Audit of Medicaid Costs Reported by Autumn Hills Convalescent Centers, Inc., Houston, TX

Pursuant to a congressional request, GAO examined unallowable and questionable central office costs of a chain of nursing homes participating in the Medicaid program in Texas and focused on the costs reported by one home about which there have been allegations of poor patient care.

Although GAO questioned about 18 percent of the central office costs for 1980 and a Texas Department of Human Resources audit had disallowed approximately $140,000 in 1978, neither review found that the questionable costs impacted the statewide Medicaid payment rates. Under the State's rate-setting methodology, GAO believes that individual homes or chains would find it very difficult to manipulate the system by overstating reported costs. In addition, the State has the opportunity to give greater attention to those few facilities whose reported costs actually determine the payment rates. In reviewing one of the chain's homes, GAO found that, for about 35 percent of the time, it did not have enough nurses on duty to meet State standards, thus raising questions about the level of nursing care. GAO noted that Texas does not reduce payment rates for homes that do not meet staffing standards.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Michael Zimmerman Team: General Accounting Office: Human Resources Division Phone: (202) 275-6195