McPherson Hospital, Inc.Non-Profit

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Significant Deficiency; Reporting Compliance Requirement Criteria: The Provider Relief Fund (PRF) 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). Eligible healthcare providers received PRF appropriations for health-care 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: The Hospital had one error in the Period 1 reporting submission. The Hospital used the alternative reasonable method for calculating lost revenue. The alternative methodology selected was quarter one 2020 (Q1 2020) and quarter two 2020 (Q2 2020) actual compared to budget and for all other quarters actual versus actual was utilized. The budgeted patient service revenue used for the lost revenue calculation for Q1 2020 and Q2 2020 did not agree to the board approved budget for patient service revenue. Cause: The spreadsheet used by the Hospital to calculate lost revenues did not correctly reflect the board approved budgeted patient service revenue. Effect: The Hospital overstated their lost revenue for the Period 1 reporting by $112,341. Questioned costs: Known $112,341. However, the Hospital reported unused lost revenues of $551,124. The unused lost revenues after reducing for the overstatement of $112,341, results in unused lost revenues of $438,783 prior to considerations of findings 2021-003 through 2021-004 below. Perspective Information: We tested the Period 1 report submitted during the reporting period to supporting documentation to determine if the report was completed accurately. Repeat Finding: N/A Recommendations: We recommend policies and procedures over federal grant reporting be strengthened to ensure required reports are completed accurately and using correct financial information. These procedures should include a review of supporting documentation of calculations made to ensure mathematical accuracy. Views of Responsible Officials: The Hospital agrees with this finding of noncompliance and significant deficiency in internal control over compliance and will be implementing the following plan of correction. Beginning on May 1, 2022, as new opportunities, applications, and reporting documents are prepared for Provider Relief Fund or other COVID-19 related funding, a second reviewer of the documentation prepared will be instituted requiring an approval prior to submission.

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Allowable Costs Compliance Requirement Criteria: The Provider Relief Fund (PRF) 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). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. Cost principles do not apply to the PRF, however, charges to the PRF must be necessary, reasonable, accorded consistent treatment, and conform to the limitations and exclusions of the terms and conditions of the award. Condition: The Hospital utilized estimates in reporting costs attributable to coronavirus for an expenditure in which actual invoices were available for calculating the amount attributable to coronavirus. Cause: The minimum income guarantee (subsidy) amount for emergency room (ER) services was significantly higher once the COVID-19 pandemic started due to patients not coming to the ER during the early stages of the COVID-19 pandemic. The Hospital performed an estimate of the additional expense from March 2020 to March 2021 based on a monthly average for three months prior to COVID (September 2019 - November 2019). Actual invoices for the subsidy were available through November 2020. Estimates were only needed for the period after November 2020. The estimates for December 2020 through June 30, 2021 indicated that the estimated monthly subsidy average was below the pre-COVID monthly average. Effect: The Hospital overstated PRF expenditures for the Period 1 reporting by $259,678. Questioned costs: Known $259,678. The Hospital's lost revenues after reducing for finding 2021-002 were $438,783. Of this amount, $259,678 would be used to offset the overstatement of PRF expenditures as a result of using estimates versus actual invoices. Lost revenues after consideration of finding 2021-001 and 2021-002 would be $179,105 prior to consideration of finding 2021-004 below. Perspective Information: One total amount for the ER subsidy was included in the listing of expenditures that were reported for Period 1. The amount was selected for testing for being individually significant. Repeat Finding: N/A Recommendations: We recommend policies and procedures over federal grant reporting be strengthened to ensure allowable costs are supported by vendor invoices or other supporting documentation when available. Amounts that require estimates should be reviewed to ensure completeness, reasonableness of estimate, and mathematical accuracy in calculations. Views of Responsible Officials: The Hospital agrees with this finding of noncompliance and material weakness of internal control over compliance and will be implementing the following plan of correction. Beginning on May 1, 2022, as new opportunities, applications, and reporting documents are prepared for Provider Relief Fund or other COVID-19 related funding, a second reviewer of the documentation prepared will be instituted requiring an approval prior to submission.

Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Allowable Activities Compliance Requirement Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116-260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care 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 for other sources or that other sources are obligated to reimburse. Condition: The Hospital did not meet the requirement that the PRF funds be used to reimburse expenses that have not been reimbursed by other sources or that other sources are obligated to reimburse. Cause: The Hospital's spreadsheet for tracking federal grant expenditures had multiple sheets for tracking the expenditures that were allowable uses for PRFs and other federal grants. When the expenditures were compiled for reporting, procedures were not in place to avoid duplication. In addition, the Hospital's procedures did not include an estimate of reimbursement the Hospital received from Medicare for rural health clinic services for PRF expenditures reported. The Hospital intended to exclude all rural health clinic (RHC) expenses to avoid the need to consider Medicare cost report reimbursement but, they failed to consider PRF expenditures that were in general service cost centers that were allocated to the RHC. Plus, some salary expense was included as PRF that were for RHC employees. Effect: The Hospital included $84,994 in PRF expenditures amounts that were reimbursed by other federal grants. In addition, the Hospital duplicated $87,291 in expenditures within the PRF listing of expenditures. Lastly, the Hospital did not consider Medicare cost report reimbursement received as an other source of reimbursement. Questioned costs: Known $172,285 and likely of $29,283. The Hospital's lost revenues after reducing for finding 2021-002 - through 2021-003 were $179,105. After consideration of finding 2021-004, the Hospital would have had PRF receipts in excess of expenditures and lost revenues of $22,463. The final net questioned costs related to PRFs is likely questioned costs of $22,463. Perspective Information: In the sample of 60, 14 instances were noted during sampling that were duplication of expenditures. Extrapolation was not necessary as we were able to cross match the expenditure listings and determine the actual dollar amount duplicated. The sample was a statistically valid sample. All expenditures were considered for potential need for calculation of Medicare cost reimbursement. Repeat Finding: N/A Recommendations: We recommend policies and procedures over federal grant reporting be strengthened to ensure expenditures are not already included in the federal grant expenses or another grant and that only amounts not reimbursed by other sources or obligated to be reimbursed by other sources are included. Views of Responsible Officials: The Hospital agrees with this finding of noncompliance and material weakness in internal control over compliance and will be implementing the following plan of correction. Beginning on May 1, 2022, as new opportunities, applications, and reporting documents are prepared for Provider Relief Fund or other COVID-19 related funding, a second reviewer of the documentation prepared will be instituted requiring an approval prior to submission.