services Program for the year ended June 30, 1996. 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,

CLV/sllby

Claude L. Vickers State Auditor

1996 Audit Report: Westbury Medical Care Home, Inc.

1

General Information

INTRODUCTION
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 of Medical Assistance has established specific payment guidelines and limitations for each covered medical service.
Through the Nursing Facilities 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

Westbury Medical Care Home, Inc., a 196-bed long-term health care facility located in Jackson, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facilities Services Program. The facility provides both skilled and intermediate care services to resident patients. The facility was operated as a freestanding nursing home by Westbury Enterprises, Inc., for the year ended June 30, 1996.

2 Audit Objectives
Scope and Methodology

Nursing Facilities Services Program

The purpose of this audit was to determine whether Westbury Medical Care Home, Inc., maintained adequate documentation to support ~e allowable costs and patient day statistics reported in its Nursing Home Cost Report for the year ended June 30, 1996; and to determine whether Westbury Medical Care Home, Inc., complied with the federal and state laws, regulations, policies and procedures for the Nursing Facilities 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 Facilities 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.

To accomplish these objectives, we performed a limited review of the 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

1996 Audit Report: Westbury Medical Care Home, Inc.

3

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 Proceduresfor 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 Westbury Medical Care Home, Inc., for the year ended June 30, 1996. If the Department of Medical Assistance implements the recommendations in this report by adjusting the allowable costs and 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 Facilities 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 Unifonn Chart ofAccounts 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 ofMedical Assistance make the following adjustment to reclassify costs to the appropriate cost centers.
(DMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Dietary Supplements Supplies Special Services Cable Television Dietary Dietary Supplements Laundry and Housekeeping Supplies Operation and Maintenance ofPlant Cable Television Communications Expense Maintenance Expense Supplies Administrative and General Communications Expense Insurance Expense Maintenance Expense Supplies Property and Related Expenses Insurance Expense

$ (44,198) (123) $

$ (3,090) (265) 284 (13)

$

265

5,797

(284)

136

(44,321) 3,090
42,780 1,418
(3,084)
5,914 (5,797)

Total Adjustment to Allowable Costs

$

0

1996 Audit Report: Westbury Medical Care Home, Inc.

5

Finding No.2

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,; DMA Policies and Procedures Section 1002.1(k

ITEMS Advertising Flowers Late Charge Income Tax Penalties Interest Expense Patient Transportation Vehicle Expense

$

(2,288)

(220)

(83)

(508)

(42,100)

(95)

(875)

$

(46,169)

COST CENTER Routine Services Special Services Operation and Maintenance ofPlant Administrative and General Property and Related Expenses
Total Adjustment to Allowable Costs

(83)

$

(2,288)

(533)

(1,165)

(42,100)

$=====(=46=,=16=:9=)

6

Nursing Facilities Services Program

Finding No.3

Lack ofSufficient Documentation

Some of the expenses included in allowable costs were not supported by adequate documentary evidence.' Federal regulations provide that cost infonnation 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 f(>llowing adjustment to remove the undocumented expenses from allowable costs.
(HCFA Pub. 15-1 Section 2304)

COST CENTER Administrative and General

$===(=44=9:=)

Finding No.4

Expense Reimbursements
Documentation examined during the audit showed that amounts shown on the cost report as revenues were from sales of materials and/or services, the cost of which were included in allowable costs claimed. Federal regulations provide that amounts received for discounts, allowances, refunds and rebates are not to be considered a fonn of income but should be used to reduce the specific costs to which they apply. We recommend that the provider implement policies and procedures to ensure that allowable costs claimed are reduced by any expense reimbursements received. We recommend that the Department of Medical Assistance make the following adjustment to reduce allowable costs claimed by expense reimbursements shown as revenues.
(HCFA Pub. 15-1 Section 800)

COST CENTER Routine Services Administrative and General
Total Adjustment to Allowable Costs

$

(187)

(1,878)

$==(=:2=,0=:65=)

1996 Audit Report: Westbury Medical Care Home, Inc.

7

Accounts Receivable Credit Balances

Finding No.5

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 $13,075.41 shown in the following table represents overpayments from the Department ofMedical Assistance that had not been resolved as of October 14, 1997. 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
Alfor, Rose Coffey, George Daniel, Corine Foster, Hassie Freeman, Flore Grant, Mattie Houchins, Lorraine Jones, Ora Jordan, George Moore, Conis Mcgarity, Mary Scholtz, Lillie Smith, Katherine Tyler, Daisy Whitaker, Mavis White, Walter Wilson, Ruth Yancy, Buddy York, Rosa
Total

Balance

$

82.22

428.70

31.80

5,937.60

862.39

10.91

186.17

262.54

140.70

265.54

244.24

1,282.00

140.70

1,021.99

465.14

1,503.60

436.94

262.54

139.69

$ 13,705.41

8

Nursing Facilities Services Program

SUMMARY OF AUDIT FINDINGS AFFECTING ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

4

Expense Reimbursements

Special Services

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

Dietary

1

Incorrect Expense Classifications

Laundry and Housekeeping

1

Incorrect Expense Classifications

Operation and Maintenance ofPlant

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

Administrative and General

1

Incorrect Expense Classifications

2

Costs Not Related To Patient Care

3

Lack ofDocumentation

4

Expense Reimbursements

$ (44,321) (83)
(187) $

$

3,090

(2,288)

$

(3,084)

(533)

$

5,914

(1,165)

(449)

(1,878)

(44,591) 802
42,780 1,418 (3,617)
2,422

1996 Audit Report: Westbury Medical Care Home, Inc.

9

FINDING NUMBER

ALLOWABLE COSTS

Property and Related Expenses

1

Incorrect Expense Classifications

2

Costs Not Related to Patient Care

$

(5,797)

(42,100)

(47,897)

Total Audit Findings Affecting Allowable Costs

$=====(4=8=,6=83=)

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

OFFICE AUDIT (1) FINDINGS

NATT AUDIT FINDINGS

FIELD AUDIT FINDINGS

AUDITED TOTALS

$ 2,510,844 $ 238,733 540,319 469,023 333,719 573,146 674,899

(3,466) $ (2,988) (1,132) (1,440) (1,078) (22,337) (1,436)

4,920 $

(44,591) $ 802
42,780 1,418 (3,617) 2,422
(47,897)

2,467,707 236,547 581,967 469,001 329,024 553,231 625,566

Total Allowable Costs

$ 5,340,683 $ (33,877) $

4,920 $ (48,683) $======5,=26=3=,04=3=

(1) An office audit of the provider was perfonned before this field audit. The results of the office audit are included in this column for infonnational purposes.