MCLAREN HEALTH CARE CORPORATION AND SUBSIDIARIES

Assistance Listing, Federal Agency, and Program Name 93.493, U.S. Department of Health and Human Services, Congressional Directives Federal Award Identification Number and Year CE1HS52674 & CE1HS53568 2025 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria The Corporation is required to maintain and follow written procurement procedures that comply with Uniform Guidance procurement standards, including the requirements in 2 CFR 200.317-200.327 regarding procurement methods and documentation of the history of procurement transactions. The Corporation is also required to comply with suspension and debarment requirements, including verification procedures required under 2 CFR 200.212, 2 CFR 200.318(h), 2 CFR 180.300, and 48 CFR 52.209-6. The requirements state that procurements paid with federal funds are supported by documentation showing the method of procurement, the basis for contractor selection, and compliance with suspension and debarment requirements. Condition The Corporation’s procurement and suspension/debarment policies and procedures were not in conformance with Uniform Guidance requirements. In addition, procurement records for the items tested did not contain sufficient documentation to support the procurement method used, the basis for contract selection, or compliance with suspension and debarment requirements. Questioned Costs $1,350,000 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 The questioned costs represent activity reported on the SEFA incurred under contracts not in compliance with federal procurement standards. Context For both contracts tested, no records were available to support the procurement method, contractor selection, or performance of required suspension/debarment verification procedures. Based on the items tested, the issue was not an isolated documentation exception but reflected a control and compliance deficiency affecting the compliance areas of procurement and suspension/debarment. Cause and Effect The Corporation did not have sufficiently developed procurement, suspension, and debarment policies and procedures aligned to Uniform Guidance requirements. As a result, compliance procedures over these areas were not adequately established or performed. Without Uniform Guidance-compliant procurement policies, required procurement history documentation, and evidence of suspension/debarment verification, the Corporation cannot demonstrate that contracts charged to the federal award were procured in accordance with federal requirements. This increases the risk of noncompliance with procurement and suspension/debarment requirements and resulted in material noncompliance over the major program. Recommendation The Corporation should update and formally adopt written procurement, suspension, and debarment policies and procedures to conform to Uniform Guidance requirements and should implement procedures to ensure those policies are consistently followed and documented for all federally funded procurements. Views of Responsible Officials and Planned Corrective Actions The Corporation concurs with the finding. The Corporation will update and formally adopt written procurement, suspension, and debarment policies and procedures to conform to Uniform Guidance requirements and implement procedures to ensure those policies are consistently followed and documented for all federally funded procurements.

Assistance Listing, Federal Agency, and Program Name 93.493, U.S. Department of Health and Human Services, Congressional Directives Federal Award Identification Number and Year CE1HS52674 & CE1HS53568 2025 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Under 2 CFR 200.305, the Corporation is required to maintain and follow documented cash management procedures that are consistent with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance requirement is that cash drawdown and disbursement practices for federal awards are governed by formal written policies and procedures designed to ensure compliance with applicable cash management requirements. Condition The Corporation’s cash management policies were not in conformance with Uniform Guidance requirements. Although cash management transactions tested were performed in accordance with existing practices, the Corporation did not have a written cash management policy that met Uniform Guidance requirements. Questioned Costs None 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 - For all cash management transactions selected for testing, controls and procedures were followed in practice; however, no written policy existed that met Uniform Guidance requirements. Accordingly, the finding reflects a formal policy deficiency rather than identified transaction-level exceptions within the items tested. Cause and Effect The Corporation did not have a written cash management policy and related procedures in place that were aligned with Uniform Guidance requirements. As a result, compliance in this area was not supported by a formal policy framework. Without documented cash management policies and procedures, the Corporation cannot demonstrate that its cash management practices are formally designed and administered in accordance with federal requirements. This increases the risk of inconsistent application of cash management practices and noncompliance with federal cash management requirements, and it resulted in material noncompliance over the major program Recommendation The Corporation concurs with the finding. The Corporation will implement and formally adopt written cash management policies and procedures that conform to Uniform Guidance requirements and ensure those procedures are consistently followed and documented.

ALN Number, 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 Distributions Post Payment Notice of Reporting Requirements dated October 27, 2022, published by the U.S. Department of Health and Human Services (HHS), allowable expenses paid with general and targeted PRF distributions may be reported as a use of PRF funds, provided that the expenses have not been reimbursed by another source. Additionally, per the Health Resources and Services Administration (HRSA) PRF Reporting Portal user guide, "the reporting entity must report the use of these payments by indicating the quarterly expenses reimbursed for these payments" once these expenses have been entered, and the portal will automatically calculate an unreimbursed expense amount for any PRF expenses entered that exceed PRF funding received. As a result of this calculation, the directions from HRSA require users to only input expenses related to the current period's payments in the current portal submission. Condition - The Corporation's controls in place for reporting submissions did not identify that guidelines were not followed related to the reporting of expenses. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A - Refer to context below for additional information Context - The reporting submission for health care expenses did not follow the guidelines published by HHS. The Corporation's Period 2 and Period 3 portal submissions overstated expenses by $3,032,735 and $6,185,506, respectively, that were included within previously submitted portal submission. These expenses should not have been re entered in the Period 2 and Period 3 submissions. Due to the Corporation having excess allowable health care expenses and lost revenue reported in the portal submissions that could have been utilized to support the retention of the PRF funds, the Corporation still would have qualified to recognize all PRF payments received in Period 2 and Period 3. Cause and Effect - The review process surrounding the expenses reported was not sufficient to ensure that the expenses were accurately reported. As a result, the report submitted was inaccurate, but the schedule of expenditure of federal awards was not impacted. Recommendation - We recommend the Corporation enhance controls, including additional 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 - The Corporation accepts the finding and will implement additional layers of review regarding expense submission to ensure the reports are submitted within the established guidelines. As stated above, the lost revenue from the COVID-19 pandemic more than offsets this finding, and there are no resulting PRF recognition issues.

ALN Number, Federal Agency, and Program Name- 97.036, Department of Homeland Security, COVID 19 Disaster Grants - Public Assistance (Presidentially Declared Disasters), Federal Award Identification Number and Year - - 152026, 151966, 151973, 150829, 153408, 151438, 163962, 158484, 151334, 150837, 158569, 158528, 161086, 158446, 158452, 158552, 158407, 158433, 151457, 158436, all relate to 2021 year., Pass-through Entity - Michigan Department of State Police, Finding Type - Material weakness, Repeat Finding - No, Criteria - Uniform Grant Guidance, section 2 CFR 200.510(b) states that the schedule of expenditures of federal awards (SEFA) must include total federal awards expended., Condition- The Corporation's SEFA provided did not follow the rules and regulations to ensure the SEFA was complete. , Questioned Costs- None, Identification of How Questioned Costs Were Computed - N/A, Context - The initial SEFA provided did not include all federal awards expended as required under Uniform Grant Guidance section 2 CFR 200.510(b). The initial SEFA excluded funding under ALN 97.036 that had been obligated and expended as of the Corporation's year end. , Cause and Effect- Appropriate review of the SEFA was not performed to ensure the SEFA was complete. , Recommendation- We recommend the Corporation implement controls, including levels of review, to ensure the SEFA is complete. , Views of Responsible Officials and Corrective Action Plan- The Corporation will review the process surrounding SEFA preparation to ensure the appropriate levels of review are in place to prevent this issue from recurring. The Corporation identified that the initial SEFA provided during the Single Audit process omitted certain federal awards expended during the period. This resulted from a misunderstanding of applicable amounts required to be included on the SEFA by individuals involved in the compilation process. The Corporation is highly aware of the federal awards that were initially omitted and has appropriate controls in place to ensure compliance with all provisions of laws, regulations, contracts and grant agreements pertaining to these awards.