Palo Pinto County Hospital District

COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Assistance Listing No. 93.498 U.S. Department of Health and Human Services Period 2 and Period 3 Expenditures Criteria or Specific Requirement ? Reporting (45 CFR 75.342) and Activities Allowed/Unallowed and Allowable Costs/Cost Principles (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) Condition ? The District is required to prepare and submit periods two and three provider relief fund reporting. These reports are to be prepared using accurate financial information and submitted by the deadline established. Questioned Costs ? Unknown Context ? The period two and three provider relief fund reports were submitted. The District selected option 2 to report lost revenues based on calendar 2020 and 2021 quarterly budgets, required to be approved by the District?s board prior to March 27, 2020, and actual quarterly revenue results for the same period. The District did have a budget approved prior to March 27, 2020 for hospital operations. The approved budget was for fiscal year ended September 30, 2020, thus did not cover the entire required reporting period of December 31, 2020 and the calendar year ending December 31, 2021. Since the District does not budget on a calendar year-basis, but rather fiscal year, the budget related to the period October 1, 2020 through December 31, 2021 was not approved prior to March 27, 2020. In order to estimate the budget at the time of reporting, management completed a detailed analysis of net patient revenue to gross patient revenue during the approved budget period and applied the computed ratio to the actual gross revenue results during Q4 2020 and all four quarters of 2021. This methodology would have been appropriately reported under option 3 within the reporting portal. In addition, certain elements of the District?s detailed analysis and estimation calculation did not agree to the underlying financial reporting documentation on a payer class level. Additionally, the Nursing Home Facilities are managed by a third-party facility and did not have documentation to support the required board approvals were obtained. The Nursing Home Facilities did not maintain supporting documentation that was able to be reconciled to the reported revenues within the portal. Effect ? The District did not elect the proper reporting option of lost revenues, which was originally identified in the audit of period 1. However, the audit of period 1 took place after period 2 and period 3 submissions were reported. Cause ? The District did not agree the Hospital or Nursing Home Facilities patient service revenue reported to underlying financial statement data. Additionally, the District selected option 2 rather than option 3. Identification as a repeat finding ? Repeat finding 2021-002 Recommendation ? Policies and procedures over federal grant reporting should be modified to ensure reports are prepared using complete and accurate information.

Planned Corrective Actions: In its Provider Relief reporting submission for the year ended September 30, 2022, the District initially selected option 2 based on quarterly actuals to budget quarterly lost revenue. However, the District, including the nursing homes for which they operate, did not have a budget approved by the respective Board by March 27, 2020 as required under option 2. Technically, the District should have reported under option 3. Management spent significant amount of time and resources evaluating the reporting requirements and considered option 2 with a prorated budget for Q4 2020 and Q1 through Q4 2021 to be a reasonable methodology given the District?s budget cycle is on the fiscal year September 30 and not December 31. Additionally, the calculated budget revenue for the nursing homes were unable to be reconciled to supporting documentation files. During the single audit, it was determined option 3 would have been the more appropriate reporting option to select. Management has performed a detailed analysis of the reporting requirements in accordance with the final guidelines set for by HRSA for future reporting periods. During period 4 reporting, the District elected option 3 to report lost revenues, which was deemed to be a more accurate representation of the lost revenue methodology utilized. As deemed necessary, the District will modify policies and procedures over federal grant reporting. The District?s CFO will oversee this to ensure that this is accomplished.

2021-002

COVID-19 Provider Relief Fund Federal Assistance Listing No. 93.498 U.S. Department of Health and Human Services Criteria or Specific Requirement ? Reporting (45 CFR 75.342) and Activities Allowed/Unallowed and Allowable Costs/Cost Principles (Pub. L. No. 116-136, 134 Stat. 563 and Pub. L. No. 116-139, 134 Stat. 622 and 623) Condition ? The District is required to prepare and submit period one provider relief fund reporting. This report is to be prepared using accurate financial information and submitted by the deadline established. Questioned costs ? Unknown Context ? The period one provider relief fund report was submitted. The District selected option 2 to report lost revenues based on quarterly budgets, required to be approved by the District?s board prior to March 27, 2020, and actual quarterly revenue results for the same period. The District did have a budget approved prior to March 27, 2020 for hospital operations. The approved budget was for fiscal year ended September 30, 2020, thus did not cover the entire required reporting period of December 31, 2020. The District did complete a budget for fiscal year ended September 30, 2021, which covered the period of October 1, 2020 through December 31, 2020, however it was not approved prior to March 27, 2020, since the District does not budget on a calendar year-basis, but rather fiscal year. In order to estimate the budget at the time of reporting, management completed a detailed analysis of net patient revenue to gross patient revenue during the approved budget period and applied the computed ratio to the actual gross revenue results during Q4 2020. This methodology would have been appropriately reported under option 3 within the reporting portal. Additionally, the Nursing Home Facilities are managed by a third-party facility and did not have documentation to support the required board approvals were obtained. The Nursing Home Facilities did not maintain supporting documentation that was able to be reconciled to the reported revenues within the portal. Effect ? The District did not elect the proper reporting option of lost revenues. Cause ? The District did not agree the Nursing Home Facilities patient service revenue reported to underlying financial statement data. Additionally, the District selected option 2 rather than option 3. Identification as a repeat finding ? Not a repeat finding Recommendation ? Policies and procedures over federal grant reporting should be modified to ensure reports are prepared using complete and accurate information. Views of Responsible Officials and Planned Corrective Actions ? Responsible Official: Buddy Whiddon, Chief Financial Officer at Palo Pinto County Hospital District (the District)

Planned Corrective Actions: In its Provider Relief reporting submission for the year ended September 30, 2021, the District initially selected option 2 based on quarterly actuals to budget quarterly lost revenue. However, the District, including the nursing homes for which they operate, did not have a budget approved by the respective Board by March 27, 2020 as required under option 2. Technically, the District should have reported under option 3. Management spent significant amount of time and resources evaluating the reporting requirements and considered option 2 with a prorated budget for Q4 2020 to be a reasonable methodology given the District?s budget cycle is on the fiscal year September 30 and not December 31. Additionally, the calculated budget revenue for the nursing homes were unable to be reconciled to supporting documentation files. During the single audit, it was determined option 3 would have been the more appropriate reporting option to select. Management will perform a detailed analysis of the reporting requirements in accordance with the final guidelines set for by HRSA for future reporting periods. As deemed necessary, the District will modify policies and procedures over federal grant reporting. The District?s CFO will oversee this to ensure that this is accomplished.