Federal Program: Health Center Program Cluster Assistance Listings: 93.224 and 93.527 Federal Agency: U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: Under the Health Center Program Cluster (ALN 93.224 and ALN 93.527), as governed by Section 330(k)(3)(G) of the Public Health Service Act and 42 CFR 51c.303(f), (g), and (u), health centers are required to implement and apply a sliding fee discount schedule (SFDS) to adjust patient charges based on income and family size, ensuring access to affordable healthcare services for low-income individuals. The sliding fee discounts must be applied in accordance with the health center’s approved schedule. Condition: This finding was reported in the prior year, and the condition continued during the fiscal year ended September 30, 2024. In performing our audit procedures at the Wa’ab Community Health Center, we noted that income and family-size assessments were not performed or documented for patients as required by the Health Center Program. The health center treated the entire Yap State population as being below the applicable federal poverty level, resulting in patients automatically qualifying for sliding-fee discounts without documented individual assessments. The documentation provided by Yap State Government and the health center was limited to cash receipts reports. These reports did not contain sufficient patient-level information regarding income and family size to allow us to determine whether patients were assigned to the appropriate sliding-fee discount category and whether discounts were calculated and applied in accordance with program requirements. On April 10, 2026, the Wa’ab Community Health Center issued a policy stating that no patient will be denied health care services because of the individual’s inability to pay. Although this policy addresses the requirement to provide services regardless of a patient’s ability to pay, it does not eliminate the separate requirement to assess patients for sliding-fee discount eligibility based on income and family size. The policy also does not demonstrate compliance during the fiscal year ended September 30, 2024. Accordingly, the April 10, 2026 policy does not resolve the condition identified in the current-year or prior-year finding. Cause: The health center did not establish or consistently implement procedures requiring patient income and family size to be assessed, documented, and periodically reassessed for purposes of determining eligibility under the sliding fee discount program. The health center also did not maintain or provide patient financial records necessary to demonstrate that discounts were properly determined and applied. Effect: We were unable to determine whether the health center properly assessed patient eligibility or applied sliding-fee discounts in accordance with Health Center Program requirements. The condition increases the risk that patients may be assigned to incorrect discount categories and that patient charges may not be calculated consistently or accurately. Questioned Costs: None Recommendation: We recommend that YSG work closely with the health center to establish and enforce procedures for the timely and complete submission of patient financial records for audit and compliance purposes. The health center should ensure that adequate documentation is maintained to support income and family size determinations and the proper application of sliding fee discounts. If necessary, YSG should seek guidance from the federal awarding agency to ensure compliance with program requirements. In addition, Yap State Government health centers should immediately develop, implement, and document a comprehensive Sliding Fee Discount Schedule in accordance with applicable federal regulations. Identification as a Repeat Finding: Yes – Finding 2023-002 Views of Responsible Officials: See the corrective action plan.
Finding No.: 2024-003 Federal Agency: U.S. Department of the Interior, Office of Insular Affairs Federal Program: Economic, Social, and Political Development of the Territories – Compact of Free Association, as Amended, Compact Sector Grants Assistance Listing: 15.875 Compliance Requirement: Activities Allowed or Unallowed – Educator Qualification Requirements Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The Compact Grant’s Education Sector terms and conditions, consistent with the FSM Policy on Teacher Certification and JEMCO Resolutions 2009-9 and MT 2011-1, prohibit grantfunded compensation for teachers, tutors, and teacher aides without college degrees. The provision also prohibits payment of culture teachers from the grant. Condition: We tested 82 educators whose compensation was charged to the Education Sector Grant and were unable to verify degree completion for 16, or approximately 20%, of the items tested. The sample was not statistically selected. Although transcripts were available, the documentation provided for these 16 educators did not demonstrate that degrees had been conferred. Diplomas or other evidence confirming degree completion were not provided for the following samples: 2, 14, 16, 17, 19, 22, 35, 40, 45, 48, 49, 53, 56, 58, 61, and 64. As a result, we could not verify satisfaction of the college degree requirement for the identified educators subject to that requirement. Cause: The process for maintaining and reviewing educator qualification records did not ensure that documentation establishing degree completion was retained and available to support verification of compliance with the grant requirement. Management indicated that its practice permits official transcripts in lieu of diplomas when the transcripts clearly confirm that the required degrees were awarded. However, the documentation provided for the remaining exceptions did not establish degree conferral. Effect: Incomplete qualification records limit Yap State Government’s ability to demonstrate compliance with the grant’s educator qualification requirements and increase the risk that compensation for individuals who do not meet those requirements could be charged to the grant. The absence of documentation does not, by itself, establish that the educators lacked college degrees or that their compensation was unallowable. Questioned Costs: Undetermined Recommendation: We recommend that Yap State Government strengthen its procedures for verifying and maintaining educator qualification records by: Obtaining documentation confirming degree completion for the identified educators subject to the grant requirement, such as diplomas, official transcripts showing degree conferral, or written confirmation from the issuing institutions. Maintaining complete and accessible qualification records for educators whose compensation is charged to the grant. Requiring documented verification of applicable educator qualifications before charging compensation to the grant. Performing periodic supervisory reviews to identify and resolve missing or incomplete qualification documentation. Identification as a Repeat Finding: No. Views of Responsible Officials: See the corrective action plan.