PROMEDICA HEALTH SYSTEM INC

Assistance Listing, Federal Agency, and Program Name 21.027 U.S Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year HB 33 336648 ARPA 2024 Pass through Entity The Ohio Department of Mental Health and Addiction Services Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.302(a)(2)(ii), Uniform Guidance establishes that the recipient is responsible for determining and documenting in procurement procedures an appropriate Simplified Acquisition Threshold, based on internal controls and evaluation of risk, which may be lower than, but must not exceed, the threshold established in the FAR. Additionally, per 2 CFR 200.320(a)(2), if simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Condition Controls in place were not adequate to ensure the policy included a well defined Simplified Acquisition Threshold and related procurement method. Additionally, controls were not adequate to ensure price or rate quotations were obtained from an adequate number of qualified sources for contracts above the Simplified Acquisition Threshold. Questioned Costs $136,910 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed Questioned costs represent all costs reported on the SEFA for the contracts in question. Context During testing of contracts procured above the micro purchase threshold, but below the Simplified Acquisition Threshold, we noted management did not obtain price or rate quotations from an adequate number of qualified sources, as required by Uniform Guidance. Cause and Effect Not defining the Simplified Acquisition Threshold within the System's written policies and procedures, nor establishing the minimum number of required prcie and rate quotations needed could lead to noncompliance with Uniform Guidance and questioned costs. Recommendation Management should implement controls to ensure all procurement policies include specific thresholds for procurement methods in line with Uniform Guidance and that appropriate procurement methods are used for each contract entered into. Views of Responsible Officials and Corrective Action Plan Management understands the importance of adhering to procurement thresholds and methods. Procurement policies and grant policies will be updated to include federal thresholds and methods to reflect federal Uniform Guidance. Additionally, the procurement procedures will be amended to include additional review and sign-off from Grant and Purchasing leadership prior to purchases being made with federal funds to ensure price and rate quotations were obtained for contracts above the Simplified Acquisition Threshold.

Assistance Listing, Federal Agency, and Program Name 21.027 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year MH 1251 2023 Pass through Entity The Ohio Department of Mental Health and Addiction Services Finding Type Material weakness Repeat Finding No Criteria Per 2 CFR 200.508(b), an auditee must prepare appropriate financial statements, including the schedule of expenditures of federal awards, in accordance with 200.510 financial statements. Per 2 CFR 200.510(b), the auditee must also prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements, which must include the total federal awards expended, as determined in accordance with 200.502 basis for determining federal awards expended. Condition Controls in place were not adequate to ensure the schedule of federal expenditures was complete and accurate. Questioned Costs N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context ProMedica did not initially include the funds received through the Ohio Department of Mental Health and Addiction Services Coronavirus State and Local Fiscal Recovery funds on the SEFA. Cause and Effect ProMedica has a process in place to identify all potential sources of federal funding received during the year, however they received some incorrect information when going through these procedures, resulting in the SEFA being incomplete for the year ended December 31, 2023. Upon discovery of the error, ProMedica prepared a SEFA that included the Ohio Department of Mental Health and Addiction Services Coronavirus State and Local Fiscal Recovery funds. This lack of controls resulted in the reissuance of the 2023 single audit. Recommendation Management should implement controls to ensure all federal funding received is properly identified as such and included on the SEFA. Views of Responsible Officials and Corrective Action Plan Management fully understands the importance of internal controls to ensure the schedule of federal expenditures is complete and accurate. The Grants Department will amend its current written processes regarding award establishment to include requiring documentation indicating an award is federal funds prior to establishing the project in Infor CloudSuite Financials & Supply Management (Accounting software). Additionally, the Grants Department will routinely audit the database the department utilizes to record awards to ensure the field to note federal awards is properly updated. Furthermore, the SEFA will be reviewed with documented sign-off by each member of the Grants Team prior to submission

Assistance Listing, Federal Agency, and Program Name 21.027 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year MH 1251 2023 Pass through Entity The Ohio Department of Mental Health and Addiction Services Finding Type Significant deficiency Repeat Finding No Criteria Per 2 CFR 200.320, an entity must have written procurement procedures that address the procurement methods outlined throughout 2 CFR 200.318, 200.319, and 200.320. Condition Controls in place were not adequate to ensure the policy included appropriate procurement thresholds and methods. Questioned Costs N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context ProMedica did not include all requirements outlined throughout 2 CFR 200.318, 200.319, and 200.320 for procurement methods in their written policy. Cause and Effect ProMedica has written procurement procedures in place, however these policies did not include all requirements outlined throughout 2 CFR 200.318, 200.319, and 200.320. This lack of controls could lead to noncompliance with the Uniform Guidance requirement to have written policies. Recommendation Management should implement controls to ensure all procurement policies align with the guidance in 2 CFR 200.318, 200.319, and 200.320. Views of Responsible Officials and Planned Corrective Actions Management understands the importance of adhering to procurement thresholds and methods. Procurement policies and grant policies will be updated to include federal thresholds and methods to reflect federal Uniform Guidance.

Assistance Listing, Federal Agency, and Program Name - 93.498, U.S. Department of Health and Human Services, COVID-19: Provider Relief Fund and American Rescue Plan Rural Distribution (PRF) Federal Award Identification Number and Year - N/A - 2022 Pass through Entity - N/A - Direct funded Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per the Provider Relief Fund Distributions and American Rescue Plan Rural Distribution Post Payment Notice of Reporting Requirements dated October 27, 2022, infection control expenses paid with Nursing Home Infection Control distributions, allowable expenses may be reported as a use of targeted funds. Allowable expenses must be those that are unreimbursed by other sources and determined using the recipient's basis of accounting. Condition - ProMedica Health System's controls in place for reporting submissions did not identify that guidelines were not followed related to the reporting of infection control expenses in the correct period. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - Refer to context below for additional information. Context - The reporting submissions for certain HCR entities did not follow the guidelines published by the U.S. Department of Health and Human Services (HHS). These entities did not break out infection control expenses in the correct quarter in which they were expended. All infection control expenses were entered in quarter 1 and quarter 2 2022, regardless of if they were incurred in 2020 or 2021. Cause and Effect - Appropriate review of the expenses was not completed to ensure that eligible expenses were entered into correct period. As a result, the reports submitted were inaccurate, but the schedule of expenditure was not impacted. Recommendation - We recommend ProMedica Health System implement controls, including levels of review, to ensure reports are completed and submitted in accordance with the guidelines established by HHS. Views of Responsible Officials and Corrective Action Plan - Management fully understands and acknowledges the importance of identifying and complying with the reporting guidelines of federal awards, including the reporting of infection control expenses in the correct period. The receipt of Provider Relief Funds has broadened the scope of individuals that are responsible for reporting of Federal awards to those outside of the Grants and Research departments. Expenses for the Provider Relief Funds were correctly captured by period incurred and appropriately tracked for allowability. ProMedica has implemented a review procedure of the Provider Relief Funds consistent with other grant reporting so that the HRSA reports will be reviewed by a Grants Advisor or Grants Analyst prior to submission to ensure that eligible expenses are entered into the correct period in accordance with the guidelines established by HHS.

ALN Number, Federal Agency, and Program Name - 21.019, U.S. Department of the Treasury, COVID-19 - Coronavirus Relief Fund and 32.006, Federal Communications Commission, COVID-19 - Telehealth Program Federal Award Identification Number and Year - Various Pass-through Entity - Various Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.510(b), a schedule of expenditures of federal awards (the "Schedule") must be prepared to cover the same period as the financial statement audit and include the total federal awards expended as determined in accordance with 2 CFR 200.502. Condition - The Schedule, as originally provided by management, did not accurately report total expenditures for ALN 21.019 and did not include the federal expenditures for ALN 32.006. Questioned Costs ? $11,223 on ALN 21.019 - Award #20-10015 passed through RAP Foundation Identification of How Questioned Costs Were Computed - The System could not provide support for costs of $4,071 and costs of $7,152 were incurred in January 2021 after the end of the grant period. Context - The Schedule was initially overstated by $61,740 related to errors in reporting award expenditure totals within the COVID-19 - Coronavirus Relief Fund (ALN 21.019) and understated by $707,298 related to errors in reporting the COVID-19 - Telehealth Program (ALN 32.006). The errors were due to incorrect calculation of funding amounts received (ALN 21.019) and misidentification of the funds as relating to a period outside of the audit scope (ALN 32.006). The required adjustment of approximately $646,000, made up less than 5 percent of total expenditures included in the Schedule. Cause and Effect - Although the System had processes in place to prepare the Schedule, controls in place were not effective in identifying accurate federal grant expenditures for inclusion in the Schedule, resulting in the Schedule initially being understated. Recommendation - The System should implement necessary changes to the current process for identifying and evaluating grant expenditures related to federal awards, including ensuring appropriate levels of review take place. Views of Responsible Officials and Planned Corrective Actions - The System will implement a review process of the Schedule after preparation.

ALN Number, Federal Agency, and Program Name - 93.461, Department of Health and Human Services, COVID-19 - Testing for the Uninsured Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Significant deficiency Repeat Finding - No Criteria - The COVID-19- Testing for Uninsured grant is to be used for "reimbursement of payment for COVID-19 testing and testing related items for individuals who do not have coverage through an individual or employer-sponsored plan", per the 2020 Compliance Supplement Addendum. Condition - The System initially reported costs on the Schedule for expenditures that were unallowable, as the individuals were ultimately ineligible because they were insured at the time that COVID-related procedures were performed. Questioned Costs - None Context - In 1 of 40 individuals sampled, the claim submitted by the System for services performed related to the individual was improperly reimbursed by HRSA because the individual was determined to have insurance at the time procedures were performed. These expenditures, totaling approximately $4,000, were initially included in the Schedule provided by management, but were subsequently removed. Cause and Effect - While the System had a process in place to review individuals for eligibility and allowability prior to claims being submitted initially, there was not a process to subsequently evaluate changes in determination of insurance status that may result in repayment of previously reimbursed claims back to HRSA. Recommendation - The System should review the reports of both paid and unpaid services for the year under audit to determine and identify any necessary repayments and to ensure that correct amounts are recorded to be reported on the Schedule. Views of Responsible Officials and Corrective Action Plan - The System will implement a review of paid and unpaid services when determining the amount to record on the Schedule. The System will also work with the funder to repay the ineligible costs back.

ALN Number, Federal Agency, and Program Name - 21.019, U.S. Department of the Treasury, COVID-19 - Coronavirus Relief Fund Federal Award Identification Number and Year - 20-10014 Pass-through Entity - RAP Foundation Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Costs under this program are required to be incurred during the period that begins on March 1, 2020 and ends on December 30, 2020 per section 601(d) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Condition - The System included certain expenditures on the Schedule that were not incurred during the period noted above. Questioned Costs - $49,572 Identification of How Questioned Costs Were Computed - Total amount of invoice identified that was cancelled. Context - In 1 of 40 samples, the invoice submitted as an allowable cost by the System for goods and services was cancelled and therefore not paid. Cause and Effect - The System did not have a close out process in place to ensure that invoices claimed as allowable costs were paid resulting in funding received for costs that were not incurred. Recommendation - The System should put in place a process to close out grants and ensure that all costs were liquidated in a timely manner. Views of Responsible Officials and Planned Corrective Actions - The System will implement a grants close out process and ensure that all costs are liquidated in a timely manner. The System will also work with the funder to resubmit paid invoices or to repay the unallowable costs back.

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