NORTHWEST MICHIGAN HEALTH SERVICES, INCNon-Profit

AL# 93.224 and 93.527 Health Center Cluster - Significant Deficiency in internal control over federal award program - Special Tests and Provisions: Sliding Fee Discounts Criteria - Health centers are required to have a corresponding schedule of discounts applied and adjusted on the basis of patients' ability to pay and their eligibility. A patient's eligibility to pay is determined on the basis of the official poverty guideline, as revised by DHHS (42 CFR Sections 51c, 107(b)(5) and 56.303(f)). The Center should be implementing and monitoring procedures to properly determine, calculate, and review sliding fee discounts issued to patients in accordance with the Center's sliding fee scale. Condition - During audit procedures of sliding fee adjustments there was one instance where the slide was inappropriately applied based on the sliding fee discount schedule in place at the time of service and several instances supporting documentation was missing. Questioned Costs - None. Context- A nonstatistical sample of 25 sliding fee adjustment transactions were selected for testing. Of this sample one error was identified as incorrect sliding fee was given to the patient and nine applications income documentation was missing from the client's records. Potential Effect - The Center did not comply with the determination of sliding fee discounts based on the federal poverty guidelines in effect for the year ended March 31, 2026. In addition, the Center did not comply with its policies and procedures and may have not properly calculated the sliding fee or discount given to the patients and the discount given, in any, may not have been based on the patient's ability to pay. Cause - The condition is attributable to human error and the lack of internal controls to monitor and review to ensure that the proper sliding fee documentation is being collected and applied. Recommendation - We recommend the Center provide proper training to employees to ensure that the sliding fee discounts are being properly applied and documented. In addition to implementing policies and procedures to ensure the sliding fee discounts are being properly monitored and supervised on a periodic basis to ensure compliance. Views of Responsible Officials and Planned Corrective Actions - Management concurs with this finding and will ensure that controls are established to ensure proper training and monitoring of the sliding fee discounts.

Criteria - Health centers are required to have a corresponding schedule of discounts applied and adjusted on the basis of patients' ability to pay and their eligibility. A patient's eligibility to pay is determined on the basis of the official poverty guideline, as revised by DHHS (42 CFR Sections 51c, 107(b)(5) and 56.303(f)). The Center should be implementing and monitoring procedures to properly determine, calculate, and review sliding fee discounts issued to patients in accordance with the Center's sliding fee scale. Condition - During audit procedures of sliding fee adjustments there were multiple instances where the slide was inappropriately applied based on the sliding fee discount schedule in place at the time of service and multiple applications were missing. Questioned Costs - None. Context- A nonstatistical sample of 40 sliding fee adjustment transactions were selected for testing. Of this sample two errors were identified as incorrect sliding fee was given to the patient, one sliding fee application was missing from the client's records, and one sliding fee inputs did not agree to the application on file. Potential Effect - The Center did not comply with the determination of sliding fee discounts based on the federal poverty guidelines in effect for the year ended March 31, 2024. In addition, the Center did not comply with its policies and procedures and may have not properly calculated the sliding fee or discount given to the patients and the discount given, in any, may not have been based on the patient's ability to pay. Cause - The condition is attributable to human error and the lack of internal controls to monitor and review to ensure that the proper sliding fee documentation is being collected and applied. Recommendation - We recommend the Center provide proper training to employees to ensure that the sliding fee discounts are being properly applied and documented. In addition to implementing policies and procedures to ensure the sliding fee discounts are being properly monitored and supervised on a periodic basis to ensure compliance. Views of Responsible Officials and Planned Corrective Actions - Management concurs with this finding and will ensure that controls are established to ensure proper training and monitoring of the sliding fee discounts.

2022-001 Federal Program CFDA # 93.224 and 93.527 Health Center ClusterSignificant deficiency in internal control over federal award program - Special Tests and Provisions: Sliding Fee DiscountsCriteria ?Pursuant to 2 CFR 200 and the Uniform Guidance, and as noted in the compliance supplement. Health Centers must prepare and apply a sliding fee discount schedule so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient?s ability to pay. The Center may establish a sliding fee discount schedule, approved by the governing board, provided certain criteria in the compliance supplement are met. The Center has established an appropriate policy and sliding fee scale.Condition ?In testing discounts given to patients under the Center?s sliding fee policy, we noted instances where personnel were not following Center guidelines. As required by the Center?s sliding fee discount policy, patients are required to annually renew their applications, to sign and date the applications. Additionally, patients are required to provide income verification annually or within 30 days of service for new patients. We noted instances where existing patients did not have a signed application on file and/or no income support documentation was maintained.Context -A non-statistical sample of 25 sliding fee encounters was selected. In our sample we noted two sliding fee encounters did not have supporting documentation in the file.Effect -Sliding fee encounters that occur without the appropriate family size and annual income information could result in patients not being charged the appropriate fee and/or received an incorrect sliding fee discount.Cause -Employees responsible for implementation and documentation of sliding fee discounts were not monitored to adequately verify processes were being performed as prescribed. Additionally, specific procedures for telehealth visits were not in place and guidance was not readily available to management.Recommendation -Auditors recommend additional training for staff on sliding fee policies and procedures and management monitor and verify processes are being performed as prescribed on a reoccurring basis.Views of Responsible Officials -We concur with the audit finding. While the Center has a policy that meets the compliance requirements, management is responsible for the implementation and monitoring of those processes and procedures. Additional staff training on slide fee discounts is in place and monthly review and testing of compliance with Center sliding fee discount policy will be done.

Finding 2020-001 Federal Program CFDA # 93.224 and 93.527 Health Center Cluster Special Tests and Provisions: Sliding Fee Discounts Material Weakness in Internal Control over Compliance Criteria ? Pursuant to 2 CFR 200 and the Uniform Guidance, and as noted in the compliance supplement. Health Centers must prepare and apply a sliding fee discount schedule so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient?s ability to pay. The Center may establish a sliding fee discount schedule, approved by the governing board, provided certain criteria in the compliance supplement are met. The Center has established an appropriate policy and sliding fee scale. Condition ? In testing discounts given to patients under the Center?s sliding fee policy, we noted instances where personnel were not following Center guidelines. As required by the Center?s sliding fee discount policy, patients are required to annually renew their applications, to sign and date the applications. Additionally, patients are required to provide income verification annually or within 30 days of service for new patients. We noted instances where existing patients did not have a signed application on file and/or no income support documentation was maintained. Questioned Costs - None. Context - A non-statistical sample of 25 sliding fee encounters was selected. The proper supporting documents were not maintained for five encounters tested. Effect - Sliding fee encounters that occur without the appropriate family size and annual income information could result in patients not being charged the appropriate fee and/or received an incorrect sliding fee discount. Cause - Employees responsible for implementation and documentation of sliding fee discounts were not monitored to adequately verify processes were being performed as prescribed. Recommendation - Auditors recommend additional training for staff on sliding fee policies and procedures and management monitor and verify processes are being performed as prescribed on a reoccurring basis. Views of Responsible Officials - We concur with the audit finding. While the Center has a policy that meets the compliance requirements, management is responsible for the implementation and monitoring of those processes and procedures. Additional staff training on slide fee discounts is in place and monthly review and testing of compliance with Center sliding fee discount policy will be done.