Audit report, for the year ended June 30, 1996, Wildwood Health Care, Inc., Medicaid provider no. 00143547A, Nursing Facilities Services Program

DEPARTMENTOEAUDITSAM1ACCOUNTS Medicaidalld Local Government Audits .
AUDIT REPO.RT FOR.THE.YEARENDEDJUNE30, 1996
W1LDWOODHEALTHCARE,INC~
MEDICAID PROVIDER NPMBER00l43547A NURSING FA,CILITIESSERVICESPROGRAM

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 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 of Medical Assistance 2 Peachtree Street, N.W., 40th Floor Atlanta, Georgia 30303
Ladies and Gentlemen:
This report provides the results of our audit ofWildwood Health Care, Inc., provider number 00143547A, 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.

CLV/sl/by

Claude L. Vickers State Auditor

1996 Audit Report: Wildwood Health Care, Inc.

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 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

Wildwood Health Care, Inc., a 44-bed long-term health care facility located in Talking Rock, Georgia, is a provider enrolled in the Georgia Medicaid Nursing Facilities Services Program. The facility provides both skilled and intermediate care services to resident

2 Audit Objectives

Nursing Facilities Services Program
patients. The facility was operated as a freestanding nursing home for the year ended June 30, 1996.

The purpose ofthis audit was to determine whether Wildwood Health Care, Inc., 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, 1996; and to determine whether Wildwood Health Care, 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.

1996 Audit Report: Wildwood Health Care, Inc.

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 amouilts 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 infonnation regarding the accuracy of cost and patient data for Wildwood Health Care, 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/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 Facilities Services Program

Finding No.1

FINDINGS AND RECOMMENDATIONS

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 ofMedical Assistance make the following adjustment to decrease allowable costs claimed for expenses not applicable to the year under review.
(HCFA Pub. 15-1 Section 2302.1)

Adjustments to Balance Sheet Accounts:

Allowable Costs

June 30, 1996 Balance Accounts Payable Prepaid Insurance

$

(1,961)

(1,154)

$

(3,115)

COST CENTER Routine Services Special Services Dietary Administrative and General Property and Related

$

118

(360)

(175)

(2,253)

(445)

Total Adjustment to Allowable Costs

$====(=3=,1=15=)

1996 Audit Report: Wildwood Health Care, 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 Auto Expenses Employee's Doctors Bills NSF Bank Charges Insurance Expense Vending Expenses

$

(325)

(3,014)

(215)

(6,832)

(716)

(4,837)

$ (15,939)

COST CENTER Routine Services Dietary Operation and Maintenance of Plant Administrative and General Property and Related Expenses
Total Adjustment to Allowable Costs

$

(215)

(4,837)

(254)

(9,917)

(716)

$====(1=5=,9=39::)

6

Nursing Facilities Services Program

Finding No.3

Incorrect Expense Classifications

Documentation examined during the audit showed that some of the expenses were not classified in accordance with the Unifonn 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 ofMedical Assistance make the following adjustment to reclassify costs to the appropriate cost centers.
(DMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Medical Records Medical Waste Disposal Oxygen Special Services Supplies Operations and Maintenance Medical Waste Disposal Administrative and General Interest Expense Medical Records Oxygen Supplies Property and Related Interest Expense

$

(591)

(334)

56 $

$ (1,073) 591 (56) (236)

(869) 236 334
(774) 1,073

Total Adjustment to Allowable Costs

$

0

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 ~ere included in allowable costs claimed. Federal regulations provide that amounts received for discounts, allowances, refunds and rebates are not to be considered a

1996 Audit Report: Wildwood Health Care, Inc.

7

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

$===(=:4=17:::)

Finding No.5

Excess Compensation

Allowable costs claimed included compensation to the administrator 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)

Position Title

Compensation Guideline

Claimed

Ceiling

Excess

Administrator (A)

$

60,091 $ 53,499 $==(=6=,5=92:=)

(A) Includes amounts paid on behalf of administrator.

COST CENTER Administrative and General

$==(=6=,5=92:=)

8

Nursing Facilities Services Program

Finding No.6

Patient Day Statistics
Census records examined during the audit showed that the nursing home had 15,926 patient days of service rather than the 15,894 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 32 days to correct the statistical information.
(HCFA Pub. 15-1 Section 2304)

1996 Audit Report: Wildwood Health Care, Inc.

9

SUMMARY OF AUDIT FINDINGS AFFECTING . ALLOWABLE COSTS AND PATIENT DAY STATISTICS

FINDING NUMBER

ALLOWABLE COSTS

Routine Services

1

Accrual Basis ofAccounting

2

Costs Not Related to Patient Care

3

Incorrect Expense Classifications

4

Expense Reimbursements

$

118

(215)

(869)

(417) $

(1,383)

Special Services

1

Accrual Basis of Accounting

3

Incorrect Expense Classifications

$

(360)

236

(124)

Dietary

1

Accrual Basis of Accounting

2

Costs Not Related to Patient Care

$

(175)

(4,837)

(5,012)

Operation and Maintenance ofPlant

2

Costs Not Related to Patient Care

$

(254)

3

Incorrect Expense Classifications

334

80

Administrative and General

1

Accrual Basis of Accounting

2

Costs Not Related to Patient Care

3

Incorrect Expense Classifications

5

Excess Compensation

$

(2,253)

(9,917)

(774)

(6,592)

(19,536)

PropertY and Related Expenses

1

Accrual Basis of Accounting

2

Costs Not Related to Patient Care

3

Incorrect Expense Classifications

$

(445)

(716)

1,073

(88)

Total Audit Findings Affecting Allowable Costs

$ (26,063)

SCHEDULE OF ALLOWABLE COSTS AND PATIENT DAY STATISTICS

COST REPORT TOTALS

OFFICE AUDIT FINDINGS (1)

FIELD AUDIT FINDINGS

AUDITED TOTALS

ALLOWABLE COSTS

Routine Services

$ 502,576 $

$ (1,383) $ 501,193

Special Services

82,000

(124)

81,876

Dietary

165,670

(5,012)

160,658

Laundry and Housekeeping

103,689

103,689

Operation and Maintenance of Plant

97,096

80

97,176

Administrative and General

178,805

(529)

(19,536)

158,740

Property and Related Expenses

35,054

(1,975)

(88)

32,991

2:

Total Allowable Costs

$ 1,164,890 $

(2,504) $ (26,063) $ 1,136,323

=============

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Patient Days

15,894

32

15,926

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