Hays Medical Center, Inc.Non-Profit

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund and American Rescue Plan Rural Distribution; Noncompliance Finding/Significant Deficiency; Activities Allowed or Unallowed Compliance Requirement Criteria: Provider Relief Fund (PRF) and American Rescue Plan Rural Distribution 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) and the American Rescue Plan Act of 2021 (Pub. L. No. 117-2). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for healthcare 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 by other sources or that other sources are obligated to reimburse. Condition: The Medical Center is cost reimbursed from Medicare for certain services provided to Medicare beneficiaries. The Medical Center claimed expenses attributable to coronavirus and reduced such expenses by an estimate of the amount Medicare would reimburse. In reviewing this estimate we noted that overall Medicare reimbursement is higher per Medicare cost reports than the percentage estimated by the Medical Center. Cause: The Medical Center used judgment in estimating the amount reimbursed however this estimate was lower in comparison to actual Medicare reimbursement for the periods in which the COVID-19 expenditures occurred. Effect: The potential for costs to be claimed that have been reimbursed by other sources or that other sources were obligated to reimburse. Questioned Costs: $161,695. Perspective Information: Questioned costs were estimated by taking the total amount of PRF expenditures multiplied by the Hospital's internally calculated Medicare reimbursement rate based on filed Medicare cost reports. Repeat Finding: N/A Recommendations: We recommend the Medical Center estimate the reimbursement from Medicare to be based on Medicare cost report reimbursement percentages from recent cost report filings. Views of Responsible Officials: The Hospital agrees with this finding. See separate auditee document for planned corrective action.

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund and American Rescue Plan Rural Distribution; Material Weakness; Activities Allowed or Unallowed, Allowable Costs/Cost Principles Compliance Requirement Criteria: Provider Relief Fund (PRF) and American Rescue Plan Rural Distribution 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) and the American Rescue Plan Act of 2021 (Pub. L. No. 117-2). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for healthcare 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 by other sources or that other sources are obligated to reimburse. Condition: We noted instances in our testwork in which the invoice claimed as federal expenditures lacked the documented proof of approval from the appropriate department heads. Cause: During the period of transition following the Medical Center's disassociation from another health system, the invoice approval process changed from an electronic workflow to a manual workflow as the Medical Center changed accounting systems. During this period, the routing of contract labor invoices for approval took longer since it was no longer part of the electronic work flow. As a result, the accounting department began coding the invoices in order to get the vendors paid so that the vendors could continue providing much needed healthcare services during the COVID-19 pandemic. We noted, however, that there were no processes in place to obtain the department head's approval for the account coding performed by accounting and approval of the invoice for payment was not documented during the transition period. Effect: There is an increased risk that federal awards could be expended for activities or costs that are not allowable under the federal program. Questioned Costs: None. Perspective Information: In our sampling testwork, there was a total of 53 contract labor invoices selected for testing out of a total sample size of 60. Of the 53 invoices, 33 invoices did not have the necessary documented approvals from department heads. Repeat Finding: N/A Recommendations: We recommend the Medical Center follow its established policies for approving contract labor invoices for payment and that the approval process be documented. Views of Responsible Officials: This finding was isolated to two vendors that provided the Medical Center with much needed contract labor during the COVID-19 pandemic. With the nationwide shortage of healthcare workers, the Medical Center was forced to utilize more contract labor in order to maintain delivery of healthcare services for all patients, including patients with COVID-19. Contract labor invoices often covered services in multiple departments, and so each invoice would go through multiple department heads for approval which required additional time. This multi-step approval process created delays in paying the contracting vendors. In order for vendors to continue to provide staffing services, accounting personnel began coding the invoices during a short transition period following the disassociation from a larger health system so that the vendors could be paid promptly. While the control deficiency identified during the audit did affect the processing of invoices, it did not impact the amounts claimed with the PRF funds. The issue has been addressed and corrected during FY 2023.

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund and American Rescue Plan Rural Distribution; Significant Deficiency; Reporting Compliance Requirement Criteria: Provider Relief Fund and American Rescue Plan Rural Distribution 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) and the American Rescue Plan Act of 2021 (Pub. L. No. 117-2). Eligible healthcare providers received PRF appropriations for healthcare 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. Condition: For contract labor costs claimed using PRF funds, the Medical Center performed a computation of the incremental cost of contract labor as a result of the COVID-19 pandemic. A significant component to this computation was contract labor hours. During the audit, we noted errors in the reported number of contract labor hours which included mistakes in keying the correct number of hours and/or the omission of hours. We also noted that there was not an independent review of the computation and the information reported in the PRF reporting portal. Cause: The Medical Center utilized spreadsheets that were prepared to track COVID-19 expenditures which included the reported number of contract labor hours utilized. Controls were not in place to review the information accumulated on the spreadsheets or review the information submitted in the PRF reporting portal. Effect: There is an increased risk of error in completing the reporting submission by not having an independent review completed. As a result, the Medical Center underreported expenditures in the PRF reporting portal by misstating the number of contract labor hours. Questioned Costs: None Perspective Information: We examined invoice detail for 23,820 hours out of a total of 93,907 contract labor hours used in the computation of incremental contract labor costs. Of the hours tested, we noted a net difference of 303 reported contract labor hours which likely caused the Medical Center to underreport its calculated increase in contract labor costs in the PRF reporting portal. Repeat Finding: N/A Recommendations: We recommend the Medical Center implement procedures to review reported contract labor hours to ensure accurate reporting and that any future PRF report filings contain an independent review of the submission. Views of Responsible Officials: The Medical Center acknowledges that there were some minor errors in the reporting of the number of contract labor hours used in the computation of the incremental cost of contract labor due to the COVID-19 pandemic. However, despite these errors, costs were not improperly claimed under a federal grant award. For future report filings, we will implement a subsequent review of the PRF submission before the filing is completed.