Finding 2025-001 – N: Special Tests and Provisions Information on the Federal Program: Grantor: United States Department of Health and Human Services Program Name: Health Center Program Cluster Assistance Listing Numbers: 93.224 – Health Center Program; 93.527 – Grants for New and Expanded Services under the Health Center Program Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR), Part 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).” Per 42 CFR sections 51c.303(e), (f), and (g) and 42 CFR sections 56.303(e), (f), and (g), health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient’s ability to pay as defined by these subsections. Condition: Montefiore Health System, Inc. (the Health System) was unable to demonstrate that internal controls were operating effectively throughout the audit period to ensure the proper application of its sliding fee discount schedule (SFDS). During testing, three patients were charged self-pay balances when, based on the applicable sliding fee discount schedule, those charges should have been discounted. The exceptions occurred prior to the implementation of corrective actions associated with the prior-year finding. Management implemented enhanced controls effective October 1, 2025; however, the identified exceptions demonstrate that controls were not operating effectively during a portion of the audit period. Cause: Corrective actions associated with the prior-year finding were not fully implemented until October 1, 2025. As a result, controls designed to ensure the consistent and accurate application of the sliding fee discount schedule were not operating effectively during a portion of the audit period, resulting in instances where eligible patients were assessed self-pay balances that should have been discounted. Effect or Potential Effect: As a result of the control deficiency, eligible patients were charged self-pay balances that exceeded amounts permitted under the Health System's sliding fee discount schedule. Although the exceptions identified were limited to transactions occurring prior to the implementation of corrective actions effective October 1, 2025, failure to effectively apply the SFDS could result in eligible patients being charged incorrect amounts and increase the risk of noncompliance with Federal program requirements. Questioned Costs: None noted. Amounts charged to patients do not impact expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA); therefore, no questioned costs were identified. Context: We tested 60 compliance samples from a population of 31,357 transactions for compliance with the Health Center Program Cluster special test and provision related to sliding fee discount schedule requirements. Three exceptions were identified in which patients were charged self-pay balances that should have been reduced based on the applicable sliding fee discount schedule. All three exceptions occurred during the first nine months of the audit period, prior to management's implementation of corrective actions effective October 1, 2025. Identification as a repeat finding: Repeat Finding 2024-001 Recommendation: We recommend management continue to monitor the effectiveness of the corrective actions implemented on October 1, 2025 and ensure controls operate consistently to verify that sliding fee discount determinations are supported, documented, and applied accurately in accordance with Federal requirements and organizational policy. View of responsible officials: Management concurs with the audit finding and will continue to monitor the effectiveness of the corrective actions implemented October 1, 2025. The total of noted exceptions was determined to be de minimis (less than $50). Standardized procedures have been implemented to strengthen patient screening and enrollment, including controls to ensure the timely collection and documentation of income and family size.
Finding 2025-002 – I. Procurement and Suspension and Debarment Information on the Federal Program: Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Program Name: Congressional Directives Assistance Listing Numbers: 93.493 Criteria or Specific Requirement (including statutory, regulatory or other citation): 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).” Title 2, Subtitle A, Chapter II, Part 200, Subpart D 200.320 – Procurement methods – requires entities to maintain documented procurement procedures and appropriate supporting documentation for procurement methods, including noncompetitive procurements. Purchases below the simple acquisition threshold, but above the micro-purchase threshold, require price and rate quotations to be obtained from an adequate number of qualified sources. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 - Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition: The Health System did not retain documentation demonstrating either (1) competitive bidding was performed or (2) the justification and circumstances supporting the use of a noncompetitive procurement method for equipment, installation and broadband services purchased under the grant. The procurement transactions reviewed exceeded the micro-purchase threshold; however, no supporting competitive procurement or sole-source documentation was available for audit inspection. The Health System has an established process to monitor vendor suspension and debarment requirements. Management’s process includes suspension and debarment evaluations on all new vendors prior to entering into any business relationship. The Health System utilized a third party to perform monthly suspension and debarment reviews; however, vendors associated with the program were not included in the listings provided to the third party for review. As a result, the Health System could not demonstrate that required suspension and debarment procedures had been performed for applicable vendors. Cause: Controls over the retention and maintenance of procurement documentation were not operating effectively to ensure that competitive procurement activities or sole-source justifications were documented and retained in accordance with Federal requirements. Controls over the identification and submission of vendors subject to suspension and debarment review were not operating effectively to ensure all applicable program vendors were included in the monthly review process performed by the third party. Effect or potential effect: Failure to maintain procurement documentation supporting competition or sole-source justification may result in noncompliance with Federal procurement requirements and limits the Health System's ability to demonstrate that contracts were awarded in accordance with Federal regulations. Failure to perform and document required suspension and debarment procedures increases the risk that the Health System could enter into a covered transaction with a suspended, debarred, or otherwise excluded party, resulting in noncompliance with Federal requirements. Questioned costs: Questioned costs totaled $2,299,513 and represent procurement transactions exceeding the micro-purchase threshold for which competitive procurement or sole-source documentation was not available for audit inspection. Although the costs are questioned due to the lack of required procurement documentation, the audit team noted the costs appear allowable. No questioned costs were noted for suspension and debarment. Audit procedures performed by the audit team determined that none of the vendors tested were suspended or debarred. Context: The population consisted of 20 procurement transactions. We selected a sample of 5 procurement transactions for testing and identified exceptions in all 5 items tested. For each transaction selected, the Health System was unable to provide documentation demonstrating that competitive bidding occurred or documentation supporting the circumstances that would allow for the use of a noncompetitive procurement method at the time the procurement occurred. The population consisted of 8 vendors associated with the Congressional Directives program. We selected a sample of 5 vendors for testing and identified exceptions for all 5 vendors. Specifically, several of the vendors selected for testing did not appear on a sample of 6 monthly vendor listings provided to the third party responsible for performing suspension and debarment reviews. As a result, the Health System could not demonstrate that the required suspension and debarment procedures had been performed for those vendors. Although these vendors were not subjected to the Health System's suspension and debarment review process, our independent verification procedures noted that none of the vendors tested were suspended or debarred. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: The Health System should strengthen its internal controls over procurement and suspension and debarment compliance to ensure: (1) procurement files contain and retain documentation supporting competitive procurement procedures or noncompetitive procurement justifications, as applicable; and (2) all vendors subject to Federal suspension and debarment requirements are identified, included in the review process, and appropriately documented. Views of Responsible Officials: Management agrees with the findings. The Health System has established procurement policies and procedures; however, the purchases identified in the audit were not consistently processed through the established procurement review process, and the required supporting documentation was not retained. The purchases involved IT equipment, installation, and broadband services necessary for the project. Management believes the vendor selections were supportable as sole-source procurements based on technical compatibility, integration with existing IT infrastructure, continuity of implementation and support, and specialized vendor capabilities. Management determined that the associated costs were allowable. Corrective action will focus on reinforcing departmental compliance with the existing procurement policy, requiring procurement’s involvement before vendor engagement, and ensuring that competitive bidding documentation or an approved sole-source justification is retained for all federally funded purchases. Although the Health System has an established suspension and debarment screening process, certain vendors associated with the Federal program were not included in the screening population. Management will implement a documented reconciliation of federally funded vendors to the screening population, including supervisory review and resolution of any exceptions, to ensure that all applicable vendors are screened and evidence of the screening is retained. No questioned costs were identified, and subsequent to the transaction, management verified that none of the vendors tested were suspended or debarred at the time of the transactions.