Franciscan Alliance, Inc.

Cluster: Not applicable Federal Granting Agency: Department of Health and Human Services (“HHS”), Substance Abuse and Mental Health Services Administration (“SAMHSA”) Award Name: Congressional Directives Award Year: 2023 Assistance Listing #: 93.493 Federal Award Identification Number: 1H79FG000903-01 Criteria In accordance with 2 CFR 200.328 and the notice of award, there are other reporting requirements that the entity must complete and submit to HHS. Specifically, the Programmatic Report, as defined in the notice of award, is required on an annual basis and must be submitted as a .pdf to the View Terms Tracking Details page in the eRA Commons System no later than 90 days after the end of each 12-month budget period. Condition The Programmatic Report, which was due by December 28, 2023, was not submitted to the eRA Commons System until July 25, 2024. Cause Management initially did not have the accurate access to submit the report in the eRA Commons System. Once the access was resolved, management did not have an adequate understanding of the reporting requirements of the award and the control was not designed to ensure that the reports were completed and submitted to the agency in a timely manner. Effect The late submission of the Programmatic Report causes Franciscan to be out of compliance with specific grant reporting requirements. Questioned Costs None noted. Recommendation We recommend that Franciscan enhance its internal control around the monitoring of grant reporting requirements, including evaluating report due dates, confirming reporting requirements with the granting agency as appropriate, ensuring appropriate access to systems is maintained, and performing reviews prior to submission to ensure all reports are being completed accurately and submitted in a timely manner. Management’s Views and Corrective Action Plan Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior audit findings and status.

The Management of Franciscan Alliance, Inc. and Affiliates (“Franciscan”) considers the implementation and monitoring of effective internal controls to be one of its most important responsibilities, especially as they relate to the funds received from the Federal government. Management has continued to promote sound business practices and effective internal controls across the organization through communication, training, and consistent enforcement of the Franciscan’s policies. The following are the Views and Corrective Action Plans of Management regarding the Schedule of Findings and Questioned Costs for the year ended December 31, 2023 for Franciscan Alliance, Inc. and Affiliates. AUDIT FINDING 2023-001 – Compliance with Reporting Requirements MANAGEMENT’S RESPONSE: Management concurs that the Programmatic Report due December 28, 2023 was not submitted until July 25, 2024. CORRECTIVE ACTION PLAN: Franciscan submitted the report on July 25, 2024. Franciscan created an additional tracking system to document reporting requirements for all grants, provide reminders, and document the submitted date. The tracker is prepared and reviewed monthly, with appropriate segregation of duties, to ensure all reports are being submitted accurately and timely. Franciscan now verifies the appropriate individuals have access to reporting systems in advance of reporting due dates. RESPONSIBLE PERSONS: Gregory Pantale, Director Grant Administration, Franciscan Alliance, Inc. COMPLETION DATE: September 2024

2021-001 ? Improve understanding of specific grant reporting requirements Cluster: Not applicable Federal Granting Agency: Department of Health and Human Services Award Name: COVID-19 ? Provider Relief Fund; and COVID-19 ? Testing for the Uninsured Award Year: 2021 Assistance Listing #: 93.498; and 93.461 Criteria COVID-19 ? Provider Relief Fund The reporting entity required for recipients of Provider Relief Fund (?PRF?) payments reporting purposes may not align to the reporting entity as defined for financial reporting purposes. It is important to note that the required PRF level of reporting has no bearing on the application of the requirements in 2 CFR 200.514 for defining the entity to be audited for single audit purposes. Thus, for single audits that include PRF, the Single Audit must cover the entire operations of the auditee, or, at the option of the auditee, such audit must include a series of audits that cover departments, agencies, and other organizational units that expended or otherwise administered federal awards during such audit period, provided that each such audit must encompass the financial statements and schedule of expenditures of federal awards for each such department, agency, and other organizational unit, which must be considered to be a nonfederal entity. As such, the Schedule of Expenditures of Federal Awards (?SEFA?) should contain all payments for which the audited entity received during the period under audit. COVID-19 ? Testing for Uninsured In accordance with the Health Resources & Services Administration (?HRSA?) website (https://www.hrsa.gov/provider-relief/about/covid-uninsured-claim), the Testing for Uninsured program stopped accepting claims due to a lack of sufficient funds. No claims submitted after March 22, 2022 for testing or treatment will be processed for adjudication/payment. No claims submitted after April 5, 2022 for vaccine administration will be processed for adjudication/payment. Total expenditures presented within the SEFA for this program, thus, should only include those claims submitted prior to the claims submission website shutdown. Condition COVID-19 ? Provider Relief Fund We noted that the initial total reported expenditures for the Provider Relief Program improperly excluded payments received by consolidated joint ventures, which are a part of the entity under audit. The SEFA was subsequently revised to include these payments which increased the total expenditures reported by $611,136. COVID-19 ? Testing for Uninsured We noted that the initial total expenditures reported for Testing for Uninsured program included claims submitted after the deadline noted in the Criteria section above. The SEFA was subsequently revised to exclude these claims which reduced the total expenditures reported by $5,290,785. Cause Franciscan initially excluded consolidating joint ventures from the SEFA under the Provider Relief Fund program because there was no federal guidance that those entities needed to be included in the SEFA. Under the Testing for Uninsured program, Franciscan included on the SEFA claims billed to HRSA after the submission deadline. Effect Because the SEFA serves as the basis for the auditors? determination of major programs, its completeness and accuracy are vital. The SEFA should include all and only those federal expenditures for the fiscal year under audit in accordance with grant reporting requirements. An incomplete or inaccurate SEFA could result in incomplete information provided to the federal government, failure to identify the need for a single audit, audit inefficiencies, incorrect major program selection, or additional audit costs. Further, inaccurate reporting to the federal government could result in recoupment of grant dollars. Questioned Costs None noted. PwC Recommendation We recommend that Franciscan perform a formal review of the reporting requirement guidelines for grants prior to the compilation of the SEFA. This should include, at a minimum, review of the grant terms and conditions, and OMB Uniform Guidance requirements and other publicly available information, as necessary, to ensure that the SEFA presents the appropriate amount of expenditures that should be reported. Management?s Views and Corrective Action Plan Management?s views and corrective action plan is included at the end of this report after the summary schedule of prior audit findings and status.

AUDIT FINDING 2021-001 - Improve understanding of specific grant reporting requirements. MANAGEMENT?S RESPONSE: Throughout the COVID-19 Pandemic (?Pandemic?), Franciscan extensively reviewed regulatory requirements and other publicly available information such as frequently asked questions related to the COVID -19 ? Provider Relief Fund that at times was changing on a daily basis. Further, Franciscan had regular consultations throughout the Pandemic with external experts specific to the COVID-19-Provider Relief Fund (?PRF?) compliance and reporting requirements. Franciscan initially prepared a draft of its? Schedule of Expenditures of Federal Awards (?SEFA?) associated with the Provider Relief Fund payments with certain of its joint venture subsidiaries excluded because there was no federal guidance that those entities needed to be included in the SEFA and at that time Franciscan was evaluating if each of those joint venture subsidiaries were going to have their own uniform guidance audit. After determining certain of Franciscan?s joint venture subsidiaries would not have their own uniform guidance audit, Franciscan modified the SEFA to include those grant dollars. The COVID-19 ? Testing for Uninsured program indicated there would be penalties or PRF recoupment for billing uninsured patients for COVID related services. As such, Franciscan extensively reviewed the billing compliance requirements surrounding this program as well as continually consulted with experts. Franciscan initially prepared a draft SEFA including both billed and unbilled claims that may have qualified for reimbursement through the COVID ? 19 Testing for Uninsured program with service dates prior to the program termination as Franciscan was awaiting direction on if Franciscan could reverse the financial class used to bill uninsured patients for COVID services having service dates prior to the program?s closure. Once Franciscan received guidance, Franciscan reversed the financial class previously used and revised the SEFA accordingly. CORRECTIVE ACTION PLAN: Franciscan Alliance, Inc. will continue to review the reporting requirement guidelines for grants and consult with external experts prior to compilation of the SEFA. This will include, at minimum, review of the grant terms and conditions, and Office of Management and Budget Uniform Guidance requirements and other publicly available information, as necessary, to ensure that the SEFA presents the appropriate amount of expenditures. RESPONSIBLE PERSON: Paul Plomin, Vice President Finance, Franciscan Alliance, Inc. COMPLETION DATE: Ongoing

2021-002 ? Amounts reported to HRSA did not agree to underlying support Cluster: Not applicable Federal Granting Agency: Department of Health and Human Services Award Name: COVID-19 ? Provider Relief Fund Award Year: 2021 Assistance Listing #: 93.498 Criteria Providers who accepted Provider Relief Fund (?PRF?) payments agreed to the Terms and Conditions of the program, which included a requirement to report on the use of the funds. The following line items are required to reported in a provider?s respective portal submissions: ? Total Other Provider Relief Fund Expenses ? 2020 Budget information, including: o Total Column for Total Revenue/Net Charges from Patient Care (Budgeted) for each quarter and for each year, 2020 and 2021 o Total Column for Total Revenue/Net Charges from Patient Care (Actuals) for each quarter and for each year, 2020 and 2021 Condition We noted the following line items reported on portal submissions to HRSA that did not agree to underlying accounting records: ? Actual revenues for two quarters (Q1 2021 and Q2 2021) reported by Franciscan Health Indianapolis & Mooresville (Tax Identification Number (?TIN?) 350913537) did not agree to financial records. Reported quarterly revenue was $7,146,000 and $9,914,000 less than actual quarterly revenue for Q1 2021 and Q2 2021, respectively. ? Total budgeted annual revenue for 2020 and 2021 for Franciscan Health Indianapolis & Mooresville did not agree to the Board approved budget. The budgeted annual revenue reported was $842,000 and $139,000 less than the Board approved budget for 2020 and 2021, respectively. ? Total budgeted annual revenue for 2020 for Franciscan Health Olympia Fields (TIN 362167869) did not agree to the Board approved budget. The budgeted annual revenue reported was $3,092,000 more than the Board approved budget. Cause The cause of the discrepancies noted above are described as follows: ? For Franciscan Health Indianapolis & Mooresville, the discrepancy in the actual revenues reported was due to a system limitation which excluded certain joint venture financial results that should have been captured in the actual revenues reported to HRSA in Q1 and Q2 2021. ? For Franciscan Health Olympia Fields, the budget discrepancies noted above were due to an error in accumulating the budget data by entity/month for quarterly reporting purposes to HRSA. Effect Inaccurate reporting or financial information used to calculate lost revenues could result in HRSA recouping PRF payments received by Franciscan, however, Franciscan?s incremental expenses and cumulative lost revenue were well in excess of amounts received. Questioned Costs No questioned costs were identified as the total amount of other expenses and cumulative lost revenues for Franciscan Health Indianapolis & Mooresville and Olympia Fields exceeded the amount of PRF payments received, such that, if accurate amounts had been reported, Franciscan would still have qualified and met the terms and conditions of the program to keep the PRF payments. PwC Recommendation We recommend that management review and enhance the process for collecting budget and actual revenue data across the various operating sites to ensure the accuracy of required reporting. Management?s Views and Corrective Action Plan Management?s views and corrective action plan is included at the end of this report after the summary schedule of prior audit findings and status.

AUDIT FINDING 2021-002 ? Amounts reported to HRSA did not agree to underlying support. MANAGEMENT?S RESPONSE: Franciscan accepted the Provider Relief Fund (?PRF?) payments and, by not returning the PRFs, it agreed to the terms and conditions of the program. Consistent with PRF?s terms and conditions, Franciscan completed the required Phase 1 and Phase 2 filing requirements using Lost Revenue Option 2. Franciscan?s internal process for compiling the budgeted patient service revenue for the filing consisted of using both: a.) summarized budget models and b.) detail budgets by month. Franciscan?s Board of Trustees the reviews and makes its approval of the multiyear budget using the summarized budget model. Once approved, those summarized models are loaded into a detail budget by month for the year. While great care is used to make sure income statement lines match the summarized model, there is the potential for some movement between income statement lines while maintaining the operating income/(loss) that is consistent with the Board of Trustees? approval. This methodology can cause slight differences in the net patient service revenue between the summarized model and the detailed budget load by month. The differences noted for the Franciscan Health Olympia Fields and the Franciscan Health Indianapolis & Mooresville filings occurred because of this above process. It should be noted that if all the minor variances were removed from the portal filings for Franciscan Health Indianapolis and Mooresville and for Franciscan Health Olympia Fields, the lost revenue would still greatly exceed the PRF payments received. In addition, as part of the terms and conditions of accepting Provider Relief Funds, the reporting requirements were based on tax identification numbers of payment recipients which created complexity related to how Franciscan?s internal financial statements are reported. To comply with the reporting requirements related to net patient service revenue, Franciscan had to manually remove net patient service revenue from internal statements to be consistent with the portal?s filing requirements. On January 1, 2021, Franciscan converted to a new Enterprise Risk Management (?ERP?) system which included the standardization of the entire health system?s chart of accounts and certain net patient service revenue amounts were reclassified to be consistent with the new standardized reporting format. This created a variance with the Franciscan Health Indianapolis and Mooresville net patient service revenue; however, the lost revenues would still greatly exceed the PRF payments received. CORRECTIVE ACTION PLAN: Franciscan Alliance, Inc. will review and enhance the process for collecting budget and actual revenue data across the various sites to confirm the accuracy of required reporting. RESPONSIBLE PERSONS: Paul Plomin, Vice President Finance, Franciscan Alliance, Inc. COMPLETION DATE: December 1, 2022