FAC Explorer

Audit 8606

FY End
2023-03-31
Total Expended
$28.20M
Findings
6
Programs
6
Organization: Logan Health (MT)
Year: 2023 Accepted: 2023-12-27
Auditor: Eide Bailly LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
6651 2023-002 Significant Deficiency - ABL
6652 2023-003 Material Weakness Yes ABL
6653 2023-004 Material Weakness Yes ABL
583093 2023-002 Significant Deficiency - ABL
583094 2023-003 Material Weakness Yes ABL
583095 2023-004 Material Weakness Yes ABL

Programs

ALN Program Spent Major Findings
93.498 Covid-19 Provider Relief Fund $27.13M Yes 3
93.931 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $682,431 - 0
93.697 Covid-19 Testing for Rural Health Clinics $279,735 - 0
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $49,529 - 0
93.435 Innovative State and Local Public Health Strategies to Prevent and Manage Diabetes and Heart Disease and Stroke- $37,000 - 0
93.110 Maternal and Child Health Federal Consolidated Programs $20,510 - 0

Contacts

Name Title Type
EBQ5M7RU4RJ7 Courtney Schwartz Auditee
4067515759 Renee Gravalin Auditor
No contacts on file

Notes to SEFA

Title: Principles of Consolidation Accounting Policies: The accompanying consolidated schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Logan Health and Subsidiaries (Corporation) under programs of the federal government for the year ended March 31, 2023. 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 Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Corporation, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Corporation. Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are 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% de minimis cost rate. The consolidated schedule of expenditures of federal awards includes the federal grant activity of Logan Health and its consolidated subsidiaries (collectively, the Corporation), which received federal financial assistance. Significant intercompany balances and transactions have been eliminated in the consolidated schedule of expenditures of federal awards. The following entities and their associated TIN numbers included within the Schedule are as follows: (See Table in Report) The accompanying Schedule does not include federal grant activity of the following subsidiaries: Logan Health Fitness Center, Inc; Flathead Hospital Development Company, LLC; Logan Health Shelby; or Montana Pediatrics as these organizations did not expend any federal grant dollars during the year.
Title: Provider Relief Funds and American Rescue Plan (ARP) Rural Distribution Accounting Policies: The accompanying consolidated schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Logan Health and Subsidiaries (Corporation) under programs of the federal government for the year ended March 31, 2023. 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 Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Corporation, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Corporation. Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are 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% de minimis cost rate. The Corporation received funds from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) program (Federal Financial Assistance Listing #93.498) during the year ended March 31, 2023. The PRF expenditures were recognized on the Schedule when the expenditures were included in the reporting to HHS for Period 3, defined as payments received between January 1, 2021 and June 30, 2021; and for Period 4, defined as payments received between July 1, 2021 and December 31, 2021. The amounts recognized in the Schedule for Periods 3 and 4, including interest, were $11,310,591 and $15,819,280, respectively. The total amount of PRF expenditures included on the SEFA requires management to make estimates and assumptions that affect the reported amounts. Accordingly, such expenditures are considered a significant estimate. Estimates and assumptions may include reducing actual expenses by amounts that have been reimbursed or are obligated to be reimbursed by other sources and estimating marginal increases in expenses related to coronavirus. Actual amounts could differ from those estimates.

Finding Details

Finding 2023-002
2023-002 U.S. Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #810515463 Activities Allowed or Unallowed, Allowable Costs/Costs Principles, and Reporting Significant Deficiency 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 Chester location. In addition, there was no evidence retained that the Corporation’s HHS Special Report submitted to the Department of Health and Human Services for Period 4 was reviewed and approved by a separate individual outside of the preparer at the LH Chester location. 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. There were nine HHS Special Reports in the population and all were tested of which one did not have documented evidence of proper review. 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 2023-003
2023-003 U.S. Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 3 and Period 4 TIN #237293874; #810413632; #371518772; #810420653; and #810540517 Material Weakness in Internal Control over Compliance – Activities Allowed or Unallowed, 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 NWH entities which consists of comparing actual quarterly revenues in calendar years 2020, 2021, and 2022 to actual quarterly revenues in calendar year 2019. Note that the revenue calculations also included AHS, 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. issue and the impact was as follows: Entity Revenue Amount Reported in HHS Special Report Amounts that Should Have Been Reported in HHS Special Report Excess Revenue Reported LHMC $ 1,810,255,440 $ 1,802,735,657 $ 7,519,783 Entity Revenue Amount Reported in HHS Special Report Amounts that Should Have Been Reported in HHS Special Report Excess Revenue Reported NWH 42,763,145 42,623,775 139,370 Period 3 Period 4 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 3 and Period 4 Department of Human Services (HHS) special report. Repeat Findings from Prior Years – Yes, Finding #2022-003 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. (See Table in Report)
Finding 2023-004
2023-004 U.S. Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 3 TIN #237293874, #810413632; #371518772; #810420653; and #810540517 Material Weakness in Internal Control over Compliance – Activities Allowed or Unallowed, 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 LHMC which consists of comparing actual quarterly revenues in calendar years 2020, 2021, and 2022 to actual quarterly revenues in calendar year 2019. Condition – The operations of HC were consolidated into LHMC as of December 31, 2020. When LHMC calculated their lost revenues, they included HC’s revenue for 2020, 2021, and 2022 instead of only the 2021 and 2022 information. This resulted in LHMC reporting higher lost revenues than the detailed reports supported in Period 3. LHMC selected Option iii for Period 4 and amounts were properly updated. 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: Entity Lost Revenue Amount Reported in HHS Special Report Amounts that Should Have Been Reported in HHS Special Report Excess Lost Revenue Reported LHMC $ 26,318,146 $ 17,377,554 $ 8,940,592 Period 3 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 3 HHS special report. Repeat Findings from Prior Years – Yes, Finding #2022-004 Recommendation - We recommend that the Corporation enhance internal controls to ensure the lost revenue calculation is completed according to the terms and conditions. Views of Responsible Officials - Management agrees with the finding. (See Table in Report)
Finding 2023-002
2023-002 U.S. Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #810515463 Activities Allowed or Unallowed, Allowable Costs/Costs Principles, and Reporting Significant Deficiency 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 Chester location. In addition, there was no evidence retained that the Corporation’s HHS Special Report submitted to the Department of Health and Human Services for Period 4 was reviewed and approved by a separate individual outside of the preparer at the LH Chester location. 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. There were nine HHS Special Reports in the population and all were tested of which one did not have documented evidence of proper review. 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 2023-003
2023-003 U.S. Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 3 and Period 4 TIN #237293874; #810413632; #371518772; #810420653; and #810540517 Material Weakness in Internal Control over Compliance – Activities Allowed or Unallowed, 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 NWH entities which consists of comparing actual quarterly revenues in calendar years 2020, 2021, and 2022 to actual quarterly revenues in calendar year 2019. Note that the revenue calculations also included AHS, 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. issue and the impact was as follows: Entity Revenue Amount Reported in HHS Special Report Amounts that Should Have Been Reported in HHS Special Report Excess Revenue Reported LHMC $ 1,810,255,440 $ 1,802,735,657 $ 7,519,783 Entity Revenue Amount Reported in HHS Special Report Amounts that Should Have Been Reported in HHS Special Report Excess Revenue Reported NWH 42,763,145 42,623,775 139,370 Period 3 Period 4 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 3 and Period 4 Department of Human Services (HHS) special report. Repeat Findings from Prior Years – Yes, Finding #2022-003 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. (See Table in Report)
Finding 2023-004
2023-004 U.S. Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan Rural Distribution Applicable Federal Award Number and Year – Period 3 TIN #237293874, #810413632; #371518772; #810420653; and #810540517 Material Weakness in Internal Control over Compliance – Activities Allowed or Unallowed, 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 LHMC which consists of comparing actual quarterly revenues in calendar years 2020, 2021, and 2022 to actual quarterly revenues in calendar year 2019. Condition – The operations of HC were consolidated into LHMC as of December 31, 2020. When LHMC calculated their lost revenues, they included HC’s revenue for 2020, 2021, and 2022 instead of only the 2021 and 2022 information. This resulted in LHMC reporting higher lost revenues than the detailed reports supported in Period 3. LHMC selected Option iii for Period 4 and amounts were properly updated. 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: Entity Lost Revenue Amount Reported in HHS Special Report Amounts that Should Have Been Reported in HHS Special Report Excess Lost Revenue Reported LHMC $ 26,318,146 $ 17,377,554 $ 8,940,592 Period 3 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 3 HHS special report. Repeat Findings from Prior Years – Yes, Finding #2022-004 Recommendation - We recommend that the Corporation enhance internal controls to ensure the lost revenue calculation is completed according to the terms and conditions. Views of Responsible Officials - Management agrees with the finding. (See Table in Report)