oversight

Review of John J. Kane Hospital: A County Nursing Home in Pittsburgh, Pennsylvania

Published by the Government Accountability Office on 1977-09-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         DOCMENT RESUME
035'2 - [A2593739]

Review of John J. Kane Hospital: A County Nursing Home in
Pittsburgh, Pennsylvania. September 9, 1977. 7 pp.

Testimony before the Senate Special Committee on Aging; by
Gregory J. Ahart, Director, Human Resources Div.

Issue Area: Health Programs: Health Faci2ities (1203).
Contact: Human Resources Div.
Budget Function: Health: Nursing Homes (557).
Organizaticn Concerned: John J. Kane Hospital, Pittsburgh, PA;
    Pennsylvania.
Congressional Relevance: Senate Special Committee on Aging.
         The management of patients' funds at Kane Nursing Home
included the practice of charging to patient funds for services
that should have been paid by Medicare and Medicaid. Erroneous
charges were also made to patients' funds for facility-based
physician services and laboratory and x-ray services that could
have amounted to as much as $600,000 from 1972 through 1974. In
April 1970, Kane began investing patients' personal funds in
interest bearing savings certificates. A comparison was made of
Medicare and Medicaid audited reports for 1972-1974. In addition
to c rges ade to Medicare Part B, Kane also charged Medicaid
for the costs of the same facility-based physician services and
x-ray and laboratory services., The true overpayment was the
Federal share of the overcharges, or about $655,000, which was
in addition to the erroneous charges to patients' funds. A check
on staffing practices revealed that seven part-time doctors were
receiving lergth-cf-service credit for the county retirement
system as if they were full-timc mployees. Also, the number of
general care nursing hours available to Kane patients during
February 1976 did not meet minimum State requirements. No
evidence was found of coercion in obtaining contributions from
patients' families, but it did not appear that Kane adequately
explained that conrtr4'utions were voluntary. (SW)
                       UNITED STATES GENERAL ACCOUNTING OFFICE
                               WASHINGTON, D.C. 20548
                                                       FOR RELEASE ON DELIVERY
                                                       EXPECTED ON SEPTEMBER 9, 1977
0ol                                                    10: AM.
                                                       Senate Caucus Room
                                                       Room 318
                                                       Russell Office Building

                                    STATEMENT OF
                             GREGORY J. AHART, DIRECTOR
                              HUMAN RESOURCES DIVISION
                                     BEFURE THE
                              SPECIAL COMMITTEE ON AGING
                                UNITED STATES SENATE
                                       ON THE
                               REVIEW OF JOHN J. KANE
                             HOSPITAL: A COUNTY NURSING
                          HOME IN PITTSBURGH, PENNSYLVANIA

           Mr. Chairman and members of the Committee, we are pleased to appear
      here today to highlight portions of our May 6, 1977, report to the
      Comnittee entitled, "Lack of Coordination Between Medicaid and Medicare at
      John J. Kane Hospital. Kane is a public nursing home operated by Alle-
      gheny County near Pittsburgh, Pennsylvania.   This facility received most
      of its financial support from the Medicaid program, with the Federal Govern-
      ment paying 55 percent and Allegheny County absorbing the renianing 45
      percent.  For the period covered by our review, the State did not participate
      in the costs of public nursing home care under Medicaid. Kane also provided

      skilled nursing home care under the Federal Medicare program and received
      payments under Part A for post-hospital inpatient services and under Part
      B for physicians services and X-ray and laboratory services largely for
      patients whose Part A benefits were exhausted or were not applicable.
     Our review at Kane was made at the request of the Chairman of the
former Subcommittee on Long Term Care of this Committee and we were specific-
ally asked to
     --Review the management of patients' funds;
     --Audit the 1974 Medicaid cost report;
     --Ascertain whether employees were actually working
       or otherwise properly accounted for; and
     --Determine whethe- Kane was requirirg relatives of patients
       to make payments for the county's share f Meoicaid reim-
       bursement.
A summary of our findings on these matters follow.
Management of patients' personal funds
     From strictly an accountability standpoint, the management of patients'
personal funds at Kane was probably the most difficult and complicated
situation we have ever encountered in our various financial type reviews
at nursing homes.     Because so many things were handled incorrectly in
relation to Medicaid and Medicare requirements, we did not attempt to recon-
struct the net effect of what might have occurred if the management of such
funds ere handled correctly and the Medicare and Medicaid benefits effec-
tively coordinated.
     For example, following State requirements, which were contrary to
Federal Medicaid regulations, Kane routinely allowed too much money--as
much as $900--to accumulate in the personal accounts of its patients over
the first 6 months of their stays at the facility.    This happened because


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the State was requiring Kane to set aside in each patient's account up to
$150 a month as a home maintenance allowance even though Federal regulations
authorized such set asides only if an individual was lil-ely to return home
within 6 months and a physician certified to that likelihood.   Otherwise,
such income or resources should have been applied to the cost of care--
thereby reducing Medicaid's nursing home costs.   On the other hand, these
personal funds which the patients should not have had in the first place
were not used to maintain homes but were used by Kane to pay for
     --patients' services which were covered by and payable by either
       the Medicare Part B or the Medicaid program or both;
     --patient Medicare Part B deductible and coinsurance amounts--which
       under the approved State plan--were payable by Medicaid; and
     --amounts in excess of Medicare's Part B reasonable charge
       allowances which were not payable by the patients or either
       program.
     .n addition to the charges to patient funds for covered services that
should have been pid by Medicare and Medicaid, erroneous charges to
patients' funds for facility-based physician services and for laboratory
and X-ray services could have amounted to as much as $600,000 from 1972
through 1974 even though the costs of such services were also included
in Medicaid's reimbursement rates as certified by the State Auditor General.
     To further complicate the accountability problem, beginning in April
1970, Kane began investing ,,atients' personal funds in interest bearing
savings certificates.   s of January 1976 the accumulated interest earnings


                                    3
amounted to about $217,000, none of which had been distributed to individual
patients' accounts.    As early as August 1975, HEW had concluded that
interest on patients' funds should accrue to individual patients, but in
November 1976 the State issued proposed regulations which would give
nursing homes the option of applying earned interest to each patients'
account or to use the interest for specific activities benefiting all
patients as a group.
     We made recommendations to HEW designed to assure that
     --the State stop requiring the accumulation of home maintenance
       allowances except where such allowances were justified under
       Federal regulations,
     --Kane patients' personal funds not be used to pay or services
       covered by Medicare and Medicaid by requiring the State, Kane,
       and other providers of service to follow proper billing procedures;
       and
    --money earned through the investment of patients' funds be
       fairly distributed.
Audit of Medicaid Cost Reports
    Because there had been no exchange of audit information between
Medicaid and Medicare at Kane, our review featured a comparison of Medicare
and Medicaid audited cost reports for 1974 which was    xpanded to include
cost reports for 1972 and 1973. We found that Kane had charged both Medi-
care Part B (which was appropriate) and Medicaid for the costs of the same




                                     4
facility-based physician services and X-ray and laboratory services.      For
the 1972-1974 period, the total Medicaid overcharges were about $1.2 million;
however, because Allegheny Couvt, which operated Kane absorbed about 45
percent of Kane's Medicaid costs, t. true overpayment was the Federal share
of the overcharges or about $655,000.   This overpayment is inaddition to
the erroneous charges to patitnts' funds for physicians and X-ray and labor-
atory services which we previously discussed.   These erroneous charges
could have amounted to as Kiuch as $600,000 and represeited the Medicare
Part B deductible and coinsurance amounts which related to costs also
included in the Medicaid reimbursenent rates.
     We recommend that HEW
     --recover the Federal share of Medicaid overpayments to Kane, and
     --provide for the exchange of audit information between Medicare
       and the State Auditor General.
In addition, because Medicare Part B deductible and coinsurance charges
for MedicLid elig:ibles werp properly chargeable tr Medicaid under the State
plan, we recommended that collections from Medicaid patients' personal
'unds for Part B services cease and tnat restitution be made to patients
or their estates for previous erroneous charges.
     We understand that for the 1975 Medicaid cost report, the State
Auditor General did disallow $273,000 for physician salary costs paid by
Medicare but that prior overpayments had not been recovered.
Review of staffing practices
     In line with the Subcommittee's request, we made an unannounced time
and attendance check of a random sample of employees.     Everybody in the
sample was either on the job or could be accounted for.     On the other hand,
we did note that seven part-time doctors were receiving length-of-service
credit for the county retirement zystem as if they were full-time employees.
without the concurrence of the county retirement board.    This practice has
stopped and,in any event,it did not result in increased costs because con-
tributions to the pension fund were based on salary--not hours worked.
     In addition, we noted that the number of general care nursing hours
available to Kane patients during February 1976 did not meet inimum State
requirements.   Since our field review, the State has made at least three
reviews of Kane's staffing.    According to the related reports, Kane has
nmade improvements by hiring more nursing personnel and reducing the atient
census.
Family Contributions
     We did not find evidence of coercion in obtaining contributions from
patients' families.    Only about 5 percent of the patients had family
members making contributions and total collections were less than $5,000
per mnoth. The contributions were correctly used to offset Medicaid pay-
ments for each patient's care. We 'interviewed five contributing relatives.
All five stated that they did not believe the quality of care their relatives
was getting depended in any way on their contributions.




                                     6
    On the other hand, it did not appear that Kane Hospital adequately
explained that contributions are supposed to be completely volurtary.        We
have been told that Kane Hospital no longer sends its regular contributors
monthly reminders that both Kane and the family members we interviewed
referred to as "bills".
        This completes the sunmmary of our report, which we request be included
in the record in its entirety.
        We shall be happy to answer any questions that the Committee might
have.