Coffeyville Regional Medical Center, Inc.

2022-004 Change in methodology for the calculation of lost revenues Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Reporting 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 Medical Center changed the methodology for calculating lost revenues from the Period 1 reporting submission to the Period 4 reporting submission. The Medical Center used the alternative reasonable method for calculating lost revenues in both submissions. The alternative reasonable methodology required a narrative describing the methodology, including an explanation of why the methodology is reasonable for the circumstances and a description establishing how lost revenues were attributable to coronavirus. In addition, due to a change in the methodology from the Period 1 reporting period, the Medical Center was required to submit in the narrative, a written justification to support and explain the lost revenue methodology change. The Medical Center's narrative described the calculation of lost revenues under the new methodology as being 2019 actual revenues by department versus 2020, 2021, and 2022 actual revenues by department computed on a monthly basis and accumulated by quarter. In reviewing the Medical Center's calculation, the revenues by month and department for 2020, 2021, and 2022 were compared to the same month and department for 2019 as described in the narrative, however in determining the lost revenues for each month, the Medical Center only included those departments that had a loss for the month and excluded all other departments with gains. As noted above, the narrative also did address the justification for changing the methodology. Cause: The Medical Center's calculation of lost revenues was not accurately described in the Medical Center's narrative submitted in the reporting portal and a justification for the change was not included in the narrative. Effect: Unknown. Questioned Costs: Unknown. Perspective Information: We recalculated lost revenues based on the method intended by management in their supporting worksheets. Repeat Finding: This finding was not reported in the previous year. Recommendations: We recommend policies and procedures over federal grant reporting be strengthened to ensure the Medical Center's calculation of lost revenues is accurately described in the Medical Center's narrative and that the justification for changing the lost revenue calculation from previous reporting is included in the narrative. Views of Responsible Officials: The Medical Center experienced turnover in key accounting personnel during the month leading up to the deadline for the Period 4 reporting submission. It was not the intent of management to change Period 1 reporting methodology, however, we encountered difficulties in transitioning the PRF accounting from the prior CFO to the interim CFO. Prior to completing future submissions, we will implement a procedure to double check the computations and review revised lost revenue calculations for prior reporting periods.

2022-005 Computational errors in calculation of lost revenues Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; 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 health care 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 Medical Center had multiple errors in calculating lost revenues for the Period 4 reporting submission. The Medical Center used the alternative reasonable method for calculating lost revenue. The alternative methodology selected was 2019 actual revenues by department versus 2020, 2021, and 2022 actual revenues by department computed on a monthly basis and then accumulated by quarter. The Medical Center then applied an overall contractual adjustment and bad debt percentage to arrive at net lost revenues for the quarter. The first error noted was the data utilized by the client for each year did not agree to the total revenues by month per the general ledger and to the total revenues per the financial statements. The 2019 revenues were understated by $1,161,485, the 2020 revenues were understated by $825,079, the 2021 revenues were understated by $934,522, and the 2022 revenues were understated by $1,391,572. The second error noted was in the calculation of the lost revenues for June 2022. Data was input into the spreadsheet inaccurately resulting in the calculation of lost revenues by department to be incorrect. The last error, was the overall contractual adjustment and bad debt percentage for 2022 was not updated and the percentage for 2021 was utilized. The three errors resulted in lost revenues for the period January 1, 2020 to December 31, 2022, to be overstated by $1,965,836. Cause: The spreadsheet used by the Medical Center to calculate lost revenues did not agree to total revenues per the financial statements, contained input errors, and utilized an incorrect contractual adjustment and bad debt percentage for 2022. Effect: The Medical Center understated the lost revenues for the Period 1 reporting period (January 1, 2020 to June 30, 2021) by $452,595 and overstated their lost revenues for the Period 4 by $2,418,431. Questioned Costs: None. The Medical Center's lost revenues after including the overstatement of $2,418,831 resulted in unused lost revenues of $1,954,004 for Period 4. The understatement of $452,595 for Period 1 is reflected below in Finding 2022-006. Perspective Information: We tested the Period 4 report submitted during the reporting period to supporting documentation to determine if the report was completed accurately. Repeat Finding: Yes; prior year finding 2021-005. Recommendations: We recommend policies and procedures over federal grant reporting be strengthened to ensure required reports are completed accurately and use correct financial information. These procedures should include a review of supporting documentation of calculations made to ensure mathematical accuracy. Views of Responsible Officials: The Medical Center experienced turnover in key accounting personnel during the month leading up to the deadline for the Period 4 reporting submission. It was not the intent of management to change Period 1 reporting methodology, however, we encountered difficulties in transitioning the PRF accounting from the prior CFO to the interim CFO. Prior to completing future submissions, we will implement a procedure to double check the computations and review revised lost revenue calculations for prior reporting periods.

2022-006 Period 1 revised lost revenue calculation Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; 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 health care 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 Medical Center elected to calculate lost revenues under option iii, "Alternate Reasonable Methodology" for the Period 1 and the Period 4 reporting submissions. The Medical Center, however, changed the methodology for calculating lost revenues for the Period 4 reporting submission. The change in the methodology resulted in the revenues reported for the Period 1 (January 1, 2020 through June 30, 2021) to be $1,491,516 lower than what was needed to cover the total funding received for the Period 1 when combined with the healthcare related expenses for Period 1. Cause: The Medical Center did not review the total revised lost revenues for Period 1 to ensure that the change in methodology for the calculation of lost revenues resulted in an amount equal to or greater than what was reported and needed to cover the Period 1 funding received. Effect: The Medical Center changed its lost revenue calculation for Period 1 which resulted in $1,491,516 in unused Period 1 funds. Questioned Costs: Known $1,038,921. The reported lost revenue computation for Period 1 was changed which resulted in $1,491,516 of unused Period 1 provider relief funds. When you net the $452,595 understatement error in the lost revenue calculation noted in 2022-005, it results in $1,038,921 in unused Period 1 funds. Perspective Information: We tested the information reported for Period 1 within the Period 4 reporting submission to supporting documentation to determine if the report was calculated based on underlying accounting data. Repeat Finding: This finding was not reported in previous year. Recommendations: We recommend policies and procedures over federal grant reporting to be strengthened to ensure that changes in the methodology for the calculation of lost revenues results in total lost revenues equal to or greater than what was reported and needed to cover prior funding received. Views of Responsible Officials: The Medical Center experienced turnover in key accounting personnel during the month leading up to the deadline for the Period 4 reporting submission. It was not the intent of management to change Period 1 reporting methodology, however, we encountered difficulties in transitioning the PRF accounting from the prior CFO to the interim CFO. Prior to completing future submissions, we will implement a procedure to double check the computations and review revised lost revenue calculations for prior reporting periods.

2021-005 Improper calculation of lost revenuesIdentification: 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 health care 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 Medical Center had two errors in the Period 1 reporting submission. The Medical Center used the alternative reasonable method for calculating lost revenue. The alternative methodology selected was 2019 actual versus 2020 and 2021 actual with adjustments made to 2020 and 2021 actual to account for new revenue enhancement initiatives implemented by the Medical Center prior to the pandemic to make the 2020 and 2021 revenues comparable to 2019. One of these adjustments was the removal of the 340b drug program revenue initiative. The Medical Center had not included the actual 340b drug program revenue in its calculation of lost revenue due to this program not being implemented until late in 2019. The computed lost revenues improperly adjusted for estimated increases in 340b retail drug program revenue. We also noted that the computed lost revenues improperly included other operating revenue for the second quarter of 2021. Cause: The spreadsheet used by the Medical Center to calculate lost revenue did not correctly account for other operating revenue in the second quarter of 2021 and an adjustment for increased 340b drug program revenue caused by a revenue enhancement initiative. Effect: The Medical Center understated their lost revenue for the Period 1 reporting by $53,607. Questioned costs: None. The Medical Center reported unused lost revenues of $2,056,633. The Medical Center's lost revenues after including the understatement of $53,607 results in unused lost revenues of $2,110,240 prior to consideration of finding 2021-006 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: This finding was not reported in the previous year. 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: Prior to completing future submissions, we will implement a procedure to double check the computations.

2021-006 Reporting of expenditures 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 Medical Center 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. There were also amounts reported which were duplicated in the filing. Cause: The Medical Center had spreadsheets for tracking expenditures allowable for PRFs and other federal grants. When the expenditures were compiled for reporting, procedures were not in place to avoid duplication. Several amounts were claimed that were not adequately supported. In addition, the Medical Center's procedures did not include an estimate of reimbursement the Medical Center received from Medicare for rural health clinic services for PRF expenditures reported. Effect: The Medical Center included $98,923 in PRF expenditure amounts that were reimbursed by other federal grants. In addition, the Medical Center duplicated $58,929 in expenditures within the PRF listing of expenditures and included $173,680 in expenditures for a high dollar drug within the PRF listing of expenditures without support. Lastly, the Medical Center did not consider Medicare cost report reimbursement received as another source of reimbursement which totaled $139,081. Questioned costs: Known $470,613. The Medical Center's lost revenues after increasing for findings 2021-005 were $2,110,240. After consideration of finding 2021-006, the Medical Center would have had expenditures and lost revenues in excess of PRF receipts of $1,639,627, thus, not having any impact on the amount of funds retained by the Medical Center. Perspective Information: In the sample of 69, 3 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. In the sample of 69, 5 instances were noted during sampling that had no supporting documentation for the expenditures. Extrapolation was not necessary because the issue was isolated to a high dollar drug used to treat patients affected with COVID-19 and we were able to test 100 percent of the amounts claimed for the high dollar drug. All expenditures excluding duplicate expenditures and expenditures lacking support were considered for potential need for calculation of Medicare cost reimbursement. The estimated reimbursement from Medicare for expenditures included in the PRF filing is $139,081. Repeat Finding: This finding was not reported in the previous year. 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 Medical Center implemented a process to track the provider relief fund expenditures. The process was modified throughout the pandemic as new guidance was issued. We will maintain the process and also implement an independent review to ensure duplicate amounts are not reported.