Finding 2022-001 ? Internal control deficiency and noncompliance over reporting of lost revenues attributable to coronavirus in the HRSA PRF Reporting Portal (the ?Portal?). Identification of the federal program: Assistance Listing Number 93.498: ? COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution ? U.S. Department of Health and Human Services ? Health Resources and Services Administration ? Federal award identification number ? Not Applicable ? Federal award year ? Period 4 ? July 1, 2021 to December 31, 2021 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 ? Internal controls. 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 terms and conditions of the award requires the following: ? The recipient certified that the payment will only be used to prevent, prepare for, and respond to coronavirus, and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. ? The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. ? The recipient shall submit reports as Health and Human Services (HHS) determines are needed to ensure compliance with conditions that are imposed on the payment, and such reports shall be in such form, with such content, as specified by the secretary of HHS in future program instructions directed to all recipients. The Provider Relief Programs: Provider Relief Fund and ARP Rural Payments Frequently Asked Questions states the following: ? Duplication of expenses and lost revenues is not permitted. Condition: During our testing over reporting, we observed management did not have effective internal controls in place to ensure lost revenues reported in the Portal were not duplicated. This resulted in an overstatement of lost revenues reported in the Portal. Additionally, we noted two other errors in reporting of net patient service revenue in the Portal for 1 of 4 submissions. Cause: Management did not have effective internal controls in place to ensure the reported lost revenues attributable to coronavirus reported in the Portal were not duplicated among all submissions and also to ensure accurate reporting of net patient service revenue in the Portal. Effect or potential effect: The lost revenues attributable to coronavirus were reported incorrectly in the Portal. Questioned costs: None. Context: During our testing over reporting, we obtained a listing of 4 PRF reports submitted to the Portal and tested each of these 4 submissions. We observed the lost revenues attributable to coronavirus were reported in both the parent entity?s PRF report and the subsidiary entity?s PRF report (i.e., lost revenues were duplicated). This resulted in an overstatement of lost revenues in the amount of $52,642,643. Total lost revenues attributable to coronavirus submitted in the Portal was $115,748,881 compared to actual lost revenues attributable to coronavirus of $63,106,238. Management?s control regarding the review of the PRF reports did not identify the overstatement when submitting the Period 4 submissions into the Portal. Cottage Health still has excess lost revenues to substantiate the payments received. Additionally, for one submission, net patient service revenue was overstated in the submission for quarter 1 of 2021 by $1,043,829 and understated for quarter 2 of 2021 by $1,043,829 when compared to the general ledger. The net effect to the net patient service revenue reported for the year ended December 31, 2021 was $0; however, the individual amounts reported in the submission by quarter were incorrect. There was no impact to lost revenues reported in the submission for 2021. Of the actual lost revenues attributable to coronavirus of $63,106,238, Cottage Health has requested from HRSA, at HRSA?s recommendation, that unreimbursed lost revenue be used to cover $214,069 in questioned costs related to prior year finding 2021-002. Identification as a repeat finding, if applicable: No. Recommendation: Management should develop and implement effective internal controls to ensure the total lost revenues reported in the Portal during each reporting period, across all of the entity?s submissions, are reflective of the entity?s consolidated lost revenues and are not duplicated, and also to ensure amounts reported in the Portal are accurate. Views of responsible officials: Management has reviewed this finding (2022-001) and agrees with the conclusion. We consider our controls around tracking PRF distributions and calculating lost revenues are sufficient to ensure no funding is requested beyond qualifying, allowable amounts. The PRF portal (Portal), as developed by HRSA, permitted the reporting of general distributions under the parent company, even if the distribution was made to an individual provider. Targeted distributions, however, were required to be reported by the recipient provider (Cottage Health providers operate under separate Tax Identification Numbers). Cottage Health received both general and targeted period 4 distributions, and applied the distributions to lost revenues, which were calculated by using the Option i ? Actuals methodology. The Portal did not allow for demonstrated transfers between provider numbers for reporting lost revenues when electing Option i ? Actuals methodology to report lost revenues. Actual revenue was therefore reported in both parent company and individual provider reports where both a general and targeted distribution was made to a single provider. Management will change its methodology for amounts reported as lost revenues from Option i ? Actuals to Option iii ? Alternate Reasonable Methodology. Changing the methodology will allow management to restate lost revenues reported in the Portal and correct the amounts that were overstated. Management is also in the process of refining and implementing additional controls to ensure lost revenues are reported accurately. These controls will include detailed quarterly review by both the Cottage Health Director of Finance and the VP of Finance and Controller, of net revenue by financial class and provider. The Director of Finance and VP of Finance and Controller will also review and approve the amounts reported in the Portal prior to submission.
Finding 2022-001 ? Internal control deficiency and noncompliance over reporting of lost revenues attributable to coronavirus in the HRSA PRF Reporting Portal (the ?Portal?). Identification of the federal program: Assistance Listing Number 93.498: ? COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution ? U.S. Department of Health and Human Services ? Health Resources and Services Administration ? Federal award identification number ? Not Applicable ? Federal award year ? Period 4 ? July 1, 2021 to December 31, 2021 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 ? Internal controls. 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 terms and conditions of the award requires the following: ? The recipient certified that the payment will only be used to prevent, prepare for, and respond to coronavirus, and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. ? The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. ? The recipient shall submit reports as Health and Human Services (HHS) determines are needed to ensure compliance with conditions that are imposed on the payment, and such reports shall be in such form, with such content, as specified by the secretary of HHS in future program instructions directed to all recipients. The Provider Relief Programs: Provider Relief Fund and ARP Rural Payments Frequently Asked Questions states the following: ? Duplication of expenses and lost revenues is not permitted. Condition: During our testing over reporting, we observed management did not have effective internal controls in place to ensure lost revenues reported in the Portal were not duplicated. This resulted in an overstatement of lost revenues reported in the Portal. Additionally, we noted two other errors in reporting of net patient service revenue in the Portal for 1 of 4 submissions. Cause: Management did not have effective internal controls in place to ensure the reported lost revenues attributable to coronavirus reported in the Portal were not duplicated among all submissions and also to ensure accurate reporting of net patient service revenue in the Portal. Effect or potential effect: The lost revenues attributable to coronavirus were reported incorrectly in the Portal. Questioned costs: None. Context: During our testing over reporting, we obtained a listing of 4 PRF reports submitted to the Portal and tested each of these 4 submissions. We observed the lost revenues attributable to coronavirus were reported in both the parent entity?s PRF report and the subsidiary entity?s PRF report (i.e., lost revenues were duplicated). This resulted in an overstatement of lost revenues in the amount of $52,642,643. Total lost revenues attributable to coronavirus submitted in the Portal was $115,748,881 compared to actual lost revenues attributable to coronavirus of $63,106,238. Management?s control regarding the review of the PRF reports did not identify the overstatement when submitting the Period 4 submissions into the Portal. Cottage Health still has excess lost revenues to substantiate the payments received. Additionally, for one submission, net patient service revenue was overstated in the submission for quarter 1 of 2021 by $1,043,829 and understated for quarter 2 of 2021 by $1,043,829 when compared to the general ledger. The net effect to the net patient service revenue reported for the year ended December 31, 2021 was $0; however, the individual amounts reported in the submission by quarter were incorrect. There was no impact to lost revenues reported in the submission for 2021. Of the actual lost revenues attributable to coronavirus of $63,106,238, Cottage Health has requested from HRSA, at HRSA?s recommendation, that unreimbursed lost revenue be used to cover $214,069 in questioned costs related to prior year finding 2021-002. Identification as a repeat finding, if applicable: No. Recommendation: Management should develop and implement effective internal controls to ensure the total lost revenues reported in the Portal during each reporting period, across all of the entity?s submissions, are reflective of the entity?s consolidated lost revenues and are not duplicated, and also to ensure amounts reported in the Portal are accurate. Views of responsible officials: Management has reviewed this finding (2022-001) and agrees with the conclusion. We consider our controls around tracking PRF distributions and calculating lost revenues are sufficient to ensure no funding is requested beyond qualifying, allowable amounts. The PRF portal (Portal), as developed by HRSA, permitted the reporting of general distributions under the parent company, even if the distribution was made to an individual provider. Targeted distributions, however, were required to be reported by the recipient provider (Cottage Health providers operate under separate Tax Identification Numbers). Cottage Health received both general and targeted period 4 distributions, and applied the distributions to lost revenues, which were calculated by using the Option i ? Actuals methodology. The Portal did not allow for demonstrated transfers between provider numbers for reporting lost revenues when electing Option i ? Actuals methodology to report lost revenues. Actual revenue was therefore reported in both parent company and individual provider reports where both a general and targeted distribution was made to a single provider. Management will change its methodology for amounts reported as lost revenues from Option i ? Actuals to Option iii ? Alternate Reasonable Methodology. Changing the methodology will allow management to restate lost revenues reported in the Portal and correct the amounts that were overstated. Management is also in the process of refining and implementing additional controls to ensure lost revenues are reported accurately. These controls will include detailed quarterly review by both the Cottage Health Director of Finance and the VP of Finance and Controller, of net revenue by financial class and provider. The Director of Finance and VP of Finance and Controller will also review and approve the amounts reported in the Portal prior to submission.