Audit of Austinwoods Nursing Center's Medicaid Cost Report for the Calendar Year Ended December 31, 2001

EXECUTIVE SUMMARY:

The objective of this audit was to determine whether costs reported on Austinwoods' Calendar Year (CY) 2001 cost report were allowable, allocable, and reasonable in accordance with applicable Federal and State requirements. Of the total costs claimed on Austinwoods' CY 2001 cost report, $39,104 of indirect costs related to services provided to non-resident patients in the physical therapy unit and costs that were not related to patient care were unallowable.  The State plan requires that costs claimed by nursing facilities must be related to patient care provided to resident patients.  The unallowable costs were due to a lack of a methodology to identify indirect costs and allocate those costs to the physical therapy unit, and, subsequently, between resident and non-resident services as well as weaknesses in their system for classifying costs. We recommended that Austinwoods work with the State to adjust the unallowable expenses; establish a methodology for costs allocable to the physical therapy unit; and establish policies and procedures to ensure that costs are properly categorized.