SAINT ELIZABETH MEDICAL CENTER, INC.Non-Profit

Assistance Listing Number, Federal Agency, and Program Name - 93.498, U.S. Department of Health and Human Services: COVID-19 Provider Relief Fund; Federal Award Identification Number and Year - N/A, 2020; Pass-through Entity - Direct funded; Finding Type - Significant deficiency; Repeat Finding - No; Criteria - The U.S. Department of Health and Human Services (HHS) requires the nonfederal entity to report lost revenue in order to support that funding received has been appropriately earned. HHS has provided specific guidance in the June 11, 2021 Post-Payment Notice on how to complete the required reporting of lost revenue in the reporting portal. Condition - The Organization's reporting submissions did not follow the HHS guidelines related to the reporting of lost revenue. Questioned Costs - None; Identification of How Questioned Costs Were Computed - N/A Context - The Period 1 and Period 2 reporting submissions for lost revenue did not follow the acceptable options provided by the HHS. Recipients may choose to apply Provider Relief Fund payments toward lost revenue using one of three options: (i) up to the amount of the difference between actual patient care revenue, (ii) up to the amount of the difference between budgeted (if approved prior to March 27, 2020) and actual patient care revenue, or (iii) up to the amount calculated by any reasonable method of estimating revenue. The Organization used option ii to calculate lost revenue; however, the budgeted amounts used in the submission for the first and second quarters of 2021 were not approved by March 27, 2020; therefore, option ii was not allowable. Based on the actual calculation prepared by management, the Organization should have used option iii to report lost revenue. Cause and Effect - Appropriate review of the reporting submission was not completed to ensure the report followed the required HHS guidelines for lost revenue as defined by the HHS guidance. Recommendation - We recommend the Organization implement controls, including levels of review, to ensure reports are completed and submitted in accordance with the HHS guidelines. Views of Responsible Officials and Corrective Action Plan - Management read HHS Guidelines and, given the lack of clear guidance regarding 2021 lost revenue, consulted an independent external accounting firm for a recommendation on reporting of lost revenue, even though the organization did not utilize lost revenue in 2021. Based on that recommendation, Management reported utilizing Option 2. For Period 3 reporting, the organization will change the reporting of lost revenue to Option 3 and submit the necessary justification. Lost revenue from 2021 will not be utilized in Period 3. Note: Management included in the Period 2 attestation the rationale and method used for reporting lost revenue, including an explanation that St. Elizabeth had lost revenue in 2020 related to COVID-19 but did not have lost revenue in 2021 related to COVID-19.

Assistance Listing Number, Federal Agency, and Program Name - 93.498, U.S. Department of Health and Human Services: COVID-19 Provider Relief Fund; Federal Award Identification Number and Year - N/A, 2020; Pass-through Entity - Direct funded; Finding Type - Material weakness and material noncompliance with laws and regulations; Repeat Finding - No; Criteria - The U.S. Department of Health and Human Services (HHS) requires the nonfederal entity to report incurred expenses in order to support that funding received has been appropriately earned. HHS has provided specific guidance in the June 11, 2021 Post-Payment Notice on how to complete the required reporting of allowable expenses in the reporting portal. Condition - The Organization's reporting submissions did not follow the HHS guidelines related to the reporting of allowable expenses. Questioned Costs - None; Identification of How Questioned Costs Were Computed - N/A; Context - The Period 1 reporting submissions improperly included $539,064 of expenses due to clerical error and inadequate recordkeeping. As a result, reimbursed expenses were overstated in the Period 1 portal submission; however, the Organization had excess lost revenue and qualifying expenses of $52.2 million. This excess lost revenue and qualifying expenses would more than make up for the overstated expenses and supports the recognition and inclusion of the full PRF amount as allowable cost on the schedule of expenditures of federal awards. Cause and Effect - Appropriate review of the reporting submission was not completed to ensure the report followed the required HHS guidelines for allowable expenses as defined by the HHS guidance. Recommendation - We recommend the Organization implement controls, including levels of review, to ensure reports are completed and submitted in accordance with the HHS guidelines. Views of Responsible Officials and Planned Corrective Actions - Management self-reported the expense findings which represented 1.0% of total expenses and 0.4% of total lost revenues and qualifying expenses. At the end of reporting Period 2, the organization had remaining $52.2 million in lost revenue and qualifying expense to support additional provider relief funds. Management strives to always report accurately and will implement an additional layer of review of the detailed supporting schedules prior to submitting Period 3 reporting.