GRAFTON CITY HOSPITAL INC

Federal Program - COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program   Assistance Listing Number - 93.498 Federal Agency - U.S. Department of Health and Human Services Passed-Through Entities - N/A Award Number - N/A Award Year - 2020 Compliance Requirement - Activities Allowed or Unallowed Questioned Costs - $1,359,809 Criteria - Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Funds (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by the U.S. Department of Health and Human Services. Activities allowed have been defined as expense used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. Additionally, all recipients of PRF payments must comply with the reporting requirements described in the PRF terms and conditions and specified in directions issued by the U.S. Department of Health and Human Services. Condition and Context - The Hospital included expenses in its filing that did not meet criteria of allowable expenses as defined by the U.S. Department of Health and Human Services guidance. The filing included various expenses associated with the facility that were not specifically used to prevent, prepare for, and respond to the coronavirus. During our testing we noted exceptions on 7 of 40 samples. Upon further analysis of the entire population, we noted that the Hospital reported expenses associated with the facility that were not specifically used to prevent, prepare for, and respond to the coronavirus totaling $1,359,809. The Hospital received distributions totaling $3,736,717 and reported total expenses of $1,950,653. Our sample was not a statistically valid sample. Effect - The Hospital claimed expenses that were not in accordance with established U.S. Department of Health and Human Services guidance and therefor deemed unallowable. Cause - The Hospital had an insufficient control in place to identify and correct errors prior to reporting on the use of their Provider Relief Funds. Recommendation - We recommend that management implement procedures to ensure that the most recent guidance is reviewed and understood and that information used in accumulating allowable expenses is reviewed, with errors addressed before completing any future filings. Procedures should be performed on a monthly basis with previously recognized expenses being reviewed to ensure they qualify as an allowable expense under the most recent guidance. View of Responsible Officials - Grafton City Hospital agrees with the finding.