Ray County Memorial Hospital

2023-001 Policies and Procedures for Federal Awards Federal Agency U.S. Department of Health and Human Services Federal Assistance Listing Number 93.498 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Criteria [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Recipients of federal awards should maintain written policies and procedures for the tracking and usage of federal awards. Condition The Hospital did not have written policies and procedures with all of the required elements for federal awards for the year ended October 31, 2023. Context This finding appears to be a systemic problem. Cause Management is still developing and implementing internal controls as of October 31, 2023. Effect There is a risk federal funds may be expended out of conformity with federal regulations and compliance requirements. Recommendation We recommend the Hospital write policies and procedures for the tracking and usage of federal awards that conform to federal regulations and compliance requirements. Views of responsible officials and planned corrective actions Management is in the process of writing policies and procedures to ensure appropriate tracking and usage of federal awards to ensure that federal regulations and compliance requirements are met.

2023-002 Provider Relief Fund Reporting of Lost Revenue Federal Agency Department of Health and Human Services Federal Assistance Listing Number 93.498 – Provider Relief Fund and American Rescue Plan Rural Distribution Criteria [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Under the terms and conditions of the award, the recipient certifies it will report actual net patient service revenues for the periods reported on in its reporting of actual net patient service revenues for its calculation of lost revenues due to coronavirus. Condition Lost revenues reported were less than actual lost revenues. Context This finding appears to be an isolated problem. Cause The summary of net patient service revenue used in reporting contained a clerical error that understated reported lost revenue. Effect Reported lost revenues were materially understated. If the correct amount of net patient service revenues had been reported, the Hospital would still have sufficient lost revenues to use all of the Provider Relief Fund amounts received. Therefore, there is no effect on the Hospital’s retention of the Provider Relief Funds. Recommendation We recommend the Hospital’s management correct its lost revenue calculation for any future reporting for the Provider Relief Fund. Views of responsible officials and planned corrective actions Finding is noted and corrections will be made to the lost revenues schedule as noted. Future reports for PRF will be correct.

Finding No. 2021-001 Federal Program: Federal Financial Assistance Listing #93.498 US Department of Health and Human Services Provider Relief Fund Criteria: The terms and conditions of the CARES Act Provider Relief fund (PRF) distributions state that funds are to only be used to prevent, prepare for and respond to coronavirus, and that funds may only be used for healthcare related expenses or lost revenue that is attributable to the coronavirus. Subsequent guidance issued by the Health Resources and Services Administration (HRSA) states that recipients may use payments for eligible expenses incurred prior to the receipt of PRF distributions dating back to January 1, 2020, so long as they are to prevent, prepare for, and respond to coronavirus. Condition: During the process of identifying expenses and capital costs that were incurred to prevent, prepare for or respond to the coronavirus pandemic, management included expenses for which there was a lack of supporting documentation. Cause: Due to the amount of detailed information that was required to be compiled by management in order to enter data into the PRF reporting portal, management inadvertently included expenses that could not be supported by auditable evidence. Effect: Management included amounts in the PRF reporting portal which were not eligible based on the terms and conditions of the PRF distributions and subsequent HRSA guidance. Questioned Costs: Total questioned costs amounted to $66,718 and were calculated based off amounts for which there was a lack of supporting documentation, but which were claimed as eligible expenses in the PRF reporting portal. Context: Certain costs were included on the PRF submission which could not be supported by audit evidence. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance to ensure that only eligible costs are included in amounts expended. Views of Responsible Officials and Planned Corrective Action: Management agrees with the noted finding. However, the Hospital also incurred and reported sufficient lost revenue in the PRF reporting portal that if the noted expenses were not to be reported, the Hospital would have satisfactorily incurred eligible expenses and lost revenue in excess of the PRF funds received, including interest earned on such funds. Management will continue to refine processes to more diligently review expenses to ensure only those costs incurred and supported by underlying documentation are included in future reporting.

Finding No. 2021-002 Significant Deficiency Federal Program: Federal Financial Assistance Listing #93.498 US Department of Health and Human Services Provider Relief Fund Criteria: The terms and conditions of the CARES Act Provider Relief fund (PRF) distributions state that funds are to only be used to prevent, prepare for and respond to coronavirus, and that funds may only be used for healthcare related expenses or lost revenue that is attributable to the coronavirus. The PRF guidance for calculations of lost revenue requires patient revenue to be reported net of all adjustments including bad debt expense and charity care. Condition: The calculation of lost revenue was not in accordance with the terms of the award as patient revenue was not properly reduced by certain revenue adjustments, and amounts reimbursed by other services. Cause: Due to the amount of detailed information that was required to be compiled by management in order to enter data into the PRF reporting portal, management excluded certain revenue deductions from the calculation of net patient service revenue, and did not consider amounts reimbursed by other services. Effect: Management?s calculation of lost revenue was not in accordance with the terms and conditions of the PRF distributions and subsequent HRSA guidance. Questioned Costs: Total questioned costs amounted to $1,875,218 and were determined based off a recalculation of lost revenue in accordance with the PRF guidance. Context: Management excluded certain revenue deductions, and amounts reimbursed by other sources in its calculation of lost revenue. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance to ensure that federal award terms and conditions are properly being followed. Views of Responsible Officials and Planned Corrective Action: Management agrees with the noted finding. However, the Hospital also incurred and reported sufficient eligible expenses and lost revenue in the PRF reporting portal that if lost revenue had been properly calculated, the Hospital would have satisfactorily incurred eligible expenses and lost revenue in excess of the PRF funds received, including interest earned on such funds. Management will continue to refine processes to more diligently review lost revenue calculations to ensure such amounts are in accordance with the terms and conditions of the award.