Northwestern Memorial Healthcare

Finding 2022-001 ? Activities Allowed or Unallowed and Eligibility Identification of the federal program: Federal Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Assistance Listing No.: 93.461, COVID-19 HRSA COVID-19 Claims Reimbursement for the Uninsured and the COVID-19 Coverage Assistance Fund Federal Award Numbers: Various Federal Award Period of Performance: September 1, 2021 to April 5, 2022 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: ?The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: As part of our testing of the Company?s internal control over allowability as it relates to all accounts identified with a potential COVID-19 account billing indicator that are subsequently reviewed by the Company to determine whether the account can be billed to the HRSA COVID-19 Claims Reimbursement for the Uninsured program, we identified a population of accounts that were improperly excluded from the review for the period September 1, 2021 to December 31, 2021. Cause: The original script to capture potential accounts for the HRSA COVID-19 Claims Reimbursement for the Uninsured program did not include accounts that had a zero balance and/or were in a closed status. Effect or potential effect: Accounts existed that might have been able to be billed to the HRSA COVID-19 Claims Reimbursement for the Uninsured program. Questioned costs: None. Context: Forty accounts were sampled from a population of 20,706 accounts identified with a potential COVID-19 account billing indicator. For 12 (30%) of the 40 accounts sampled, although the account was identified with a potential COVID-19 account billing indicator, the account was excluded from further review for potential billing to the HRSA COVID-19 Claims Reimbursement for the Uninsured program. These accounts were either related to the Company?s HealthLab financial assistance scoring or the patient was previously approved for Company financial assistance, and so these accounts were adjusted off to financial assistance shortly after the account qualified for billing. It was determined that a total of 2,098 (10.13%) accounts were excluded from the Company?s HRSA review for the period September 1, 2021 to December 31, 2021, and, of these 2,098 accounts, 1,898 (90.47%) related to lab accounts that averaged $165 to $190 in gross charges. Federal expenditures for Assistance Listing 93.461 totaled $2,907,040 for the year ended August 31, 2022. Identification as a repeat finding, if applicable: The finding is a repeat of finding 2021-001 from the prior year. Recommendation: The Company should ensure that review controls are properly designed. Views of responsible officials: In response to the prior-year finding, and after the fiscal year ended August 31, 2021, the Company redesigned its allowability review control to include these previously omitted accounts, as applicable and subject to timely claim filing requirements. The corrective action plan was completed and in place by December 31, 2021, shortly after the FY20 Uniform Guidance audit was completed on November 29, 2021. The HRSA COVID-19 Claims Reimbursement for the Uninsured program ceased to accept claims for testing and treatment effective March 22, 2022, and claims for vaccination were no longer accepted after April 5, 2022. Therefore, no further remediation is required at this time.

Finding 2022-002 ? Reporting Identification of the federal program: Federal Grantor: United States Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing No.: 93.498, COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Provider Relief Fund Reporting Entity: Northwestern Memorial HealthCare Group Tax Identification Number (TIN): 364724966 Period of Availability: 01/01/2020?06/30/2022 (Period 3) Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: ?The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? The terms and conditions of the award require the recipient to submit reports as the secretary of HHS determines are needed to ensure compliance with the conditions that are imposed on the payment, and such reports shall be in such form, with such content, as specified by the secretary of HHS in future program instructions directed to all recipients. Condition: The amounts reported for net patient service revenue (NPSR) by payer for calendar year 2022 Quarter 1 (Q1 2022) and Quarter 2 (Q2 2022) were incorrect for Commercial Insurance and Medicare A+B for Northwestern Memorial HealthCare Group TIN?s Period 3 Provider Relief Fund (PRF) Report. Cause: Management?s review of out-of-period adjustments made to NPSR was not sufficiently precise to detect that the incorrect amounts were included in management?s lost revenue calculation workbook used to prepare the Period 3 PRF Report for Northwestern Memorial HealthCare Group?s reporting TIN. Effect or potential effect: NPSR by payer was incorrectly reported for Q1 2022 and Q2 2022 for Commercial Insurance and Medicare A+B. The total NPSR was correct as reported, and there was no impact on resulting lost revenues. Questioned costs: None. Context: We tested five of 10 Periods 2 and 3 PRF Reports submitted to HRSA. For one of the five reports tested, the NPSR amounts reported by payer for two of the six financial classes were incorrect for Q1 2022 and Q2 2022 for Northwestern Memorial HealthCare Group?s reporting TIN as follows: Total Revenue/Net Changes from Patient Care (2022 Actuals) ? As Reported (See Schedule of Findings and Questioned Costs for chart/table) Total Revenue/Net Changes from Patient Care (2022 Actuals) ? Corrected (See Schedule of Findings and Questioned Costs for chart/table) Total Revenue/Net Changes from Patient Care (2022 Actuals) ? Increase/(Decrease) (See Schedule of Findings and Questioned Costs for chart/table) There was no impact on lost revenues reported for these quarters. Federal expenditures for Assistance Listing 93.498 totaled $199,865,192 for the year ended August 31, 2022. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: The Company should ensure that internal controls over the review of PRF Reports are enhanced to include sufficient precision to allow for accurate reporting of NPSR by payer. Views of responsible officials: While there was no impact on lost revenues reported in the Northwestern Memorial HealthCare Group?s TIN Period 3 PRF Report, we agree that the amounts used for out-of-period adjustments were incorrect. Going forward, we will provide additional peer review of PRF Reports to confirm accuracy.

Finding 2021-001 ? Activities Allowed or Unallowed Identification of the federal program: Federal Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Assistance Listing No.: 93.461, COVID-19 HRSA COVID-19 Claims Reimbursement for the Uninsured and the COVID-19 Coverage Assistance Fund Federal Award Numbers: Various Federal Award Period of Performance: 09/01/2020?08/31/2021 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: ?The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: As part of our testing of Northwestern Memorial HealthCare and Subsidiaries? (NMHC) internal control over allowability as it relates to all accounts identified with a potential COVID-19 account billing indicator that are subsequently reviewed by NMHC to determine whether the account can be billed to the HRSA COVID-19 Claims Reimbursement for the Uninsured program, we identified a population of accounts that were improperly excluded from the review. Cause: The original script to capture potential accounts for the HRSA COVID-19 Claims Reimbursement for the Uninsured program did not include accounts that had a zero balance and/or in a closed status. Effect or potential effect: Accounts existed that might have been able to be billed to the HRSA COVID-19 Claims Reimbursement for the Uninsured program. Questioned costs: None. Context: Forty accounts were sampled from a population of 59,415 accounts identified with a potential COVID-19 account billing indicator. For nine (22.5%) of the 40 accounts sampled, although the account was identified with a potential COVID-19 account billing indicator, the account was excluded from further review for potential billing to the HRSA COVID-19 Claims Reimbursement for the Uninsured program. These accounts were either related to NMHC?s Healthlab financial assistance scoring, or the patient was previously approved for NMHC financial assistance, and so these accounts were adjusted off to financial assistance shortly after the account qualified for billing. It was determined that a total of 2,730 (4.6%) accounts were excluded from NMHC?s HRSA review during the fiscal year, and of these 2,730 accounts, 2,504 (92%) related to lab accounts that averaged $165 to $190 in gross charges. Federal expenditures for Assistance Listing 93.461 totaled $6,259,217 for the year ended August 31, 2021. Identification as a repeat finding, if applicable: The finding is a repeat of finding 2020-001 from the prior year. Recommendation: NMHC should ensure review controls are properly designed. Views of responsible officials: In response to the prior year finding and after the fiscal year ended August 31, 2021, NMHC redesigned its allowability review control to include these previously omitted accounts, as applicable and subject to timely claim filing requirements. The corrective action plan was completed and in place by December 31, 2021, shortly after the FY20 Uniform Guidance audit was completed on November 29, 2021. The HRSA COVID-19 Claims Reimbursement for the Uninsured program ceased to accept claims for testing and treatment effective March 22, 2022 and claims for vaccination were no longer accepted after April 5, 2022. Therefore, no further remediation is required at this time.

Finding 2021-002 ? Special Tests and Provisions Identification of the federal program: Federal Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Assistance Listing No.: 93.461, COVID-19 HRSA COVID-19 Claims Reimbursement for the Uninsured and the COVID-19 Coverage Assistance Fund Federal Award Numbers: Various Federal Award Period of Performance: 09/01/2020?08/31/2021 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: ?The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: An NMHC entity that was acquired on January 1, 2021, did not have internal controls in place over the balance billing special tests and provisions requirement of the HRSA COVID-19 Claims Reimbursement for the Uninsured program. Cause: For the NMHC entity in question, accounts with a COVID-19 billing indicator were manually reviewed for allowability and eligibility from a designated work queue. Once the account was billed to the HRSA COVID-19 Claims Reimbursement for the Uninsured program, it was manually removed from the work queue and there was no system or manual internal control in place during the fiscal year to ensure that a patient would not be sent a statement. Effect or potential effect: A patient may be balance billed or charged cost-sharing for COVID-19 testing, testing-related items and services, treatment, or vaccine administration fees for which claims reimbursement was received under the HRSA COVID-19 Claims Reimbursement for the Uninsured program. Questioned costs: None. Context: Federal expenditures for Assistance Listing 93.461 for the NMHC entity in question totaled $681,470 from January 1, 2021 through August 31, 2021, representing 10.9% of total federal expenditures of the major federal program of $6,259,217 for the year ended August 31, 2021. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: NMHC should ensure an internal control is designed and placed in operation over the balance billing requirement for this NMHC entity. Views of responsible officials: The HRSA COVID-19 Claims Reimbursement for the Uninsured program ceased to accept claims for testing and treatment effective March 22, 2022 and claims for vaccination were no longer accepted after April 5, 2022. Management will review accounts with the COVID-19 billing indicator to ensure that a patient is not sent a statement and document the review for the NMHC entity acquired on January 1, 2021. Should HRSA funding be reinstated, NMHC will ensure an internal control is designed and placed in operation over the balance billing requirement for this NMHC entity.

Section III?Federal Award Findings and Questioned Costs Finding 2020-001 ? Activities Allowed or Unallowed Information on the federal program: Federal Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Assistance Listing No.: 93.461, COVID-19 Testing for the Uninsured Federal Award Numbers: Various Federal Award Period of Performance: 02/04/2020?08/31/2020 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: ?The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: As part of our testing of Northwestern Memorial HealthCare and Subsidiaries? (NMHC) internal control over allowability as it relates to all accounts identified with a potential COVID-19 account billing indicator that are subsequently reviewed by NMHC to determine if the account can be billed to the HRSA testing for uninsured program, we identified a population of accounts that were improperly excluded from the review. Cause: The original script to capture potential accounts for the HRSA testing for uninsured program did not include accounts that had a zero balance and/or in a closed status. Effect or potential effect: Accounts existed that might have been able to be billed to the HRSA testing for uninsured program. Questioned costs: None Context: Forty accounts were sampled from a population of 27,914 accounts identified with a potential COVID-19 account billing indicator. For 10 (25%) of the 40 accounts sampled, although the account was identified with a potential COVID-19 account billing indicator, the account was excluded from further review for potential billing to the HRSA testing for uninsured program. These accounts were either related to NMHC?s Healthlab financial assistance scoring, or the patient was previously approved for NMHC financial assistance, and so these accounts were adjusted off to financial assistance shortly after the account qualified for billing. Upon further investigation, it was determined that a total of 1,226 (4.4%) accounts were excluded from NMHC?s HRSA review and of these 1,226 accounts, 1,188 (97%) related to lab accounts that averaged $100 in gross charges. Federal expenditures for Assistance Listing 93.461 totaled $8,635,133 for the year ended August 31, 2020. Identification as a repeat finding, if applicable: The finding is not a repeat finding. Recommendation: NMHC should redesign its allowability review control to include these previously omitted accounts, as applicable and subject to timely claim filing requirements. Views of responsible officials: NMHC agrees with the finding and has developed a plan to correct the finding.

Information on the federal program: CFDA 93.638, Federal ID IL1CMS33144 and Pass-Through Award 60041550 NMFF: ACA-Transforming Clinical Practice Initiative: Practice Transformation Networks (PTNs) Centers for Medicare and Medicaid Services passed through Northwestern University (grant award year 2015). Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, US Code of Federal Regulation, Part 200, Section 303 (2 CFR 200.202) requires that non-Federal entities must: ?Establish and maintain effective internal control over the Federal award that provided reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States and the ?Internal Control integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: Internal controls over allowable cost for payroll were not functioning as designed. Cause: Timecards for payroll were processed without approval. The internal controls over payroll were not functioning as designed. Effect or potential effect: Unallowable costs related to payroll could be reimbursed without supervisory review and approval. Questioned costs: None identified. Context: A significant deficiency was identified in the prior year Uniform Guidance audit regarding the timely approval of the timecards. Per management, the control was remediated as of February 28, 2019. Based on a sample size of 23 payroll timecards, after the remediation date, we identified two timecards that were not approved within the payroll system after remediation. The total of unapproved payroll totaled $3,336 and the total payroll tested for the period after remediation was $33,284, while the total payroll for the program was $572,154 and total federal expenditures totaled $731,433. Identification as a repeat finding, if applicable: A significant deficiency was identified in the prior year Uniform Guidance audit, finding 2018-001, regarding the timely approval of the payroll timecards. Recommendation: We recommend that management review the design of the internal controls to ensure that the approval of timecards is performed before the payroll is charged to the grant. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

Information on the federal program: CFDA 93.638, Federal ID IL1CMS33144 and Pass-Through Award 60041550 NMFF: ACA-Transforming Clinical Practice Initiative: Practice Transformation Networks (PTNs) Centers for Medicare and Medicaid Services passed through Northwestern University (grant award year 2015). Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, US Code of Federal Regulation, Part 200, Section 303 (2 CFR 200.202) requires that non-Federal entities must: ?Establish and maintain effective internal control over the Federal award that provided reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States and the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: Internal controls around the approval of grant fringe benefit rate development are not designed appropriately. In addition, the internal controls over the application of the fringe benefit rate to salaries is not designed appropriately to approve the fringe expense charged. Cause: Internal controls are not designed at the appropriate level to review the allocation of benefits to the grant level. Effect or potential effect: Unallowable fringe benefits could be charged to the grant. Questioned costs: None identified. Context: A significant deficiency was identified around the design of the grant fringe benefit rate development and allocation internal control. Management reviews the fringe benefit allocation in totality; however, the review and approval are not documented for the allocation or the rate development. The fringe benefits charged to the grant were $95,865, while the total expenditures for the grant were $731,433. Identification as a repeat finding, if applicable: The finding is not a repeat finding. Recommendation: We recommend that management formalize the review of the rate development and allocation of fringe benefits in totality and at the grant level. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

Information on the federal program: CFDA 93.638, Federal ID IL1CMS33144 and Pass-Through Award 60041550 NMFF: ACA-Transforming Clinical Practice Initiative: Practice Transformation Networks (PTNs) Centers for Medicare and Medicaid Services passed through Northwestern University (grant award year 2015). Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, US Code of Federal Regulation, Part 200, Section 303 (2 CFR 200.202) requires that non-Federal entities must: ?Establish and maintain effective internal control over the Federal award that provided reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States and the ?Internal Control Integrated. Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Condition: Management prepared, reviewed and submitted performance reports required; however, documentation of management?s review was not retained. Cause: Management does not have adequate internal controls and policies and procedures in place over the reporting process to ensure sufficient documentation of the control is retained. Effect or potential effect: Reporting errors could occur and not be identified on a timely basis. Questioned costs: None identified. Context: Northwestern Memorial HealthCare is required to file technical progress reports both quarterly and bi-annually for the Transforming Clinical Practice Initiative: Practice Transformation Networks (PTNs) Centers for Medicare and Medicaid Services program. For the two quarterly reports and one bi-annual report selected for testing, there was no evidence of management review. Total federal expenditures were $731,433 for the program for the year ended August 30, 2019. Identification as a repeat finding, if applicable: The finding is not a repeat finding. Recommendation: We recommend that management review its internal controls and policies and procedures over the report review and approval process. Such controls should include documentations of the review and approval of the reports. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.

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