MAINE GUARANTEED ACCESS REINSURANCE ASSOCIATION

U.S. Department of Health and Human Services Federal Financial Assistance Listing 93.423 1332 State Innovation Waivers Reporting Significant Deficiency in Internal Control in Federal Compliance Criteria: Recipients of federal funds must submit financial reports as required by the Federal award. Reports submitted annually by the recipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period, in accordance with CFR § 200.328(c). Condition: The Association’s existing controls over their reporting processes, to ensure reports were submitted timely, were not functioning in such a way that ensured reports were submitted on time. Cause: The Association didn’t set a reminder or have a pre-arranged schedule that notified management a report was due. Effect: 1 quarterly report was submitted 3 days late. 1 quarterly report was submitted 2 days late. Questioned Costs: None reported Context/Sampling: Sampling was not used. 100% of the reports submitted during the year were tested. Repeat Finding from Prior Year(s): No Recommendation: Management should have a control in place to ensure they are notified that a report is coming due so they are able to compile and submit it on time. If information required to be included in the report is not available at the time the report is due, management should have a control in place to request an extension for the delayed submission of the report. Views of Responsible Officials: Management of the Association agrees with the finding.

U.S. Department of Health and Human Services Federal Financial Assistance Listing 93.423 1332 State Innovation Waivers Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control in Federal Compliance Criteria: Costs charged to the federal funds under the 1332 Waiver program must comply with the cost principles at 45 CFR Part 75, Subpart E, and any other requirements or restrictions on the use of federal funding outlined in the grant Standard Terms and Conditions. Condition: The Association’s existing controls over their IT environment for reviewing and reimbursing carriers for claims was not able to detect and prevent a claim from being reimbursed twice. Cause: The Association began working with a new carrier, Aetna, and did not modify their IT environment for this specific carrier to ensure that claims being reimbursed were not able to be duplicated. Effect: A claim was able to be reimbursed to a carrier twice using federal monies. Questioned Costs: $74,799.52 Context/Sampling: A nonstatistical sample of 60 claims out of 89,552 claims were selected for testing. Repeat Finding from Prior Year(s): No Recommendation: Management should implement parameters in their IT environment that allow them the ability to detect and prevent a claim being duplicated and paid out twice. Views of Responsible Officials: Management of the Association agrees with the finding.

Criteria: 2 CFR Part 200 (Uniform Guidance) requires that a non-Federal entity must use its own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procedures conform to applicable federal law and standards. Uniform Guidance requires price or rate quotations from an adequate number of qualified sources for small purchases. Uniform Guidance also requires contracts contain the applicable provisions described in Appendix II to Part 200 for contracts under federal awards. Condition: The Association does not have a formal written procurement policy in place in accordance with the Uniform Guidance and all applicable provisions of the Uniform Guidance. Cause: The Association does not have an internal control system in place designed to ensure compliance requirements are met related to procurement. Effect: Without a formal written policy that includes all applicable provisions of the Uniform Guidance, the Association could procure goods and services outside compliance with the Uniform Guidance. Questioned Costs: None Context/Sampling: The Association's procurement procedures were examined in their entirety. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Association monitor changes in federal legislation and implement controls, when necessary, to ensure its procurement procedures are updated to conform with federal requirements. View of Responsible Officials: The Board of Directors and management agree with the finding.