Harrison County Community Hospital DistrictLocal Government

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund and American Rescue Plan Rural Distribution; Noncompliance Finding/Material Weakness; Activities Allowed Compliance Requirement. Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116-260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. The PRF funds may not be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Condition: The Hospital District did not meet the requirement that the PRF funds be used to reimburse expenses that have not been reimbursed by other sources or that other sources are obligated to reimburse. Cause: The Hospital District's summary spreadsheet for tracking federal grant expenditures contained information from multiple sources. When the expenditures were compiled into the summary spreadsheet used for reporting, procedures were not in place to prevent duplication. Effect: The Hospital District duplicated expenditures within the listing of PRF expenditures. Questioned Costs: Known questioned costs are $89,514. The Hospital District had unused lost revenues of $316,395 after reporting period 4 was completed. Therefore, after considering the effects of the known questioned costs identified, the Hospital District would still have unused lost revenues to carryforward to future reporting periods in the amount of $226,881. Perspective Information: The known questioned costs of $89,514 consisted of two separate components. The first component consisted of $87,350 of known questioned costs. Sampling was not necessary on this component as the entire amount was deemed to have been duplicated. The second component consisted of a sample of 10 expenses totaling $23,602 from a population of 80 expenses totaling $87,742. Each item tested in the second component contained a small amount of duplicated expenses. Total duplicated expenses identified were $2,164. The sample was not intended to be a statistically valid sample. Repeat Finding: N/A Recommendations: We recommend policies and procedures over federal grant reporting be strengthened to ensure expenditures are not already included in the federal grant expenses to avoid duplication of expenses. Views of Responsible Officials: The Hospital District agrees with this finding of noncompliance and materialweakness in internal control over compliance and will be implementing a plan of correction to include another individual independent of the reporting process to review the federal grant expenses prior to submission.

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Significant Deficiency; Reporting Compliance Requirement. Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116-260). Eligible health care providers received PRF appropriations for health care related expenses or lost revenues attributable to coronavirus. Recipients who received one or more payments exceeding $10,000 are required to report in each applicable reporting period. Lost revenues are calculated using either option i, option ii, or option iii. For option ii, lost revenues are calculated for each quarter during the period of availability, as a standalone calculation, with budgeted quarters serving as a baseline. Reporting entities may use budgeted revenues if the budget(s) and associated documents covering the Period of Availability were established and approved prior to March 27, 2020. Condition: The Hospital District selected option ii for the reporting of budgeted revenues for 2020 to actual revenues for all of 2020 and the first two quarters of 2021. The Hospital District should have selected option iii for the following reasons: (1) The Hospital District's approved budget did not include the second quarter of 2021, however, the Hospital District did not claim any lost revenues during this quarter, (2) the Hospital District utilized a reasonable methodology to report actual revenues which consisted of actual claims charges and payments by payor, however, this methodology did not exactly reflect the actual revenue reported in the general ledger, and (3) the Hospital District made modifications to actual revenue for retail 340b receipts and Medicare's share of reimbursed expenses from the Medicare cost report. Such adjustments, while documented are not consistent with the option ii methodology. Cause: The budget used by the Hospital District that was approved by March 27, 2020, did not include the second quarter of 2021 and there were modifications made to actual revenues reported. Effect: The Hospital District reported lost revenues on the PRF portal under option ii instead of option iii. Questioned Costs: None. The option selected to report lost revenues was not accurate and the Hospital District should have reported under option iii for the reasons noted. Perspective Information: We tested the Period 1 report submitted during the reporting period to supporting documentation to determine if the report was completed accurately. Repeat Finding: N/A Recommendations: We recommend policies and procedures over federal grant reporting be strengthened to ensure the proper reporting of lost revenues in future PRF filings. Views of Responsible Officials: The Hospital District acknowledges the error in the reporting options and that option iii appears to be the more appropriate methodology under the circumstances but will note that the guidance surrounding these reporting options was continually changing and subject to varying interpretations. The methodology we utilized to report lost revenues was a prudent methodology and was based on actual claims charges and payments originating out of our billing system for each payor class. This methodology should approximate the actual revenues reported on the general ledger but due to the financial statements containing estimates for contractual allowances and uncollectible accounts, the actual claims payments from our billing system did not match the actual revenues we reported in our financial statements. In regards to the modifications made to actual revenues reported on the general ledger, we understand that the logic of reducing eligible COVID-19 expenses by the amount that Medicare will reimburse on the Hospital's cost report. As a critical access hospital, we are reimbursed our Medicare proportionate share of expenses when we file the Medicare cost report. Therefore, when computing lost revenues, we chose to use the same approach on revenue reporting for the Medicare reimbursement of COVID-19 expenses. The approach to lost revenue is to look at actual revenue compared to budgeted revenue. For the Hospital District, Medicare reimbursement of COVID-19 expenses was not an item that we included in budgeted revenue. In totaling actual revenues, the Medicare reimbursement of COVID-19 expenses was excluded for two reasons: (1) Reimbursement had already been used to reduce expenses. If left in actual revenues, there would have been a further reduction to lost revenues, essentially doubling the reduction of the provider relief fund reimbursement, something that is not intended, (2) the COVID-19 Medicare reimbursement was not included in the budgeted revenues for the periods, so by not having the Medicare reimbursement included in actual to budget, that approach gives an apples-to-apples comparison of actual to budgeted revenues for the periods.