MORAVIAN MANORS INC.

Finding 2021-001 ? Significant Deficiency in Internal Control over the Major Federal Program Assistance Listing Number: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: Not Applicable Award Number / Year: Not applicable / 2020 Compliance Requirement: Activities Allowed and Unallowed; Allowable Costs/Cost Principles and Reporting Questioned Costs: Not determinable Criteria: Provider Relief Funds (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by the U.S. Department of Health and Human Services (HHS). Activities allowed have been defined as expense used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. Recipients may choose to apply PRF payments toward lost revenues using one of three options: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted and actual patient care revenues, or Option iii: calculated by any reasonable method of estimating revenues. Condition and Context: The Manor selected option i. to account for their lost revenue used to apply towards their PRF payments. In the Manor?s reporting submissions, they only included lost revenues from skilled nursing and personal care services and erroneously excluded from their lost revenues amounts attributable to independent living services provided to residents. This was observed for the period one report submitted. Effect: The amounts reported to Health Resources & Services Administration (HRSA) were not in accordance with established U.S. Department of Health and Human Services reporting guidance (the Guidance). Cause: Management incorrectly interpreted the Guidance to exclude independent living revenue as it was not impacted by the COVID-19 pandemic. Recommendation: We recommend that management review their process and procedures to ensure that lost revenues are calculated in accordance with U.S. Department of Health and Human Services reporting guidance. View of Responsible Officials: Moravian Manors Inc. reported the lost revenue under ?Option i. ? Actuals versus Actuals? despite excluding Independent Living revenue from the calculation. It was our understanding that excluding the revenue did not require the use of ?Option iii? as this methodology, per Management?s interpretation of the guidance provide by HRSA, was allowable under `Option i?. The reason Management utilized ?Option 1? and excluded the Independent Living revenue is that Independent Living revenue does not fall into the scope of patient revenue as described by the ?USER GUIDE PROVIDER RELIEF FUND (PRF) REPORTING PORTAL ? REPORTING?. The definition given for patient revenue is as follows: ?9 ?Patient care? means health care, services, and supports, as provided in a medical setting, at home/telehealth, or in the community. It should not include non-patient care revenue such as insurance, retail, or real estate revenues (exception for nursing and assisted living facilities? real estate revenues where resident fees are allowable); prescription sales revenues (exception when derived through the 340B program); grants or tuition; contractual adjustments from all third party payers; charity care adjustments; bad debt; and any gains and/or losses on investments.? (page 62-63). Independent Living does not provide health care or health care services as part of their monthly fees. Health care services may be provided to residents, but would require an additional fee which would not be considered Independent Living Revenue. As such it would not be subject to inclusion. Additionally, Independent Living would fall under the description of real estate revenue. The real estate revenue portion of the definition allows for inclusions for nursing and assisted living facilities, however it does not specifically include the independent living in that inclusion. Finally, the specific question concerning Independent Living was asked of HRSA in an e-mail referenced as case ?00010665?. This case specifically asks about inclusion of Independent Living, and received a response of ?you would only have to report on the service lines that were impacted by Covid-19 and not on the service lines that were not impacted by Covid-19.? As such, since Moravian Manor?s Independent Living was not impacted by COVID-19 it was not subject to inclusion. In discussion with our auditors and per their insistence, Moravian Manor was advised that Option iii should have been selected and an explanation provided as to why our independent living revenue was not included in the submission. Our explanation for not including Moravian Manor?s independent living revenue under ?Option iii? is because that area of service was not impacted by COVID-19. Independent living was also in the midst of a major expansion project that was adding on units which made revenue appear higher than prior years, it would not have been an apples to apples comparison. Plan of Correction: Management will select Option iii on future HRSA PRF Reporting Portal Submissions.