Self Regional Healthcare and Affiliates

Significant Deficiency Assistance Listing 93.498 Criteria: The Department of Health and Human Services provided terms and conditions associated with the Provider Relief Fund (“PRF”). Those terms and conditions outlined the usages of the PRF distributions received, specifically related to expenses. PRF distributions should only be used to prevent, prepare for, and respond to the coronavirus that have not been reimbursed from other sources or that other sources are not obligated to reimburse. Management should have effectively designed controls in place to prevent, or to detect and correct, noncompliance and related financial reporting misstatements. Condition: The Hospital internal control over Provider Relief Fund and American Rescue Plan (“ARP”) Rural Distributions resulted in ineligible costs reported on the Department of Health and Human Services PRF portal submission. Questioned Costs: $104,407 Effect: The Hospital overstated healthcare related expenses submitted through the Department of Health and Human Services PRF portal for the first period of availability by including ineligible expenses. Cause: Lack of effectively implemented controls, including oversight and detail review of expenditures submitted through the Department of Health and Human Services PRF portal for the first period of availability. Auditor’s Recommendation: Effective controls over compliance and financial reporting should be implemented to ensure expenditures submitted through the Department of Health and Human Services PRF portal meet the criteria established in the terms and conditions. Management Response: See corrective action plan.

Contact Person: Timothy Evans Managements Response: Management had claimed pharmacy costs for drugs that were reimbursed by insurance plans. We incorrectly made an assumption that all drug related expenditures for treating the coronavirus virus were allowable expenditures. We have changed our processes for inclusion of only expenditures that have not been reimbursed. Similarly we included costs of COVID testing expenditures however, some of those costs were either billed to patients or reimbursed from other sources. We have corrected that process also. Completion Date: January 2024.

Material Weakness Assistance Listing 93.498 Criteria: The Hospital must have proper review controls in place and proper support of the review maintained for federal expenditures to determine proper allowable costs for qualifying expenditures and proper review of those costs per the terms and conditions applicable to Provider Relief Funds. Condition: Management could not support the review of certain healthcare expenditures utilized to recognize Provider Relief Funding. The Hospital claimed approximately $1.7 million in healthcare expenditures for the Schedule of Expenditures of Federal Awards reporting period for the year-ended September 30, 2021. Questioned Costs: $0 Effect: The failure to be able to support the review of COVID-19 healthcare expenditures could result in the improper determination of qualifying expenditures per the terms and conditions claimed as Provider Relief Fund expenditures. Cause: The Hospital did not have proper control procedures in place to retain the appropriate support for the controls related to Provider Relief Fund expenditures. Auditor’s Recommendation: We recommend management enhance its internal control procedures to ensure the retention of review documentation is maintained in order to support the review of the allowable costs. This will help ensure allowable costs are in accordance with the terms and conditions prior to claiming such expenditures as being allowable and reported on the portal. Management Response: See corrective action plan.

Contact Person: Timothy Evans Managements Response: The issue involved not keeping manual purchase order requests that contained original approvals for a period of greater than two years. At the time of the audit the original manual purchase requisition requests had not been saved or scanned. When we recognized this deficiency, we immediately changed our processes so that all original requests for purchase orders that have the authorizing signatures are saved for a period of 5 years. Completion Date: January 2024.