FAC Explorer

Audit 338246

FY End
2022-12-31
Total Expended
$6.54M
Findings
4
Programs
5
Organization: Confluence Health (WA)
Year: 2022 Accepted: 2025-01-15
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
519363 2022-004 Material Weakness - L
519364 2022-005 Material Weakness - L
1095805 2022-004 Material Weakness - L
1095806 2022-005 Material Weakness - L

Programs

ALN Program Spent Major Findings
93.498 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $4.80M Yes 2
93.461 Hrsa Covid-19 Claims Reimbursement for the Uninsured Program and the Covid-19 Coverage Assistance Fund $924,777 Yes 0
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $544,819 - 0
93.898 Cancer Prevention and Control Programs for State, Territorial and Tribal Organizations $212,419 - 0
14.241 Housing Opportunities for Persons with Aids $55,968 - 0

Contacts

Name Title Type
ML88S3LCLFE3 Eric Caldwell Auditee
5094333824 Dave Studebaker Auditor
No contacts on file

Notes to SEFA

Title: NOTE 1 - BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting, with the exception of the COVID-19 HRSA Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (Uninsured Program), which are based on when the claim is determined eligible as evidenced by the receipt of monies from the federal agency. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: Confluence Health has not elected to use the 10% de minimis cost rate. The accompanying consolidated schedule of expenditures of federal awards (the schedule) includes the federal award activity of Confluence Health System and its consolidated subsidiaries (collectively, Confluence Health) under programs of the federal government for the year ended December 31, 2022. The information is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of Confluence Health, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Confluence Health.
Title: NOTE 2 - PRINCIPLES OF CONSOLIDATION Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting, with the exception of the COVID-19 HRSA Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (Uninsured Program), which are based on when the claim is determined eligible as evidenced by the receipt of monies from the federal agency. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: Confluence Health has not elected to use the 10% de minimis cost rate. Significant intercompany balances and transactions have been eliminated in the consolidated schedule of expenditures of federal awards. The following entities and their associated TIN numbers included within the schedule are as follows: Central Washington Health Services Association dba Central Washington Hospital – TIN# 910171250 and Wenatchee Valley Hospital – TIN# 455563741.
Title: NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting, with the exception of the COVID-19 HRSA Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (Uninsured Program), which are based on when the claim is determined eligible as evidenced by the receipt of monies from the federal agency. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: Confluence Health has not elected to use the 10% de minimis cost rate. Expenditures reported on the schedule are reported on the accrual basis of accounting, with the exception of the COVID-19 HRSA Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (Uninsured Program), which are based on when the claim is determined eligible as evidenced by the receipt of monies from the federal agency. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient.
Title: NOTE 4 - INDIRECT COST RATE Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting, with the exception of the COVID-19 HRSA Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (Uninsured Program), which are based on when the claim is determined eligible as evidenced by the receipt of monies from the federal agency. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: Confluence Health has not elected to use the 10% de minimis cost rate. Confluence Health has not elected to use the 10% de minimis cost rate.
Title: NOTE 5 - PROVIDER RELIEF FUND AND AMERICAN RESCUE PLAN (ARP) RURAL DISTRIBUTION Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting, with the exception of the COVID-19 HRSA Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund (Uninsured Program), which are based on when the claim is determined eligible as evidenced by the receipt of monies from the federal agency. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: Confluence Health has not elected to use the 10% de minimis cost rate. Confluence Health received amounts from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) program (Federal Financial Assistance Listing #93.498) in the amount of $50,001,156 as of December 31, 2022. PRF expenditures are not recognized on the schedule until the expenditures were included in the reporting to HHS as required under the PRF program. The following summarizes the PRF program funds and the timing of when the amounts were recognized in the consolidated financial statements.

Finding Details

Finding 2022-004
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN# 455563741 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Confluence Health must establish and maintain effective internal control over federal awards that provides reasonable assurance that Confluence Health is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: Confluence Health selected option ii to calculate lost revenue which consists of a comparison of actual results during the period of availability to a budget approved before March 27, 2020, for the entire period of availability. The budget used in the calculation of lost revenue was not approved for the entire period of availability. The budget used to cover quarters in 2021 and 2022 was not approved prior to March 27, 2020. Cause: Confluence Health did have an approved budget prior to March 27, 2020, for calendar year 2020, but the approved budget did not cover the entire period of availability. Effect: The reporting to HHS for Period 4 was considered incorrect. Confluence Health did not have a budget approved prior to March 27, 2020 for the entire period of availability. There was no effect on the amount of lost revenue applied against the funding received, however there were errors in the key line items reported. Questioned Costs: None reported. Context: Key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend that management review the calculation methodology for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Views of Responsible Officials: Management agrees with the finding.
Finding 2022-005
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN# 455563741 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Confluence Health must establish and maintain effective internal control over federal awards that provides reasonable assurance that Confluence Health is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. For the calculation of lost revenues, Confluence Health used gross charges to calculate lost revenue. Condition: The amounts reported for net patient revenue were based on gross charges and did not agree to the supporting documentation provided. Cause: Confluence Health did not have an internal control process in place to ensure the accuracy of the reporting key line items. Effect: There was no effect on the amount of lost revenue applied against the funding received in the current period, however there were errors in the key line items reported. On a consolidated level, lost revenue calculated using net patient revenue would have resulted in $64,525,051 in lost revenues, which exceeds the amount claimed in prior periods of $11,480,727. Questioned Costs: None reported. Context: Key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend that management review the calculation methodology for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Views of Responsible Officials: Management agrees with the finding.
Finding 2022-004
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN# 455563741 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Confluence Health must establish and maintain effective internal control over federal awards that provides reasonable assurance that Confluence Health is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Condition: Confluence Health selected option ii to calculate lost revenue which consists of a comparison of actual results during the period of availability to a budget approved before March 27, 2020, for the entire period of availability. The budget used in the calculation of lost revenue was not approved for the entire period of availability. The budget used to cover quarters in 2021 and 2022 was not approved prior to March 27, 2020. Cause: Confluence Health did have an approved budget prior to March 27, 2020, for calendar year 2020, but the approved budget did not cover the entire period of availability. Effect: The reporting to HHS for Period 4 was considered incorrect. Confluence Health did not have a budget approved prior to March 27, 2020 for the entire period of availability. There was no effect on the amount of lost revenue applied against the funding received, however there were errors in the key line items reported. Questioned Costs: None reported. Context: Key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend that management review the calculation methodology for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Views of Responsible Officials: Management agrees with the finding.
Finding 2022-005
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN# 455563741 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Confluence Health must establish and maintain effective internal control over federal awards that provides reasonable assurance that Confluence Health is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. For the calculation of lost revenues, Confluence Health used gross charges to calculate lost revenue. Condition: The amounts reported for net patient revenue were based on gross charges and did not agree to the supporting documentation provided. Cause: Confluence Health did not have an internal control process in place to ensure the accuracy of the reporting key line items. Effect: There was no effect on the amount of lost revenue applied against the funding received in the current period, however there were errors in the key line items reported. On a consolidated level, lost revenue calculated using net patient revenue would have resulted in $64,525,051 in lost revenues, which exceeds the amount claimed in prior periods of $11,480,727. Questioned Costs: None reported. Context: Key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend that management review the calculation methodology for lost revenues and ensure the amounts used for actual revenues agrees to the amounts presented in the financial statements. Views of Responsible Officials: Management agrees with the finding.