Finding 2025-001 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Identification of the federal program: Federal Grantor: United States Department of the Treasury Assistance Listing Number: 21.027, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Pass-Through Entity: State of Tennessee Department of Health Ascension Ministry Market: Saint Thomas Medical Partners dba Ascension Medical Group (Ascension, Tennessee) Pass-Through Award Number: Not applicable Pass-Through Award Period: 11/1/2022 – 06/30/2026 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The internal controls should align with the 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).” Condition: Time and Effort (T&E) certification reports related to certain employees’ salary charged during the year to the federal award were not reviewed timely. Cause: T&E certification reports were processed without timely Project Manager review and approval at Ascension Medical Group Effect or potential effect: Costs may be charged to the federal award that do not comply with federal or pass-through grant requirements. Questioned costs: None. Context: Of the 14 T&E certification reports sampled (totaling $144,738), six T&E certification reports (totaling $31,596) did not evidence timely review and approval by the employee's Project Manager for Ascension Medical Group. For Assistance Listing No. 21.027, total payroll costs for Ascension, Tennessee, were $525,874, representing 3.3% of total federal expenditures of $15,919,235 for the year ended June 30, 2025. Identification as a repeat finding, if applicable: This finding is a repeat finding from the prior year (2024-001, 2023-002). Recommendation: Management at Ascension Medical Group should reinforce the importance of adhering to its internal controls and timely review over the T&E certification reports. Views of responsible officials: Ascension Grants & Research Department will reinforce the importance of timely approval of Time & Effort reports with appropriate personnel at Saint Thomas Medical Partners.
Finding 2025-002 – Procurement and Suspension and Debarment Identification of the federal program: Federal Grantor: United States Department of the Treasury Assistance Listing Number: 21.027, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Pass-Through Grantor: Kansas Department for Aging and Disability Services Ascension Ministry Market: Kansas Pass-Through Award Number: N0237723 Pass-Through Award Period: 07/01/2023 – 06/30/2026 Pass-Through Grantor: State of Tennessee Department of Health Ascension Ministry Market: Tennessee Pass-Through Award Number: Not applicable Pass-Through Award Period: 03/03/2021 – 06/30/2026 Criteria or specific requirement (including statutory, regulatory, or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The internal controls should align with the 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).” Section 200.318 states the following regarding general procurement standards: “(i) Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price.” Section 200.320 states the following regarding procurement methods: “(c) Noncompetitive procurement. There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate.” Condition: Ascension Health did not prepare a sole source justification memo timely for two procurement transactions executed in fiscal year 2025. Cause: Internal controls were not enforced to ensure a sole-source justification memo was completed before the procurement transaction occurred. Effect or potential effect: Lack of or untimely preparation of the sole source justification memo results in noncompliance with the documentation requirements under the Uniform Guidance procurement standards and could potentially result in inadequate or inappropriate procurement methods followed. Questioned costs: $24,707 calculated as follows: Pass-Through Grantor: Kansas Department for Aging and Disability Services Pass-Through Award Number: N0237723 Questioned costs (COVID-19): $16,167, representing the costs reported on the schedule of expenditures of federal awards for the year ended June 30, 2025, for one procurement transaction that lacked sole-source justification memo at the time of procurement. Pass-Through Grantor: State of Tennessee Department of Health Pass-Through Award Number: Not applicable Questioned costs (COVID-19): $8,540, representing the costs reported on the schedule of expenditures of federal awards for the year ended June 30, 2025, for one procurement transaction that lacked sole-source justification memo at the time of procurement. Context: We tested a sample of five procurement transactions totaling $3,916,620 and noted exceptions related to two procurement transactions totaling $24,707. Total procurement transactions were $14,560,955, representing 91% of total federal expenditures of $15,919,235 for the year ended June 30, 2025. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: Management should implement more robust internal controls to ensure sole source justification memos are prepared and reviewed timely. Views of responsible officials: Personnel responsible for procurement transactions will be educated on the proper procedures for obtaining and retaining sole source memo justification letters before entering into these transactions.
Finding 2025-003 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles, and Reporting Identification of the federal program: Federal Grantor: U.S. Department of Homeland Security – Federal Emergency Management Agency (FEMA) Assistance Listing Number: 97.036, COVID-19 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Pass-Through Grantor: Michigan State Police Emergency Management & Homeland Security Division Ascension Entity: Ascension Providence Rochester Hospital (125-U0BDI-00) Pass-Through Award Number: DR4494 – PW811 Pass-Through Award Period: 07/01/2021 – 06/30/2022 Criteria or specific requirement (including statutory, regulatory, or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The internal controls should align with the 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).” Section 200.403(g) of the Uniform Guidance requires that costs charged to Federal awards be adequately documented. In addition, Section 200.406 of the Uniform Guidance requires that costs charged to a Federal award be reduced by applicable credits, including any amounts that offset or reduce costs allocable to the Federal award. Condition: The System calculated a COVID-19 attribution percentage based on patient-level data extracted from the patient system that classified patients as COVID-19, suspected COVID-19, or non-COVID based on diagnosis codes. The COVID-19 percentage was then applied to the contractor costs to determine the allowable costs that could be charged to FEMA. During our testing, we noted 1 instance out of 25 patient files tested where the System could not support a COVID-19 diagnosis. Cause: The System relied on automated system logic and extracted a report that had patients’ classification as COVID-19, Suspected COVID-19 or non-COVID for purposes of the COVID-19 attribution calculation; however, controls were not sufficient to ensure that all patient accounts classified as COVID-19 were supported by sufficient underlying clinical documentation. Effect or potential effect: Costs may be charged to the federal award that do not comply with federal or pass-through grant requirements. Questioned costs: One of the 25 patient accounts tested did not retain consistent medical documentation supporting the COVID-19 classification. However, the amount of questioned costs cannot be calculated on a per-patient basis because the contractor’s costs charged are not directly attributable to individual patient accounts because of FEMA calculation methodology. Instead, the COVID-19 classification affects the overall percentage used to calculate the total allowable costs charged to FEMA. As a result, a specific overcharge attributable to the unsupported patient account could not be quantified. Context: During testing of 25 patient accounts selected to verify the accuracy of patient classification, one patient account at Ascension, Michigan, lacked documentation supporting a COVID-19 diagnosis, despite being classified as COVID-related in the patient system. Contract labor costs at Ascension Providence Rochester Hospital were $951,135. Total contract labor costs of $36,775,859 were calculated using COVID-19 attribution percentages. Total COVID FEMA federal expenditures for the year ended June 30, 2025, were $101,313,434. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: Management should enhance its review controls to ensure that the patient classifications derived from the patient systems are supported by underlying clinical documentation. Views of responsible officials: Ascension acknowledges the inability to locate relevant documentation pertaining to the COVID classification for a specific patient with services during the COVID-19 public health emergency. Although the documentation was not located in this instance, patient care was appropriately provided. However, Ascension will sample patient-level encounter records at Ascension Providence Rochester Hospital prior to future revenue recognition to ensure appropriate documentation.