Sea Mar Community Health Center and Subsidiaries

Finding 2025-001 Eligibility – Significant Deficiency in Internal Control over Compliance and Immaterial Instances of Noncompliance Program: U.S. Department of Agriculture Rural Rental Assistance Program: ALN 10.427 Award Number: Various Award Year: 2024, 2025 Criteria: Pursuant to 7 CFR 3560.576, the Health Center must determine whether actual dollars earned from farm labor by a domestic farm laborer did not exceed 65 percent of the annual income limits. Condition/Cause: Sea Mar Farmworker and Community Housing Development Association did not consistently follow policies and procedures in place over the eligibility process. Income verification documents used in the eligibility determination process were not always obtained prior to the tenant’s movein date and/or were not retained. Effect: Elgibility upon move-in could not be verified for all tenants. Questioned Cost Not applicable. Context We selected 40 tenants out of the entire population of tenants who may be eligible to receive rental assistance. In 7 of the 40 samples tested, the Health Center did not retain documents evidencing that income verification took place prior to the tenant’s move-in date. Repeat Finding: Not applicable. Recommendation: We recommend that further processes and trainings be put in place to ensure the the eligibility determination process is accurately applied to all qualifiying program participants and applicable documentation is retained. Views of Responsible Officials: The Health Center concurs with the findings and is working on implementing the recommendation.

RE: Finding Reference Number: 2025-001 Corrective Action: Sea Mar will implement a compliance worksheet that will be used by staff to ensure they have collected all necessary documentation for each tenant. This tool will assist in tracking income verification documents and move-in/move-out dates and will be included as a cover sheet for each tenant file. Sea Mar will also provide staff with additional training on eligibility determination for qualifying applicants in alignment with applicable program guidelines. This will be completed by 3/31/2026. Name of Contact Person Responsible for Implementation: John Clerkin, Housing Director Sincerely, John Clerkin Housing Director P: (206) 788-3399 E: johnclerkin@seamarchc.org Proudly serving the community since 1978

Finding 2024-001 Special Tests and Provisions – Significant Deficiency in Internal Control over Compliance Program: U.S. Department of Health and Human Services Health Center Program Cluster: ALN 93.224/93.527 Award Number: Various Award Year: 2023, 2024 U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds ALN 21.027 Award year: 2022, 2023 Criteria: In accordance with the Health Resources & Services Administration Health Center Program Compliance Manual, Chapter 9: Sliding Fee Discount Program, health centers must prepare and apply a sliding fee discount schedule so that amounts owed for health center services by eligible patients are adjusted based on the patients’ ability to pay. Condition/Cause: The Health Center had instances in which discounts were not applied accurately based on the underlying support that was provided by the patient. Effect: Certain patients may have been billed amounts in excess of and less than the amounts defined by the sliding fee discount schedule. Questioned Costs: Not applicable. Context: We selected 60 patient visits out of the entire population of patients that may be eligible to receive benefits under the program during the fiscal year ended March 31, 2024. In 2 of the 60 samples tested, the patient did not receive the proper sliding fee scale discount per the Health Center’s policy. Additionally, during our testing of Coronavirus State and Local Fiscal Recovery Funds, ALN 21.027, we noted 1 instance in our testing in which the patient received a sliding fee scale discount after declining the discount. Repeat Finding: Not applicable. Recommendation: We recommend that further processes and training be put in place to ensure that the sliding fee scale is accurately applied to all qualifying program participants and applicable documentation is retained. Views of Responsible Officials: The Health Center concurs with the finding and is working on implementing the recommendation.

Finding Reference Number: 2024-001. Corrective Action: Sea Mar will follow up with additional training on the sliding fee scale for all employees who issue the discount to patients. This training will be done via Relias, which is Sea Mar's web-based training platform. A score of 100% will be required to pass. Employees who do not score 100% will be retrained and will retake the test. Sea Mar has set a goal to achieve accuracy percentage of 95% and achieved its goal with 97% pass rate, but still had a finding on the audit because Sea Mar did not reach 100%. Sea Mar conducts monthly audits to monitor accuracy. Sea Mar will continue to use a process that will require supervisors to review and sign off on employee's income verifications to ensure they are accurate. Supervisors will be expected to ensure this process is being conducted accurately at their sites and to retrain staff who are not accurately verifying income. This review and sign off process will be verified during the quarterly audit. The quarterly audit will also identify sites and staff who need additional training. Name of Contact Person: Harshiem Ross, Senior Vice President of Operations, HarshiemRoss@seamarchc.org Projected Completion Date: 3/31/2025

Finding 2024-002 Preparation of the Schedule Expenditures of Federal Awards -Significant Deficiency in Internal Control over Compliance Program: U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds ALN 21.027 Award year: 2022, 2023 Criteria: The Uniform Guidance (2 CFR 200) Section 200.510 requires an auditee to “prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements [that]….at a minimum shall…list individual Federal programs by Federal agency…[and] provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) number or other identifying number when the ALN information is not available.” In accordance with Uniform Guidance, the Organization is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Cause: The Health Center did not have sufficient controls to ensure the SEFA included all expenditures that qualified as an expenditure of a federal award during the period. Effect: The total expenditures presented per the preliminary SEFA increased by $4,800,000 related to ALN #21.027, Coronavirus State and Local Fiscal Recovery Funds, which resulted in an additional major program. No changes to the other financial statements were needed and the final SEFA was corrected to reflect the change. Questioned Costs: Not applicable. Context: Factors contributing to the condition included the high volume of activity related to new COVID-19 programs and the lack of understanding that the related payments represented grant expenditures from a Federal source that were required to be reported on the SEFA as opposed to grant payments from a non-federal source. Repeat Finding: Not applicable. Recommendation: We recommend the Health Center develop and implement a review process through the year to ensure compliance with SEFA reporting requirements as outlined in the Uniform Guidance. Views of Responsible Officials: Processes will be put in place to compile the SEFA, provide adequete training to staff, and perform a related review prior to audit. In addition, grant agreements will be thoroughly reviewed.

Finding Reference Number: 2024-002. Corrective Action: Sea Mar will train its accounting and finance staff to recognize the difference between a state and local grant and a federal grant by learning how to read and interpret the provisions of the gran and determine whether this is a federal or state and local grant. The training will be conducted by the CFO and Controller of Sea Mar, and staff members will have to acknowledge they understand by signing acknowledgement forms stating they received the training and understand the differences. Staff will also be instructed not to rely on the name of grant because many times the name of the grant is not indicative of the agency that is funding the grant. Controls will also be developed to ensure the SEFA captures all the appropriate information and during the contract review process it will be noted whether grants are federal or not. Name of Contact Person: Dustin Greer, CFO, DustinGreer@seamarchc.org Projected Completion Date: 3/31/2025

III. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2022-001 Special Tests and Provisions ? Material Weakness in Internal Control over Compliance Program: U.S Department of Health and Human Services Health Center Program Cluster: ALN 93.22/93.527. Award Number: Various. Award Year: 2022, 2023. Criteria: In accordance with the Health Resources & Services Administration Health Center Program Compliance Manual, Chapter 9: Sliding Fee Discount Program, health centers must prepare and apply a sliding fee discount schedule so that amounts owed for health center services by eligible patients are adjusted based on the patients? ability to pay. Condition/Cause: The Health Center did not retain underlying data in accordance with policy to support the sliding fee scale discount based on the patients? family size or income. Additionally, the Health Center had instances in which discounts were not applied accurately based on the underlying support that was provided by the patient. The Health Center?s implementation of Epic during the prior year impacted the design and implementation of internal controls over the compliance with respect to the sliding fee discount. Effect: Certain patients may have been billed amounts in excess of and less than the amounts defined by the sliding fee discount schedule. Questioned Costs: Not applicable. Context: We selected 40 patient visits out of the entire population of patients that may be eligible to receive benefits under the program during the fiscal year ended March 31, 2022. In 16 out of 40 samples tested, the Health Center was unable to locate underlying support required per their policy. Repeat Finding: Not applicable. Recommendation: We recommend that further processes and training be put in place to ensure that the sliding fee scale is accurately applied to all qualifying program participants and applicable documentation is retained. Views of Responsible Officials: The Health Center concurs with the finding and is working on implementing the recommendation.

Finding 2022-001 Sea Mar will retrain medical, dental and behavioral health department staff at all sites who conduct and/or oversee the patient registration and income verification process. This includes Health Center Administrators, Front Desk Supervisors, Dental Supervisors, Financial Specialists and Receptionists. This training will be conducted via Relias (web-based training and testing). This training will be required for all staff including new hires to ensure compliance and consistency. A competency test will be administered after the training, which requires a score of I 00% to pass. If an employee does not pass the competency test, they will be retrained and will retake the test. We will track and run reports for all staff that are required to complete these tasks to ensure compliance. This log will demonstrate that staff at the sites were trained and have passed the competency test. Sea Mar will conduct an audit to determine the accuracy of income verifications. The audit will select a random sample of patients to test and verify accuracy and completeness. Sea Mar has set a goal to achieve accuracy percentage of 95%-100% and will conduct monthly audits to monitor accuracy and improvement. Sea Mar will also implement a process that will require supervisors to review and sign off on employee's income verifications to ensure they are accurate. Supervisors will be expected to ensure this process is being conducted accurately at their sites and to retrain staff who are not accurately verifying income. This review and sign off process will be verified during the quarterly audit. The quarterly audit will also identify sites and staff who need additional training. The contact person for the corrective action plan is Sea Mar's Chief Compliance Officer, Kristina Hoeschen, Kristina Hoeschen@seamarchc.org ,and the anticipated completion date of November 30, 2022.

2021-001

Criteria: In accordance with the Health Resources & Services Administration Health Center Program Compliance Manual, Chapter 9: Sliding Fee Discount Program, health centers must prepare and apply a sliding fee discount schedule so that amounts owed for health center services by eligible patients are adjusted based on the patients? ability to pay. Condition/Cause: The Health Center did not retain underlying data in accordance with policy to support the sliding fee scale discount based on the patients? family size or income. Additionally, the Health Center had instances in which discounts were not applied accurately based on the underlying support that was provided by the patient. The Health Center?s implementation of Epic during the current year impacted the design and implementation of internal controls over the compliance with respect to the sliding fee discount. Questioned Costs: Not applicable. Context: We selected 25 patient visits out of the entire population of patients that may be eligible to receive benefits under the program during the fiscal year ended March 31, 2021. In 9 out of 25 samples tested, the Health Center was unable to locate underlying support required per their policy. In 5 out of 25 samples tested services were incorrectly charged. Repeat Finding: Not applicable. Recommendation: We recommend that further processes be put in place to ensure that the sliding fee scale is accurately applied to all qualifying program participants and applicable documentation is retained. Views of Responsible Officials: The Health Center concurs with the finding and is working on implementing the recommendation.

Sea Mar will retrain medical, dental and behavioral health department staff at all sites who conduct and/or oversee the patient registration and income verification process. This includes Health Center Administrators, Front Desk Supervisors, Dental Supervisors, Financial Specialists and Receptionists. This training will be conducted via live webinars. These webinars will be recorded so staff who did not attend the live webinar can view the recorded training and to use for refresher trainings and new staff trainings. A competency test will be administered after the training, which requires a 100% score to pass. If an employee does not pass the competency test, they will be retrained and retake the test. A training log will be kept that will include the list of all staff who took the training and passed the competency test. This log will demonstrate that staff at the sites were trained and passed the competency test. Sea Mar will conduct an audit to determine the accuracy of income verifications. The audit will select a random sample of patients to test and verify accuracy and completeness. SeaMar has set a goal to achieve accuracy percentage of 95%-100% and will conduct quarterly audits to monitor accuracy and improvement. Sea Mar will also implement a process that will require supervisors to review and sign off on employee's income verifications to ensure they are accurate. Supervisors will be expected to ensure this process is being conducted accurately at their sites and to retrain staff who are not accurately verifying income. This review and sign off process will be verified during the quarterly audit. The quarterly audit will also identify sites and staff who need additional training The contact person for the corrective action plan is Sea Mar's Chief Compliance Officer, Kristina Hoeschen, KristinaHoeschen@seamarchc.org, and the anticipated completion date of April 30, 2022.