NKC HealthNon-Profit

Finding: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Department of Health and Human Services Direct Program: COVID-19 Provider Relief Fund - 93.498 Criteria or Specific Requirement ? Reporting (45 CFR 75.342) and Activities Allowed/Unallowed and Cost Principles (Pub L. No. 116-136, 134 Stat. 563 and Pub L. No. 116-139, 134 Stat. 622 and 623). The Provider Relief Fund (PRF) was established in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136) to reimburse, through grants or other mechanisms, eligible health care providers for increased expenses or lost revenue attributable to Coronavirus Disease (COVID-19). Entities that received more than $10,000 (either one time or in the aggregate) are required to report the uses of their funds, including the lost revenue reimbursement and documentation of how the lost revenue was calculated. In addition, management is responsible for establishing and maintaining effective internal control over costs directly and indirectly charged to federal awards. Condition ? The Hospital is required to prepare and submit period one provider relief fund reporting to the U.S. Department of Heath and Human Services. This report is to be prepared using accurate financial information and submitted by the deadline established. The Hospital incorrectly reported lost revenue for period one. Questioned Costs ? Unknown Context ? We tested the period one report submitted by the Hospital for the year ended June 30, 2021. The Hospital, having elected to use lost revenues calculation reporting Option #1, actual to actual, made modifications to 2020 and 2021 actual revenues to remove revenue related to the acquisition of a hospital-based anesthesia group in 2020 when comparing to 2019 actual revenues. The Hospital should have elected to use Option #3, which is any reasonable method of estimating revenues. The Hospital should have also submitted a narrative explaining the methodology of estimating revenues under Option #3. Effect ? The Hospital submitted lost revenues under the provider relief fund reporting that are not within the framework prescibed with selecting Option #1 - actual to actual. By selecting the incorrect option, the Hospital did not submit the required narrative information to the Health Resources and Services Administration. Cause ? The Hospital selected Option #1 - actual to actual but should have selected Option #3 - any reasonable method of estimating revenues because adjustments were made to remove clinic revenue in 2020 and 2021 when comparing to 2019 actual revenues. Internal controls were not in place to ensure the Hospital correctly applied the guidance. Identification as a Repeat Finding - Not a repeat finding Recommendation ? The Hospital should continue to improve their understanding of the guidance related to this type of reporting and implement additonal controls over future reporting periods to help ensure guidance is followed. View of Responsible Official and Planned Corrective Actions ? The Hospital agrees with this finding. See separate auditee document for planned corrective action.