Audit report for the year ended June 30, 1998, The William Breman Jewish Home, Inc., Medicaid provider no. 00040752A, Nursing Facilities Services Program [June 30, 1998]

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DEPARTMENT OF AUDITS AND ACCOUNTS

Medicaid and Local GovernmenfAudits

AUDIT REPORT
FOR THE YEAR ENDED JUNE 30, 1998
THE WILLIAM BREMAN JEWISH HOME,.INC.
MEDICAID PROVIDER NUMBER 00040752A NURSING FACILITY SERVICES PROGRAM

TABLE OF CONTENTS

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Summary of Audit Findings Affecting Allowable Costs and Patient Day Statistics 10

Schedule of Allowable Costs and Patient Day Statistics

12

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

RUSSELL W. HINTON
STATE AUDITOR

DEPARTMENT OF AUDITS AND ACCOUNTS
MEDICAID AND LOCAL GOVERNMENT AUDITS
254 Washington Street, S.w., Suite 322 Atlanta, Georgia 30334-8400
Telephone (404) 656-2006 Facsimile (404) 656-7535
July 13, 1999

MICHAEL A. PLANT
DIRECTOR

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 of The William Breman Jewish Home, Inc., provider number 00040752A, 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,
~p~.. &tV.4~ Russell W. Hinton State Auditor
RWHIadslbw

1998 Audit Report: The William Breman Jewish Home, 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 of Georgia and the federal government. Medicaid
l
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 fmancial, 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

The William Breman Jewish Home, Inc., a 120-bed long-term health care facility located in Atlanta, 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 was operated as a freestanding nursing home for the year ended June 30, 1998.

2

Nursing Facility Services Program

Audit Objectives

The purpose of this audit was to detennine whether The William Breman Jewish Home, 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, 1998; and to determine whether The William Breman Jewish Home, Inc., 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

1998 Audit Report: The William Breman Jewish Home. Inc.

3

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 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 te$t basis, evidence supporting these amounts and disclosures a.I\d 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 (RCFA Pub. 15-1) and DMA Policies and 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 The William Breman Jewish Home, Inc., 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 The William Breman Jewish Home, Inc., our audit did not include a 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.

4

Nursing Facility Services Program

As a result of audit procedures related to other (non-property) costs, we noted an adjustment which should be made by the Department of Medical Assistance related to lease expense. We have included a fmding related to this matter in our report.
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 The William Breman Jewish Home, Inc., 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 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.

1998 Audit Report: The William Breman Jewish Home, Inc.

5

FINDINGS AND RECOMMENDATIONS

Lack ofSufficient Documentation

Finding No.1

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 following adjustment to remove the undocumented expenses from allowable costs.
(HCFAPub. 15-1 Section 2304)

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

$

(17,359)

(2,451)

(3,684)

(2,591)

(691)

(11,023)

(14,700)

$-=-=0........(..5...2..,..4..9..9. _)

Incorrect Expense Classifications

Finding No.2

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 of Medical

6

Nursing Facility Services Program

Assistance make the following adjustment to reclassify costs to the appropriate cost centers.
(DMA Policies and Procedures, Appendix D)

COST CENTER Routine Services Supplies Expense Dietary Dietary Supplements Operation and Maintenance of Plant Dietary Supplements Property Tax Expense Repair Expellse Supplies Expense Administrative and General
mSillanceE~~se
Lease Expense Repair Expense Property and Related Expenses Insillance Expense Lease Expense Property Tax Expense
Total Adjustment to Allowable Costs

$

$

(495)

(3,322)

6,798

(8,689)

$

6,040

(4,766)

(6,798)

$

(6,040)

4,766

3,322

$

8,689 495
(5,708) (5,524) 2,048
0

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 procedilles to enSille 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, 2138; DMA Policies and Procedures Sections 902, 1002.1(k

1998 Audit Report: The William Breman Jewish Home. Inc.

7

ITEMS Dues Legal Expense Prescription Drugs
COST CENTER Routine Services Administrative and General
Total Adjustment to Allowable Costs

$

(3,664)

(1,302)

(13,293)

$

(18,259)

$

(13,293)

(4,966)

$

(18,259)

Excess Compensation

Finding No.4

Allowable costs claimed included compensation to employees which exceeded DMA maximum limitations. The Department of Medical Assistance ann~ally 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)

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Nursing Facility Services Program

Position Title
Social Services Director Payroll Taxes Medical Director Administrator Payroll Taxes Assistant Administrator Payroll Taxes Office Supervisor Payroll Taxes
Provider Adjustment

Total

Guideline

Compensation Ceiling (A)

Excess

$

54,000 $

37,449 $ (16,551)

4,131

2,865

(1,266)

48,925

22,014

(26,911)

101,970

81,147

(20,823)

5,719

5,417

(302)

51,000

43,700

(7,300)

3,902

3,344

(558)

52,141

24,020

(28,121)

3,989

1,838

(2,151)

$

325,777 $ 221,794 $ (103,983)

87,711

$ (16,272)

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

cost CENTER
Special Services Administrative and General

$ (4,455) (11,817)

Total Adjustment to Allowable Costs

$ (16,272)

Patient Day Statistics

Finding No.5

Census records examined during the audit showed that the nursing home had 42,924 patient days of service rather than the 42,807 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

1998 Audit Report: The William Breman Jewish Home, Inc.

9

recommend that the Department of Medical Assistance make the adjustment of 117 days to correct the statistical information.
(HCFA Pub. 15-1 Section 2304)

Accounts Receivable Credit Balances

Finding No.6

Documentation examined during the audit showed that the provider had 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 $603.02 shown in the following table represents overpayments from the Department of Medical Assistance that had not been resolved as of April 1, 1999. 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 Epstein, Samuel

Balance

$

603.02

-====-=-===--=--=

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Nursing Facility Services Program

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 Classification

3

Costs Not Related To Patient Care

$

(17,359)

8,689

(13,293) $

Special Services

1

Lack of Sufficient Documentation

4

Excess Compensation

$

(2,451)

(4,455)

Dietary

1

Lack of Sufficient Documentation

2

Incorrect Expense Classification

$

(3,684)

495

Laundry and Housekeeping

1

Lack of Sufficient Documentation

Operation and Maintenance ofPlant

1

Lack of Sufficient Documentation

2

Incorrect Expense Classification

$

(691)

(5,708)

Administrative and General

1

Lack of Sufficient Documentation

2

Incorrect Expense Classification

3

Costs Not Related To Patient Care

4

Excess Compensation

$

(11,023)

(5,524)

(4,966)

(11,817)

(21,963) (6,906) (3,189) (2,591) (6,399)
(33,330)

1998 Audit Report: The William Breman Jewish Home. Inc.

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FINDING NUMBER

ALLOWABLE COSTS

Property and Related Expenses

1

Lack of Sufficient Documentation

2

Incorrect Expense Classification

$

(14,700)

2,048

(12,652)

Total Audit Findings Affecting Allowable Costs

$====(8=7,0=3=0)

PATIENT DAY STATISTICS

5

Patient Day Statistics

117

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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

$ 2,668,026 $ (21,963) $ 2,646,063

Special Services

215,094

(6,906)

208,188

Dietary

874,262

(3,189)

871,073

Laundry and Housekeeping

393,093

(2,591)

390,502

Operation and Maintenance of Plant

395,854

(6,399)

389,455

Administrative and General

602,502

(33,330)

569,172

Property and Related Expenses

203,505

(12,652)

190,853

Total Allowable Costs

$ 5,352,336 $ (87,030) $ 5,265,306

PATIENT DAY STATISTICS

42,807

117

42,924