Audit 316542

Finding 2023-001 Identification of the federal program: Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) Pass-Through Grantor: Not applicable Pass-Through Award Number: Not applicable Pass-Through Award Period: 1/1/2020–12/31/2023 (Periods 5 and 6) Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Provider Relief Programs: Provider Relief Fund and ARP Rural Payments Frequently Asked Questions states the following: “If a Reporting Entity has more lost revenues for a “Payment Received Period” than it received Provider Relief Fund and/or ARP Rural payments for the same period, can those lost revenues be carried forward and applied against payments received during later “Payment Received Periods” and included in the lost revenues reported during later reporting periods? (Modified 5/5/2023). Yes. Provider Relief Fund and/or ARP Rural payments may be applied to expenses and lost revenues according to the period of availability of funding. However, expenses and lost revenues may not be duplicated. Specifically, payments received may not be applied to the same expenses and lost revenues that Provider Relief Fund or ARP Rural payments received in prior payment periods already reimbursed. The Payment Received Periods described in the Post-Payment Notice of Reporting Requirements determine the period of availability of funding and when reports are due. The opportunity to apply Provider Relief Fund payments (excluding the Nursing Home Infection Control Distribution) and ARP Rural payments for lost revenues will be available up to June 30, 2023, the end of the quarter in which the COVID-19 Public Health Emergency ends.” Condition: The “Total Lost Revenues for the Period of Availability (January 1, 2020 to June 30, 2023)” line in the HRSA PRF portal for Spectrum Health System (the Parent), TIN 383382353, General Distribution HRSA PRF report in Reporting Period 5 was $108,697,843. The amount of lost revenues reported for Period 5 should have been $107,045,743. The difference represents a $1.6 million error as a result of improperly adjusting for targeted funds to determine the Parent’s lost revenues for period 5. Cause: Management’s internal controls over the review of input of lost revenues into the HRSA PRF portal were not sufficient to ensure the lost revenues recorded in the General Distribution portal “Total Lost Revenues for the Period of Availability (January 1, 2020 to June 30, 2023)” line were appropriate. Effect or potential effect: The lost revenues reported in the HRSA PRF portal were misstated. Questioned costs: None. Context: There were three HRSA PRF reports submitted for the year ended December 31, 2023. We tested all three reports. Per our inspection of our sample of the three Corewell Health West HRSA PRF portal submissions for reporting period 5, we identified in one report that the “Total Lost Revenues for the Period of Availability (January 1, 2020 to June 30, 2023) line” was overstated by $1.6 million. The total amount of lost revenue reported for Period 5 was $107,045,743. The System had sufficient lost revenues even with the reporting misstatement. Total expenses reported on the Schedule for PRF for the year ended December 31, 2023, are $7,678,128. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: We recommend that if PRF funding were received in future periods, management should implement more robust internal controls for review of the lost revenue input into the HRSA PRF Portal. Views of responsible officials: No further lost revenue reporting is required on the HRSA PRF Portal. Management will implement more robust internal controls in preparation for similar future filings.

Finding 2023-001 Identification of the federal program: Federal Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Assistance Listing: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) Pass-Through Grantor: Not applicable Pass-Through Award Number: Not applicable Pass-Through Award Period: 1/1/2020–12/31/2023 (Periods 5 and 6) Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Provider Relief Programs: Provider Relief Fund and ARP Rural Payments Frequently Asked Questions states the following: “If a Reporting Entity has more lost revenues for a “Payment Received Period” than it received Provider Relief Fund and/or ARP Rural payments for the same period, can those lost revenues be carried forward and applied against payments received during later “Payment Received Periods” and included in the lost revenues reported during later reporting periods? (Modified 5/5/2023). Yes. Provider Relief Fund and/or ARP Rural payments may be applied to expenses and lost revenues according to the period of availability of funding. However, expenses and lost revenues may not be duplicated. Specifically, payments received may not be applied to the same expenses and lost revenues that Provider Relief Fund or ARP Rural payments received in prior payment periods already reimbursed. The Payment Received Periods described in the Post-Payment Notice of Reporting Requirements determine the period of availability of funding and when reports are due. The opportunity to apply Provider Relief Fund payments (excluding the Nursing Home Infection Control Distribution) and ARP Rural payments for lost revenues will be available up to June 30, 2023, the end of the quarter in which the COVID-19 Public Health Emergency ends.” Condition: The “Total Lost Revenues for the Period of Availability (January 1, 2020 to June 30, 2023)” line in the HRSA PRF portal for Spectrum Health System (the Parent), TIN 383382353, General Distribution HRSA PRF report in Reporting Period 5 was $108,697,843. The amount of lost revenues reported for Period 5 should have been $107,045,743. The difference represents a $1.6 million error as a result of improperly adjusting for targeted funds to determine the Parent’s lost revenues for period 5. Cause: Management’s internal controls over the review of input of lost revenues into the HRSA PRF portal were not sufficient to ensure the lost revenues recorded in the General Distribution portal “Total Lost Revenues for the Period of Availability (January 1, 2020 to June 30, 2023)” line were appropriate. Effect or potential effect: The lost revenues reported in the HRSA PRF portal were misstated. Questioned costs: None. Context: There were three HRSA PRF reports submitted for the year ended December 31, 2023. We tested all three reports. Per our inspection of our sample of the three Corewell Health West HRSA PRF portal submissions for reporting period 5, we identified in one report that the “Total Lost Revenues for the Period of Availability (January 1, 2020 to June 30, 2023) line” was overstated by $1.6 million. The total amount of lost revenue reported for Period 5 was $107,045,743. The System had sufficient lost revenues even with the reporting misstatement. Total expenses reported on the Schedule for PRF for the year ended December 31, 2023, are $7,678,128. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: We recommend that if PRF funding were received in future periods, management should implement more robust internal controls for review of the lost revenue input into the HRSA PRF Portal. Views of responsible officials: No further lost revenue reporting is required on the HRSA PRF Portal. Management will implement more robust internal controls in preparation for similar future filings.