FAC Explorer

Audit 49773

FY End
2022-03-31
Total Expended
$38.91M
Findings
6
Programs
5
Organization: Logan Health (MT)
Year: 2022 Accepted: 2022-12-22
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
60257 2022-002 Material Weakness - ABL
60258 2022-003 Material Weakness - ABL
60259 2022-004 Material Weakness - ABL
636699 2022-002 Material Weakness - ABL
636700 2022-003 Material Weakness - ABL
636701 2022-004 Material Weakness - ABL

Programs

ALN Program Spent Major Findings
93.498 Provider Relief Fund $37.31M Yes 3
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $723,706 - 0
93.461 Covid-19 Testing for the Uninsured $708,059 - 0
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $56,405 - 0
93.697 Covid-19 Testing for Rural Health Clinics $20,265 - 0

Contacts

Name Title Type
EBQ5M7RU4RJ7 Cole Turner Auditee
4067521724 Renee Gravalin Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported in the Schedule are reported on the accrual basis of accounting, with the exception forthe COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund(Uninsured program), which are recorded on the cash basis. The Uninsured program expenditures are based onreceipt of monies from the federal agency. When applicable, such expenditures are recognized following thecost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable orare limited as to reimbursement. No federal assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Corporation does not draw for indirect administrative expenses and has not elected to use the 10% deminimis cost rate. The accompanying consolidated schedule of expenditures of federal awards (the Schedule) includes the federalaward activity of Logan Health and Subsidiaries (Corporation) under programs of the federal government for theyear ended March 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 AuditRequirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion ofthe operations of the Corporation, it is not intended to and does not present the financial position, changes innet assets, or cash flows of the Corporation.
Title: Principles of Consolidation Accounting Policies: Expenditures reported in the Schedule are reported on the accrual basis of accounting, with the exception forthe COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund(Uninsured program), which are recorded on the cash basis. The Uninsured program expenditures are based onreceipt of monies from the federal agency. When applicable, such expenditures are recognized following thecost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable orare limited as to reimbursement. No federal assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Corporation does not draw for indirect administrative expenses and has not elected to use the 10% deminimis cost rate. The consolidated schedule of expenditures of federal awards includes the federal grant activity of Logan Healthand its consolidated subsidiaries (collectively, the Corporation), which received federal financial assistance.Significant intercompany balances and transactions have been eliminated in the consolidated schedule ofexpenditures of federal awards.The following entities and their associated TIN numbers included within the Schedule are as follows:237293874 Kalispell Regional Medical Center d/b/a Logan Health Medical Center (LHMC)810540517 HealthCenter Northwest, LLC (HC) (merged into LHMC effective December 31,2020)371518772 Northwest Orthopedics and Sports Medicine, LLC (NOSM) (merged into LHMCEffective December 31, 2020)810413632 Applied Health Services, Inc. (AHS)810420653 Northwest Horizons, Inc. (NWH)810247969 Logan Health Whitefish (LH Whitefish)810530457 Logan Health Cut Bank (LH Cut Bank) (Logan Health became the sole corporatemember effective May 31, 2021)810232406 Logan Health Conrad (LH Conrad) (Logan Health became the sole corporatemember effective May 31, 2021)The accompanying Schedule does not include federal grant activity of the following subsidiaries: Logan HealthFitness Center, Inc; Flathead Hospital Development Company, LLC; Logan Health Shelby (Logan Health Shelbywas acquired through an asset purchase agreement effective May 8, 2021); or Montana Pediatrics as theseorganizations did not expend any federal grant dollars during the year.
Title: Provider Relief Funds and American Rescue Plan Rural Distribtuion Accounting Policies: Expenditures reported in the Schedule are reported on the accrual basis of accounting, with the exception forthe COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund(Uninsured program), which are recorded on the cash basis. The Uninsured program expenditures are based onreceipt of monies from the federal agency. When applicable, such expenditures are recognized following thecost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable orare limited as to reimbursement. No federal assistance has been provided to a subrecipient. De Minimis Rate Used: N Rate Explanation: The Corporation does not draw for indirect administrative expenses and has not elected to use the 10% deminimis cost rate. The Corporation received amounts from the U.S. Department of Health and Human Services (HHS) through theProvider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution program (Federal FinancialAssistance Listing/CFDA #93.498) during the year ended March 31, 2022 and 2021. The Corporation incurredeligible expenditures (including lost revenue) and, therefore, for the years ended March 31, 2022 and 2021,recognized $26,712,414 and $19,525,608 as revenue, included in nonoperating activities on the consolidatedstatement of operations. In accordance with the Compliance Supplement addendum, the PRF expenditures wererecognized on the Schedule when the expenditures were included in the reporting to HHS for Period 1, definedas payments received during April 10, 2020 to June 30, 2020 and Period 2, defined as payments received duringJuly 1, 2020 to December 31, 2020. The following summarizes the Provider Relief Funds and when the amounts were recognized in the consolidatedfinancial statements. (See Table) The above table for Period 1 and Period 2 totals $35,211,511 which is $2,095,832 lower than total PRF reportedon the Schedule. This difference relates to the amounts reported on LH Cut Bank and LH Conrads financialstatements prior to the Corporation becoming the sole corporate member.The amount of PRF expenditures included in the Schedule requires management to make estimates andassumptions that affect the reported amounts. Accordingly, such expenditures are considered a significantestimate. Estimates and assumptions may include reducing actual expenses by amounts that have beenreimbursed or are obligated to be reimbursed by other sources and estimating marginal increases in expenserelated to coronavirus. Actual amounts could differ from those estimated.

Finding Details

Finding 2022-002
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #810530457 and #810247969 Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting Material Weakness in Internal Control over Compliance Criteria ? 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Corporation claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Corporation selected Option i and Option iii to calculate lost revenue (this varied based on specific entity). Condition ? During our testing, we noted reviews were performed over individual eligible expenditures; however, there was no formal review or approval of the expenditure spreadsheet used to calculate the expenditures claimed for the federal program outside of the preparer at the LH Cut Bank location. The Corporation?s calculation of lost revenue claimed under the federal program as an allowable cost was not subject to a formal review or approval by a separate individual outside of the preparer at the LH Cut Bank location. In addition, there was no evidence retained that the Corporation?s special report submitted to the Department of Health and Human Services for Period 1 was reviewed and approved by a separate individual outside of the preparer at the LH Whitefish and LH Cut Bank locations. Cause ? The Corporation did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented at all locations. Effect - The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs ? None reported.Context/Sampling - Detail testing was performed over eligible expenditures for activities allowed and unallowable and allowable cost/cost principles. A sample of 65 expenditures was tested which totaled $983,641 out of $22,638,825. The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 1 and 2 Reporting were tested. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal control policies to ensure that formal documentation of reviews is present at for all supporting documentation and reports all locations. Views of Responsible Officials - Management agrees with the finding.
Finding 2022-003
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #237293874; #810413632, #371518772; #810420653; #810540517, and #810247969 Material Weakness in Internal Control over Compliance ? Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting; Material Noncompliance - Reporting Criteria ? 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Corporation selected Option i to calculate lost revenue for the LHMC, NWH, HC, and LH Whitefish entities which consists of comparing actual quarterly revenues in calendar years 2020 and 2021 to actual quarterly revenues in calendar year 2019. Note that the revenue calculations also included NOSM and HC which were acquired by LHMC effective December 31, 2020. Condition ? In some of the quarters for certain entities, it was noted that bad debt expenses were higher than revenues, creating a negative revenue for the quarter. As the HHS reporting portal would not allow negative amounts to be entered, a zero was entered into the HHS reporting portal. These negative amounts should have been offset to other quarters or other revenue line items, but were not, which resulted in higher revenue amounts being reported than the detailed reports supported. Cause ? The Corporation did not have adequate internal controls to ensure the lost revenue calculation was done in accordance with terms and conditions of the grant.Effect ? Three of the entities included in the revenue calculation were impacted by this issue and the impact was as follows:Questioned Costs ? None reported. After recalculating the revenue by correcting the above amounts, the amount of lost revenue still exceeded the amount of provider relief funds retained. Context/Sampling ? Key line items were tested on the Period 1 and Period 2 Department of Human Services special report. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal controls to ensure the revenue calculation is in compliance with the terms and conditions of the grant. The HHS Hotline is available to assist with concerns with the HHS portal or the calculations. Views of Responsible Officials - Management agrees with the finding.
Finding 2022-004
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 and Period 2 TIN #237293874, #810413632; #371518772; #810420653; #810540517, and #810247969 Material Weakness in Internal Control over Compliance ? Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting; Material Noncompliance - Reporting Criteria ? 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Corporation selected Option i to calculate lost revenue for the LHMC and HC entities which consists of comparing actual quarterly revenues in calendar years 2020 and 2021 to actual quarterly revenues in calendar year 2019. Condition ? The operations of HC were consolidated into KHMC as of December 31, 2020. When LHMC calculated their lost revenues, they included HC?s revenue for both 2020 and 2021 instead of only the 2021 information. This resulted in LHMC reporting higher lost revenues than the detailed reports supported in Period 1. This also affected the lost revenues reported in Period 2 for LHMC. HC filed its own report for Period 1, which included their revenues for 2019 and 2020. Zeros were entered for 2021, which resulted in reporting higher lost revenues than the detailed reports supported in Period 1. Cause ? The Corporation did not have adequate internal controls to ensure the lost revenue calculation was done in accordance with the terms and conditions of the grant.Effect ? The impact of the above condition was as follows: Questioned Costs ? None reported. After recalculating the lost revenue, the amount still exceeded the amount of provider relief funds retained. Context/Sampling ? Key line items were tested on the Period 1 and Period 2 Department of Human Services special report. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal controls to ensure the lost revenue calculation is completed according to the terms and conditions of the grant. Views of Responsible Officials - Management agrees with the finding.
Finding 2022-002
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #810530457 and #810247969 Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting Material Weakness in Internal Control over Compliance Criteria ? 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Corporation claimed expenses based on specifically identified COVID related expenses and COVID related incremental expenses. The Corporation selected Option i and Option iii to calculate lost revenue (this varied based on specific entity). Condition ? During our testing, we noted reviews were performed over individual eligible expenditures; however, there was no formal review or approval of the expenditure spreadsheet used to calculate the expenditures claimed for the federal program outside of the preparer at the LH Cut Bank location. The Corporation?s calculation of lost revenue claimed under the federal program as an allowable cost was not subject to a formal review or approval by a separate individual outside of the preparer at the LH Cut Bank location. In addition, there was no evidence retained that the Corporation?s special report submitted to the Department of Health and Human Services for Period 1 was reviewed and approved by a separate individual outside of the preparer at the LH Whitefish and LH Cut Bank locations. Cause ? The Corporation did not have an adequate internal control policy in place to ensure review and approval over tracking of other funding sources, lost revenue, or reporting was documented at all locations. Effect - The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs ? None reported.Context/Sampling - Detail testing was performed over eligible expenditures for activities allowed and unallowable and allowable cost/cost principles. A sample of 65 expenditures was tested which totaled $983,641 out of $22,638,825. The lost revenue for all applicable quarters was tested. Also, key line items of the special report submitted to the Department of Health and Human Services for Period 1 and 2 Reporting were tested. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal control policies to ensure that formal documentation of reviews is present at for all supporting documentation and reports all locations. Views of Responsible Officials - Management agrees with the finding.
Finding 2022-003
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 TIN #237293874; #810413632, #371518772; #810420653; #810540517, and #810247969 Material Weakness in Internal Control over Compliance ? Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting; Material Noncompliance - Reporting Criteria ? 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Corporation selected Option i to calculate lost revenue for the LHMC, NWH, HC, and LH Whitefish entities which consists of comparing actual quarterly revenues in calendar years 2020 and 2021 to actual quarterly revenues in calendar year 2019. Note that the revenue calculations also included NOSM and HC which were acquired by LHMC effective December 31, 2020. Condition ? In some of the quarters for certain entities, it was noted that bad debt expenses were higher than revenues, creating a negative revenue for the quarter. As the HHS reporting portal would not allow negative amounts to be entered, a zero was entered into the HHS reporting portal. These negative amounts should have been offset to other quarters or other revenue line items, but were not, which resulted in higher revenue amounts being reported than the detailed reports supported. Cause ? The Corporation did not have adequate internal controls to ensure the lost revenue calculation was done in accordance with terms and conditions of the grant.Effect ? Three of the entities included in the revenue calculation were impacted by this issue and the impact was as follows:Questioned Costs ? None reported. After recalculating the revenue by correcting the above amounts, the amount of lost revenue still exceeded the amount of provider relief funds retained. Context/Sampling ? Key line items were tested on the Period 1 and Period 2 Department of Human Services special report. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal controls to ensure the revenue calculation is in compliance with the terms and conditions of the grant. The HHS Hotline is available to assist with concerns with the HHS portal or the calculations. Views of Responsible Officials - Management agrees with the finding.
Finding 2022-004
U.S. Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year ? Period 1 and Period 2 TIN #237293874, #810413632; #371518772; #810420653; #810540517, and #810247969 Material Weakness in Internal Control over Compliance ? Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Reporting; Material Noncompliance - Reporting Criteria ? 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Corporation selected Option i to calculate lost revenue for the LHMC and HC entities which consists of comparing actual quarterly revenues in calendar years 2020 and 2021 to actual quarterly revenues in calendar year 2019. Condition ? The operations of HC were consolidated into KHMC as of December 31, 2020. When LHMC calculated their lost revenues, they included HC?s revenue for both 2020 and 2021 instead of only the 2021 information. This resulted in LHMC reporting higher lost revenues than the detailed reports supported in Period 1. This also affected the lost revenues reported in Period 2 for LHMC. HC filed its own report for Period 1, which included their revenues for 2019 and 2020. Zeros were entered for 2021, which resulted in reporting higher lost revenues than the detailed reports supported in Period 1. Cause ? The Corporation did not have adequate internal controls to ensure the lost revenue calculation was done in accordance with the terms and conditions of the grant.Effect ? The impact of the above condition was as follows: Questioned Costs ? None reported. After recalculating the lost revenue, the amount still exceeded the amount of provider relief funds retained. Context/Sampling ? Key line items were tested on the Period 1 and Period 2 Department of Human Services special report. Repeat Findings from Prior Years ? No Recommendation - We recommend that the Corporation enhance internal controls to ensure the lost revenue calculation is completed according to the terms and conditions of the grant. Views of Responsible Officials - Management agrees with the finding.