THE CHIPPEWA COUNTY WAR MEMORIAL HOSPITAL, INC.

ALN Number, Federal Agency, and Program Name 93.498, U.S. Department of Health and Human Services (HHS), COVID 19 Provider Relief Fund Federal Award Identification Number and Year N/A 2021 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 General and Targeted Distribution Post Payment Notice of Reporting Requirements dated June 11, 2021, recipients may choose to apply PRF payments towards lost revenues using one of three options, up to the amount: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted (prior to March 27, 2020) and actual patient care revenues; or Option iii: calculated by any reasonable methodology of estimating revenues. Condition The Hospital's controls in place for reporting submissions did not identify that Post Payment Notice of Reporting Requirements guidelines were not followed related to the lost revenue calculations. The Period 1 reporting submission for lost revenue did not follow the acceptable options provided by the HHS. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Refer to context below for additional information. Context The Hospital Period 1 reporting submission for lost revenue did not follow the acceptable options provided by the HHS, as noted in the criteria, above. The Hospital reported to HHS that they used option ii to calculate their lost revenue included in their portal submissions. However, the budgeted amounts for patient care revenue relating to the periods in calendar year 2021 were not approved prior to March 27, 2020, therefore, option ii was not allowable. The Hospital should have selected option iii in its portal submission. We noted the Hospital appropriately selected option iii for the Period 2 and 3 reporting submissions. Cause and Effect Appropriate review of the reporting submissions was not completed to ensure the reports followed required guidelines. As a result, the Hospital selected an incorrect methodology option (option ii) for reporting lost revenues. Additionally, because the Hospital used an incorrect option, they did not provide additional information to HHS required under the correct option (option iii). The additional information included an explanation for the reason the Hospital used option iii for reporting lost revenue. Recommendation We recommend that the Hospital implement controls, including levels of review, to ensure that reports are completed and submitted in accordance with the guidelines established by HHS. Views of Responsible Officials and Corrective Action Plan The Hospital reviewed its processes surrounding the methodologies used to report lost revenue and implemented for HRSA reporting periods 2 and 3 the appropriate reporting under option iii. Management believes these additional levels of review have been appropriately implemented to ensure that the proper lost revenue methodology will continue to be used in future reporting periods.

ALN, Federal Agency, and Program Name 93.498, U.S. Department of Health and Human Services, COVID 19 Provider Relief Fund Federal Award Identification Number and Year N/A 2021 Pass through Entity N/A direct funded Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria The U.S. Department of Health and Human Services requires the nonfederal entity to report qualified incurred expenses in order to support that funding received has been appropriately earned. HHS provided specific guidance in the June 11, 2021 Post Payment Notice on how to complete the required reporting of allowable expenses in the HHS PRF Reporting Portal. Condition The Hospital's reporting submissions did not follow HHS guidelines related to the reporting of allowable expenses. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context The Period 1 reporting submissions improperly included expenses totaling $502,520 due to clerical error and inadequate record keeping. As a result, certain payroll and other PRF expenses were overstated in the Period 1 portal submission. These unallowable expenditures were covered by the excess lost revenue, as reported within the Period 1 HHS portal submission. Cause and Effect Appropriate review of the reporting submission was not completed to ensure the report followed the required HHS guidelines for allowable expenses, as defined by HHS guidance. As a result, the expenses reported in the Period 1 HHS portal submission were overstated. Recommendation We recommend the Hospital implement controls, including levels of review, to ensure reports are completed and submitted in accordance with HHS guidelines. Views of Responsible Officials and Corrective Action Plan Management self reported the expense findings, which represented 7 percent of total expenses and qualifying expenses. At the end of reporting Period 2, the Hospital had remaining $12.3 million in lost revenue and qualifying expenses to support additional Provider Relief Funds. Management strives to always report accurately and will implement an additional layer of review of the detailed supporting schedules prior to submitting Period 3 reporting.