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

HRD-83-9: Published: Oct 14, 1982. Publicly Released: Nov 9, 1982.

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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.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator of the Health Care Financing Administration to encourage and work with the State to develop a plan to concentrate its nursing home audits on those facilities grouped around the 60th percentile levels in each data array.

    Agency Affected: Department of Health and Human Services


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