Macon County Samaritan Memorial HospitalLocal Government

2024-002 USDA REQUIREMENTS Federal Agency: U.S. Department of Agriculture Program Title: Community Facilities Loans and Grants Assistance Listing Number: 10.766 Award Period: January 1, 2024 to December 31, 2024 Type of Finding: Compliance and Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Under the terms and conditions of the agreements with the USDA the Hospital is required to meet minimum requirements of Historical Debt Service Coverage Ratio of 1.25. Condition: The Hospital failed to meet the minimum Historical Debt Service Coverage Ratio for the year ended December 31, 2024. Questioned costs: None Cause: The Hospital has experienced financial challenges since the inflationary pressures associated with the COVID-19 pandemic which has negatively impacted operating results. Effect: The Hospital is not in compliance with the terms and conditions of the agreement. Recommendation: Management should continue to focus on making operational improvements to achieve the minimum level of Historical Debt Service Coverage of 1.25, as required. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding. Management has worked with the USDA to receive a waiver related to the noncompliance with the Historical Debt Service Coverage Ratio.

2022 ? 001 Federal agency: U.S. Department of Health and Human Services Other Programs Federal program title: COVID 19 Provider Relief Funding Assistance Listing Number: 93.498 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: Period 4 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Reporting Criteria or specific requirement: The Provider Relief Funds were provided under the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and are to be used to prevent, prepare for, and respond to coronavirus and that the funds shall reimburse the recipient only for expenses or lost revenues that are attributable to coronavirus. Condition: During our testing, we identified the Hospital did not have internal controls in place to ensure reporting was completed in accordance with HHS guidelines. Questioned costs: None Context: As reflected in the prior year schedule of findings, item 2021-002 was identified related to the Hospital?s calculation of lost revenues not being measured consistently between budgeted and actual amounts when reporting Period 1 lost revenues. For Period 4 the calculation of lost revenues was not updated and included the same inconsistent measurement between budgeted and actual amounts. Cause: For Period 4 reporting management identified that they were not aware that they needed to update the previous reporting of lost revenues. Upon notification management attempted to correct the reporting after the original submission but were unable to access the inputs to correct. Effect: The calculation of lost revenues continues not to be measured inconsistently as previously identified. However, regarding the Period 4 payments management has reported sufficient expenses to support the amount of COVID-19 Provider Relief Fund and American Rescue Plan Rural Distributions received. Repeat Finding: Yes Recommendation: We recommend the Hospital design controls to ensure that reporting is completed in accordance with latest HHS guidelines. Views of responsible officials: There is no disagreement with the audit finding.

2021 ? 001 Federal agency: U.S. Department of Health and Human Services Other Programs Federal program title: COVID-19 Provider Relief Funding Assistance Listing Number: 93.498 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: Period 1 Type of Finding: Material Weakness in Internal Control in and over Compliance Compliance Requirement: Allowable Costs Criteria or specific requirement: The Provider Relief Funds were provided under the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and are to be used to prevent, prepare for, and respond to coronavirus and that the funds shall reimburse the recipient only for expenses or lost revenues that are attributable to coronavirus. Condition: The Hospital?s internal controls over compliance related to covid expenditures were not effective as the Hospital reported patient revenue write-offs related to Covid-19 patients as expense. Questioned costs: N/A Context: The Hospital experienced significant write-offs on claims associated with treating Covid-19 patients as a result of minimal reimbursement provided by insurers or other sources. Cause: Given the complexity associated with the rules and regulations of the program as well as the uncertainty given changing regulations management believed patient write-offs to be an allowable expense. Effect: The Hospital?s internal controls around compliance were not effective in identifying allowable expenses associated with Covid-19. Repeat Finding: N/A Recommendation: We recommend the Hospital design controls to ensure that expenses are reported in accordance with latest HHS guidelines. Views of responsible officials: There is no disagreement with the audit finding. Management has identified additional Covid-19 expenses that were not included with the Period 1 submission that they believe would offset the issue identified above.

2021 ? 002 Federal agency: U.S. Department of Health and Human Services Other Programs Federal program title: COVID 19 Provider Relief Funding Assistance Listing Number: 93.498 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: Period 1 Type of Finding: Material Weakness in Internal Control in and over Compliance Compliance Requirement: Reporting Criteria or specific requirement: The Provider Relief Funds were provided under the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136, 134 Stat. 563) and are to be used to prevent, prepare for, and respond to coronavirus and that the funds shall reimburse the recipient only for expenses or lost revenues that are attributable to coronavirus. Condition: During our testing, we identified the Hospital did not have internal controls in place to ensure reporting was completed in accordance with HHS guidelines. Questioned costs: $500,000 Context: During our testing, it was identified that the Hospital?s calculation of lost revenues was not measured consistently between budgeted and actual amounts. Cause: Management identified that error was made in the calculation of lost revenues by erroneously excluding certain state Medicaid payments in actual results that were included in budgeted amounts. Effect: The calculation of lost revenues was not measured consistently as the state payments were included in the budgeted amounts but not factored into the actual results. The effect of this was to overstate the amount of lost revenues calculated given the error. Repeat Finding: N/A Recommendation: We recommend the Hospital design controls to ensure that reporting is completed in accordance with latest HHS guidelines. Views of responsible officials: There is no disagreement with the audit finding. Management has identified additional Covid-19 expenses that were not included with the Period 1 submission that they believe would offset the issue identified above.