Financial Audits

Everyone thinks there is too much waste, fraud, and abuse in Medicare and Medicaid programs. Skilled Nursing News had an article on Ned Lamont’s bill to solve the problem. The Governor of Connecticut proposed a bill that will authorize forensic audits to review operator annual financial reports conducted by the state Department of Social Justice.

This proposal will enhance the financial transparency within nursing homes and will identify areas of risk or fraud in fiscal records. The proposal responds to the concern that operators could be tunneling or siphoning taxpayer funds into their related entities or ancillary businesses rather than resident care.  A forensic audit will allow the department to thoroughly examine the financial records, for example, bank statements and vendor payment records.

Matthew Lew, CEO of Athena Health Care Systems, recognized that legislators aim to improve financial transparency because the industry has not been open about its financial dealings. Recent reforms in Connecticut require providers to submit reports of three year profit and loss narrative summaries, “total revenue and expenditures assets, liabilities, short term and long-term debit, and cash flows from investing and financing.”

Representative Mitch Bolinsky states that lawmakers need to go deeper than this because they don’t have visibility into the financial “layers” and that the bill should focus on “sharpening” previous legislation. He highlighted the importance of comprehensive reporting and enforcement mechanisms that prevent providers from finding more financial transparency.