Finding 2023-002 – Sliding Fee Determination and Related Patient Billing
U.S. Department of Health and Human Services
Assistance Listing No. 93.224/93.527, Health Center Program Cluster
Criteria: All section 330-funded health centers must prepare and apply a sliding fee discount schedule (SFDS), which adjust amount owed for health center services by eligible patients based on the patient’s ability to pay. Management is responsible to make sure controls are in place for patients to be charged in accordance with the SFDS and that income verifications are performed at least annually.
Condition: As part of our compliance testing procedures for the HRSA 330 grant programs, we tested sixty patients billed under a sliding fee discount schedule. Of the patients tested, five patients (8%) were found to have exceptions as the income verification was either not performed or had not been performed within the past 12 months.
Cause: Based on audit procedures performed, the income verification process was never performed or not performed on an annual basis for patients to be charged the correct amount for their service or an application.
Effect: The lack of controls over the income verification process could cause revenue to be over or understated. The impact of the ten patients that did not have appropriate documentation is not able to be quantified.
Questioned costs: None.
Repeat finding: Repeat of finding 2022-002.
Recommendations: The established policies and controls did not operate effectively in these instances. Management should ensure processes are in place to make sure the income verification process is being performed annually for each patient.
Views of responsible officials and corrective action plan: Due to significant turnover at Rural Health Corporation of Northeastern Pennsylvania, several income verifications were not completed in time. Additional hiring and training are required to ensure that these processes are followed. The outsourced billing company is routinely scheduled to participate in training with the front desk personnel and main office personnel. Another internal practice manager/front desk manager has been promoted to work with the parties involved to remedy the situation. The CFO acknowledges and is responsible for this corrective action plan.
Finding 2023-001 – Patient Services Receivable Allowances
Criteria: Management is responsible to ensure that medical records are completed and to make reasonable estimates and assumptions on the allowance for contractual adjustments and doubtful accounts.
Condition: Based on audit procedures performed, an adjustment of $878,000 was made to record an additional allowance related to patient services receivable for the year ended June 30, 2023. Rural Health Corporation of Northeastern Pennsylvania did not record an appropriate allowance at the end of the current year. Further, revenue and receivables testing during the audit indicated that several medical records were missing at least one supporting document, including consent to treat forms or incomplete patient records.
Cause: Based on audit procedures performed, management has incomplete medical records and did not record an adequate allowance for contractual adjustments and doubtful accounts due to the implementation of a new billing system and turnover of their medical billing team.
Effect: The lack of supporting documentation and accurate estimates on the allowance for contractual adjustments and doubtful accounts presents the potential for incorrect reporting of significant financial statement balances
Recommendations: Management should ensure complete medical records containing all supporting documents. Additionally, management should review their allowance for contractual adjustments and doubtful accounts on a monthly basis to ensure the accuracy of the account balances.
Views of responsible officials and corrective action plan: In June of 2022, Rural Health Corporation of Northeastern Pennsylvania implemented a new Electronic Medical Records System. This implementation, combined with turnover in the billing department, and the hiring of an outsourced claims processor, led to billing delays and various other challenges related to accounts receivable. An internal biller was hired, and processes are in place to monitor and reconcile accounts receivable on at least a monthly basis. The CFO acknowledges and is responsible for this corrective action plan.
Finding 2023-001 – Patient Services Receivable Allowances
Criteria: Management is responsible to ensure that medical records are completed and to make reasonable estimates and assumptions on the allowance for contractual adjustments and doubtful accounts.
Condition: Based on audit procedures performed, an adjustment of $878,000 was made to record an additional allowance related to patient services receivable for the year ended June 30, 2023. Rural Health Corporation of Northeastern Pennsylvania did not record an appropriate allowance at the end of the current year. Further, revenue and receivables testing during the audit indicated that several medical records were missing at least one supporting document, including consent to treat forms or incomplete patient records.
Cause: Based on audit procedures performed, management has incomplete medical records and did not record an adequate allowance for contractual adjustments and doubtful accounts due to the implementation of a new billing system and turnover of their medical billing team.
Effect: The lack of supporting documentation and accurate estimates on the allowance for contractual adjustments and doubtful accounts presents the potential for incorrect reporting of significant financial statement balances
Recommendations: Management should ensure complete medical records containing all supporting documents. Additionally, management should review their allowance for contractual adjustments and doubtful accounts on a monthly basis to ensure the accuracy of the account balances.
Views of responsible officials and corrective action plan: In June of 2022, Rural Health Corporation of Northeastern Pennsylvania implemented a new Electronic Medical Records System. This implementation, combined with turnover in the billing department, and the hiring of an outsourced claims processor, led to billing delays and various other challenges related to accounts receivable. An internal biller was hired, and processes are in place to monitor and reconcile accounts receivable on at least a monthly basis. The CFO acknowledges and is responsible for this corrective action plan.
Finding 2023-002 – Sliding Fee Determination and Related Patient Billing
U.S. Department of Health and Human Services
Assistance Listing No. 93.224/93.527, Health Center Program Cluster
Criteria: All section 330-funded health centers must prepare and apply a sliding fee discount schedule (SFDS), which adjust amount owed for health center services by eligible patients based on the patient’s ability to pay. Management is responsible to make sure controls are in place for patients to be charged in accordance with the SFDS and that income verifications are performed at least annually.
Condition: As part of our compliance testing procedures for the HRSA 330 grant programs, we tested sixty patients billed under a sliding fee discount schedule. Of the patients tested, five patients (8%) were found to have exceptions as the income verification was either not performed or had not been performed within the past 12 months.
Cause: Based on audit procedures performed, the income verification process was never performed or not performed on an annual basis for patients to be charged the correct amount for their service or an application.
Effect: The lack of controls over the income verification process could cause revenue to be over or understated. The impact of the ten patients that did not have appropriate documentation is not able to be quantified.
Questioned costs: None.
Repeat finding: Repeat of finding 2022-002.
Recommendations: The established policies and controls did not operate effectively in these instances. Management should ensure processes are in place to make sure the income verification process is being performed annually for each patient.
Views of responsible officials and corrective action plan: Due to significant turnover at Rural Health Corporation of Northeastern Pennsylvania, several income verifications were not completed in time. Additional hiring and training are required to ensure that these processes are followed. The outsourced billing company is routinely scheduled to participate in training with the front desk personnel and main office personnel. Another internal practice manager/front desk manager has been promoted to work with the parties involved to remedy the situation. The CFO acknowledges and is responsible for this corrective action plan.
Finding 2023-001 – Patient Services Receivable Allowances
Criteria: Management is responsible to ensure that medical records are completed and to make reasonable estimates and assumptions on the allowance for contractual adjustments and doubtful accounts.
Condition: Based on audit procedures performed, an adjustment of $878,000 was made to record an additional allowance related to patient services receivable for the year ended June 30, 2023. Rural Health Corporation of Northeastern Pennsylvania did not record an appropriate allowance at the end of the current year. Further, revenue and receivables testing during the audit indicated that several medical records were missing at least one supporting document, including consent to treat forms or incomplete patient records.
Cause: Based on audit procedures performed, management has incomplete medical records and did not record an adequate allowance for contractual adjustments and doubtful accounts due to the implementation of a new billing system and turnover of their medical billing team.
Effect: The lack of supporting documentation and accurate estimates on the allowance for contractual adjustments and doubtful accounts presents the potential for incorrect reporting of significant financial statement balances
Recommendations: Management should ensure complete medical records containing all supporting documents. Additionally, management should review their allowance for contractual adjustments and doubtful accounts on a monthly basis to ensure the accuracy of the account balances.
Views of responsible officials and corrective action plan: In June of 2022, Rural Health Corporation of Northeastern Pennsylvania implemented a new Electronic Medical Records System. This implementation, combined with turnover in the billing department, and the hiring of an outsourced claims processor, led to billing delays and various other challenges related to accounts receivable. An internal biller was hired, and processes are in place to monitor and reconcile accounts receivable on at least a monthly basis. The CFO acknowledges and is responsible for this corrective action plan.
Finding 2023-001 – Patient Services Receivable Allowances
Criteria: Management is responsible to ensure that medical records are completed and to make reasonable estimates and assumptions on the allowance for contractual adjustments and doubtful accounts.
Condition: Based on audit procedures performed, an adjustment of $878,000 was made to record an additional allowance related to patient services receivable for the year ended June 30, 2023. Rural Health Corporation of Northeastern Pennsylvania did not record an appropriate allowance at the end of the current year. Further, revenue and receivables testing during the audit indicated that several medical records were missing at least one supporting document, including consent to treat forms or incomplete patient records.
Cause: Based on audit procedures performed, management has incomplete medical records and did not record an adequate allowance for contractual adjustments and doubtful accounts due to the implementation of a new billing system and turnover of their medical billing team.
Effect: The lack of supporting documentation and accurate estimates on the allowance for contractual adjustments and doubtful accounts presents the potential for incorrect reporting of significant financial statement balances
Recommendations: Management should ensure complete medical records containing all supporting documents. Additionally, management should review their allowance for contractual adjustments and doubtful accounts on a monthly basis to ensure the accuracy of the account balances.
Views of responsible officials and corrective action plan: In June of 2022, Rural Health Corporation of Northeastern Pennsylvania implemented a new Electronic Medical Records System. This implementation, combined with turnover in the billing department, and the hiring of an outsourced claims processor, led to billing delays and various other challenges related to accounts receivable. An internal biller was hired, and processes are in place to monitor and reconcile accounts receivable on at least a monthly basis. The CFO acknowledges and is responsible for this corrective action plan.