OSCEOLA COMMUNITY HOSPITAL, INC.

2021-004 Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #420890973 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Health Center is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: During testing we identified the following: - No formal documentation of review and approval of the Health Center?s final expenditures listing identified as eligible and claimed under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution program (the program) was retained. - No documentation was retained to support the Health Center?s Medicare reimbursement calculated on a per department basis used to reduce expenses claimed under the program. - COVID specific salaries and general salaries claimed under other sources of funding were claimed under the program. Net costs of $46,020. - COVID specific salaries, hazard pay, and premium relief payments were claimed twice under the program. Net costs of $846,991. - Utility expenses relating to three non-patient revenue generating departments and utility expenses for a building rented to a third party were claimed under the program. Net costs of $34,561. - Supply expenses claimed under other sources of funding and supply expenses relating to two nonpatient revenue generating departments were claimed under the program. Net costs of $76,727. - One COVID supply expense and insurance expense were overclaimed under the program based upon review of supporting documentation. Net costs of $3,027. - No formal documentation of review and approval of the Health Center?s special report submitted to the Department of Health and Human Services for Period 1 TIN #420890973 was retained. - The quarterly expenses claimed and reported within the unreimbursed expense section in the special report were not based upon actual quarterly expenses incurred. Expenses net of Medicare reimbursement were calculated, and these expenses were then spread evenly across five quarters (Quarter 2 of 2020 through Quarter 2 of 2021) applicable to Period 1. In addition, the $940,769 of unreimbursed expenses was spread across the different expenses categories through a prorata calculation. Cause: Management did not retain documentation of the review and approval of the final expenditures listing and the special report submitted to the Department of Health and Human Services for Period 1 TIN #420890973. In addition, no documentation was retained to support the Health Center?s Medicare reimbursement calculation. When preparing the final expenditures listing, management overlooked the different types of salaries being claimed under other funding sources and did not ensure salaries were only claimed once under a funding source. Management claimed utility expenses and supply expenses from non-patient revenue driven departments. In addition, insurance expense was overclaimed based upon review of supporting documentation and there was a transposition error within the final expenditures listing relating to a supply expense. Management also did not complete the special report based upon actual expenses incurred by quarter. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures are claimed under the program and included within the special report. Claimed expenses of $3,656,618, after also including unreimbursed expenses of $940,769 included within the special report submitted to the Department of Health and Human Services for Period 1 TIN #420890973, were overstated by $66,577. Questioned Costs: The Health Center?s total questioned costs are $66,557. However, the Health Center reduced expenses by Medicare reimbursement calculation at the departmental level in which supporting documentation was not retained. If the Health Center calculates an overall Medicare reimbursement calculation based upon their 2020 Cost Report, the Medicare reimbursement percentage is lower than the department level rates used and the Health Center would not have any questioned costs as there would be excess unreimbursed expenses identified by the Health Center estimated at $37,000. Claimed expenses of $3,656,618, after also including unreimbursed expenses of $940,769, included within the special report submitted to the Department of Health and Human Services for Period 1 TIN #420890973 were overstated by $66,577. Context: Summary level testing was performed over mortgage, utilities, insurance, technology fees, and personnel and fringe benefits. In addition, a nonstatistical sample of 60 ($727,081 gross expenses) out of a population greater than 250 transactions relating to general and administrative and healthcare related expenses, including supplies, equipment, and facilities ($984,839 gross expenses) were tested. Unreimbursed expenses on the report were included in the sample population and subject to testing. Key line items were tested on the special report submitted to the Department of Health and Human Services for Period 1. Repeat Finding from Prior Years: No Recommendation: We recommend management retain formal documentation of the review and approval process of the final expenditures listing and special reports submitted to the federal agency. In addition, we recommend management update any future special reports submitted to the Department of Health and Human Services as deemed appropriate. Views of Responsible Officials: Management agrees with the finding.