MEMORIAL HOSPITAL D/B/A MEMORIAL HEALTHCARENon-Profit

Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients of Provider Relief Fund and American Rescue Plan Rural Distribution (PRF) payments must also comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services. The Health Resources and Services Administration (HRSA) has established certain guidelines for the calculation and reporting of lost revenues. In accordance with this guidance, lost revenues are calculated for each quarter during a period of availability, as a standalone calculation, with 2019 quarters serving as a baseline. For each calendar year of reporting, the applicable quarters where lost revenues are demonstrated are totaled to determine the annual lost revenues amount. Condition/Context: The Organization did not complete the PRF reporting in accordance with the U.S. Department and Health and Human Services guidance. Amounts reported in the Periods 3 and 4 Health Resources and Services Administration (HRSA) submissions did not agree to the underlying calculation of lost revenue. As a result of this, lost revenue amounts reported to HRSA for the periods of availability that ended in the year ended December 31, 2022 were understated by $983,963. Effect: The amounts reported to HRSA were not in accordance with established U.S. Department of Health and Human Services reporting guidance. Cause: The Organization?s calculation of lost revenue was correctly prepared on a quarterly basis, with lost revenue amounts calculated as a standalone calculation in accordance with HRSA guidance. In preparing its Period 3 and Period 4 reports, an oversight by management led to incorrect reporting whereby lost revenue did not reflect quarterly standalone amounts (lost revenue as calculated for certain quarters was offset by amounts calculated as the excess of actual over budgeted amounts for quarters that that did not demonstrate having lost revenues. The Organization?s internal control did not detect and correct this prior to report submission. Recommendation: We recommend that management implement procedures to ensure that lost revenues be reported in accordance with HRSA reporting guidance, which under Option 3 reporting would require input of zero for a quarter where there is no lost revenue.

Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Disaster Grants - Public Assistance payments must be used for allowable expenses described in the grant agreement and specified in guidance issued by the U.S. Department of Homeland Security, Federal Emergency Management Agency (FEMA). Activities allowed and eligible costs have been outlines in the FEMA Public Assistance Program and Policy Guide, FP-104-009-2, April 2-18 (PAPPG) and FEMA COVID-19 Fact Sheets and Guidance. The purpose of the Public Assistance Grant Program as it relates to the COVID-19 pandemic is to provide funds for emergency protective measures ? actions taken to eliminate or lessen immediate threats to lives, public health, or safety related to the pandemic. Condition/Context: The Organization included expenses that did not meet criteria of an allowable expense as defined by the FEMA guidance. The Organization included $3,726 of testing supplies that were not related to COVID-19. This was not a statistically valid sample. Effect: The Organization claimed expenses that were not in accordance with established FEMA guidance and are therefore deemed unallowable. Cause: An error in the coding of certain testing supplies was not detected by the Organization?s internal control process. Recommendation: We recommend that management implement procedures to ensure that the most recent guidance is reviewed and understood and that information used in accumulating allowable expenses is reviewed, with errors addressed.

Information on the federal program ? Department of Health and Human Services - Health Resources and Services Administration (HRSA) ? ALN 93.498 ? COVID-19: Provider Relief Fund ? 2020 Criteria or specific requirement ? Reporting (45 CFR 75.342) and Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623). HRSA has indicated that entities which received Provider Relief Fund distributions exceeding $10,000 in the aggregate during a Payment Received Period are required to report in each applicable Reporting Period. Funds received can be applied toward allowable expenses that were necessary to support patient care efforts to prevent, prepare for, or respond to the coronavirus that another source has not already reimbursed or is obligated to reimburse, or lost revenues. Condition ? Entities are permitted to utilize one of three different methods for reporting lost revenues. HRSA has set forth various guidelines for each method of reporting. Cause ? Memorial selected the budget-to-actual method for reporting lost revenues (commonly referred to as Option ii or #2) during the Reporting Period applicable to distributions received between April 1, 2020 and June 30, 2020. A comprehensive review of the reporting submission was not performed prior to finalization. Effect or potential effect ? Memorial submitted its reporting information inconsistent with guidelines set forth by HRSA, as it pertains to using the budget-to-actual method for calculating lost revenues. Questioned costs ? Unknown. Context ? When calculating 2020 lost revenues, Memorial used a 2020 budget which had been approved prior to March 27, 2020 but did not cover the entire period of availability (January 1, 2020 to June 30, 2021). Instead, the 2020 budget covered calendar year 2020 only. When calculating lost revenues for the first two calendar quarters of 2021, Memorial used a 2021 budget that was not approved prior to March 27, 2020. Identification as a repeat finding ? Not applicable. Recommendation ? Management should implement a more stringent review process for future applicable Reporting Periods. Views of responsible officials ? Memorial agrees with this finding, however, does note that its remaining COVID-related expenses and lost revenues still exceeded the amount of the Provider Relief Fund program money it received. See separate auditee document for planned corrective action.