NAVAJO HEALTH FOUNDATION - SAGE MEMORIAL HOSPITAL, INC.

Criteria: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. According to the Uniform Guidance (2 CFR Part 200), specifically §200.400 - 200.475, costs charged to federal awards must be reasonable, allocable, and allowable under the terms of the award. Condition and Context: Management was unable to provide sufficient documentation for specific COVID-19 expenditures that were initially reported on the Schedule of Expenditures of Federal Awards. As a result, audit adjustments were necessary to revise the total COVID-19 expenditures to include only those amounts that could be adequately substantiated. Cause: The lack of sufficient documentation was primarily due to a lack of adequate internal controls and oversight regarding the classification and allocation of COVID-19 expenditures charged to federal awards. Effect: Management did not have sufficient documentation to support activities met the terms and conditions related to the COVID-19 Indian Self-Determination federal awards. Audit adjustments were necessary to revise the total COVID-19 expenditures to include only those amounts that could be adequately substantiated. Questioned Cost: None. Repeat Finding: No Recommendation: We recommend the Hospital establish and document clear policies and procedures for identifying, classifying, and allocating costs charged to federal awards, ensuring compliance with the Uniform Guidance. Additionally, we recommend the Hospital conduct regular reviews of expenditures charged to federal awards to ensure compliance with federal regulations and the terms of the awards. Views of Responsible Officials: The Finance team of Financial Controller and Senior Accountant are responsible for gathering sufficient documentation specific to COVID-19 expenditures. Proper and accurate classification and allocation of COVID-19 related activities and expenditures will be tracked and monitored before charging to funds. This will be completed by September 30, 2025.

Criteria: The Indian Child Protection and Family Violence Prevention Act (25 USC 3201 et seq.) requires Tribal Organizations that receive funds under the ISDEAA to conduct an investigation of the character of each individual who is employed or is being considered for employment by such Tribal Organization in a position that involves regular contact with, or control over, Indian children. The Act further states that the Tribal Organization may employ only individuals in those positions if they meet standards of character that are no less stringent than those prescribed by the regulations, which are outlined in 42 CFR 136.405, and only after an individual has been the subject of a satisfactory background investigation as described in 42 CFR 136.406. Condition and Context: For 25 out of 25 employees tested, the Hospital was not able to provide sufficient documentation to support that a background check was completed prior to the employee's start date or within five years for existing employees per the Hospital’s Human Resources policy. For 12 out of 25 employees tested, the Hospital was not able to provide support that the background check results were reviewed by the appropriate authority prior to the employee being onboarded or within five years for existing employees per the Hospital’s Human Resources policy. Cause: Policies and procedures were not well defined or communicated to staff to ensure documentation was retained to support the required background checks were completed or reviewed and approved prior to an employee’s start date or within the previous five years for existing employees. Effect: The Hospital does not have sufficient documentation to evidence background checks were completed for new hires in the fiscal year or within the previous five years for existing employees. Questioned Cost: None Repeat Finding: No Recommendation: We recommend the Hospital provide additional training to ensure employees are properly documenting the background checks process and retaining evidence to support background checks were completed, reviewed and approved prior to an employee’s start date or within the previous five years for existing employees. Views of Responsible Officials: The Human Resources (HR) team of the Chief Human Resources Officer and the HR Generalists are responsible for completing background checks for existing new employees. The HR team will ensure proper and required background checks are completed, reviewed and approved for all new and existing employees. Proper documentation and results of all background checks will be reviewed and filed accordingly.

Condition and Context: There were 40 Purchased/Referred Care (PRC) claims tested, which total $64,479, out of approximately 2,400 total PRC claims incurred during fiscal year 2023 totaling $1,685,699. For one of 40 PRC claims tested, in the amount of $7,439, the patient was covered by alternate resources and was not eligible for PRC. For two of the 40 PRC claims tested, totaling $171, the Hospital was not able to provide sufficient documentation to evidence that the patient was eligible to receive PRC. For 14 out of the 40 PRC claims tested, eligibility was not verified until after the PRC claim was paid. It was noted that the pool of eligible healthcare expenditures for which this grant program is utilized for was well in excess of the amount of grant funds received. Criteria: To receive Purchased/Referred Care (PRC) an individual must meet the eligibility requirements as defined by Federal regulations published in Code of Federal Regulations (CFR), at Title 42, Section 136.21 through 136.25, and Indian Health Services, Part 2, Chapter 3, "Contract Health Services" dated January 5, 1998. Cause: Policies and procedures were not well defined or communicated to staff to ensure proper eligibility verification was performed and documented prior to payment of PRC claims. Effect: The Hospital does not have sufficient documentation to evidence that patients were eligible to receive PRC. Payment was made on an ineligible claim. Questioned Cost: None. Repeat Finding: This is a repeat finding. Recommendation: We recommend the Hospital provide additional training to ensure employees are aware of eligibility guidelines and that the eligibility determination process is being properly documented. Management’s Response: The Purchase Referred Care (PRC) team of the PRC Supervisor and PRC staff are responsible for implementing proper processes and procedures for ensuring proper eligibility verification and documentation prior to payment of PRC claims. PRC staff attended a PRC training regarding eligibility verification on August 2-3, 2023 conducted Indian Health Service. Since, staff have increased their knowledge of eligibility requirements.

2021-012 Eligibility (Significant Deficiency in Internal Controls over Compliance, Non-Compliance) Assistance Listing Number: 93.441 Program Name/Title: Indian Self-Determination Federal Agency/Pass-through Entity: Indian Health Service Award Number: 24521SM01 Award Year: 2021 Condition and Context: There were 25 Purchased/Referred Care (PRC) claims tested, which total $6,799, out of out of approximately 3,000 total PRC claims incurred during fiscal year 2021 totaling $2,197,239. For one of 25 PRC claims tested, in the amount of $777, the patient was covered by alternate resources and was not eligible for PRC. For eight of the 25 PRC claims tested, totaling $2,135, the Hospital was not able to provide sufficient documentation to evidence that the patient was eligible to receive PRC. For two out of the 25 PRC claims tested, eligibility was not verified until after the PRC claim was paid. For 23 of 25 PRC claims tested, evidence of review and approval of the eligibility requirements was not documented or retained. It was noted that the pool of eligible healthcare expenditures for which this grant program is utilized for was well in excess of the amount of grant funds received. Criteria: To receive Purchased/Referred Care (PRC) an individual must meet the eligibility requirements as defined by Federal regulations published in Code of Federal Regulations (CFR), at Title 42, Section 136.21 through 136.25, and Indian Health Services, Part 2, Chapter 3, "Contract Health Services" dated January 5, 1998. Cause: Policies and procedures were not well defined or communicated to staff to ensure proper eligibility verification was performed and documented prior to payment of PRC claims. Effect: The Hospital does not have sufficient documentation to evidence that patients were eligible to receive PRC. Payment was made on an ineligible claim. Questioned Cost: None. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Hospital provide additional training to ensure employees are aware of eligibility guidelines and that the eligibility determination process is being properly documented. Views of Responsible Officials: The team of Paul Shondee, Purchase Referred Care Supervisor and a newly hired RN Case Manager will complete Medical Priority for all Sage Hospital referrals in collaboration with Irene Yazzie, Revenue Cycle Manager. PRC will ensure there is documentation on file to ensure eligibility for patients by end of fiscal year 2023. PRC will ensure the following are on file before a determination is made: -Verifying Alternate Resource is on file (AHCCCS, approval or denial letter on file) -Ensuring a Proof of Residency (utilizing DHHS/IHS PRC Proof of Residency w Organizational Verifier?s Information (local Chapter representative) signature or the following, which includes location of home ? voter registration, Valid Driver License or state issued ID) is on file. -Requesting for Certificate of Indian Blood (CIB). The team of Paul Shondee, Purchase Referred Care Supervisor and Irene Yazzie, Revenue Cycle Manager will provide formal training for PRC staff. PRC Supervisor will continue to review Eligibility Guidelines and Determination process during staff meetings and via emails. This will be completed by end of fiscal year 2023.

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