Northern Montana Hospital

2021-003 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #810378200 Activities Allowed or Unallowed and Allowable Costs/Cost Principles, and Reporting Significant Deficiency in Internal Control over Compliance Criteria ? 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, terms and conditions of the federal award. The Organization selected option 1 to calculate lost revenue which consists of a comparison of 2019 actual results to 2020 and 2021 actual results by quarter. Patient care-related revenue should be reported net of adjustments for all third-party payers, charity care adjustments, bad debt, and any other discounts or adjustments, as applicable when reporting patient care related revenue sources. Condition ? The Organization excluded bad debt recoveries from the amounts reported for lost revenue. Cause ? The Organization?s internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the report submitted to the Department of Health and Human Services (HHS) for Period 1, did not detect an error. Effect ? The reporting to HHS for Period 1 was considered incorrect. The Organization reported amounts for Period 1 that were considered incorrect since patient revenue did not include bad debt recoveries. The impact of properly including bad debt recoveries in the lost revenue calculation would decrease the amount eligible for lost revenues reimbursement reported by $46,357 from $5,758,408 to $5,712,051. Total unused lost revenues would decrease $46,357 from $3,581,876 to $3,535,519. Questioned Costs ? None reported. There are no questioned costs as there is enough lost revenue and identified expenses in excess of funds received by the Organization. Context ? Key line items were tested on the Period 1 HHS report. Repeat Finding from Prior Years ? No Recommendation ? We recommend the Organization implement procedures to ensure the lost revenue is calculated in accordance with the terms and conditions of the federal program. Views of Responsible Officials ? Management agrees with the finding.

Finding 2021-003 Federal Agency Name: Department of Health and Human Services Program Name: COVID -19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Assistance Listing/CFDA #93.498 Applicable Federal Award Number and Year ? Period 1 TIN#810378200 Finding Summary: The organization?s Period 1 PRF program report contained errors in the amounts of quarterly patient cares revenues, utilizing Option 1, as defined by HRSA. The quarterly patient care revenues reported did not include bad debt recoveries. Responsible Individual: Kim Lucke, Vice President of Finance Corrective Action Plan: The amounts of quarterly patient care revenues, utilizing Option 1, as defined by HRSA, originally reported for Period 1 has been corrected on the Period 3 report submission. Going forward, management will ensure bad debt recoveries are included in the quarterly patient care revenues reported. Anticipated Completion Date: September 2022