Audit 8765

FINDING NO. 2022-003: Ineffective Internal Controls over Sliding Fee Revenues Federal Program Name Health Center Program Project NO. H80CS00680-21-00, H80CS00680-20-03 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: The Organization is responsible for establishing and maintaining an internal control system over sliding fee and clinic service eligibility requirements. Specifically, 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 follows: • Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the Federal Poverty Guidelines (FPG); • A full discount is applied to fees for health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; • Fees for health center services are discounted based on graduations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and • No sliding fee discount is applied to fees for health center services provided to individuals and families within 200 percent or more of the FPG. Condition: During the compliance testing of the Uniform Guidance “Special Tests and Provisions – Sliding Fee Applications” requirements, we noted the following exceptions: • Three (3) out of thirty-four (34) were missing applications. • Fourteen (14) out of thirty-four (34) sliding fee adjustments were calculated incorrectly based on the sliding fee schedule. • One (1) out of thirty-four (34) sliding fee adjustments were not properly applied to the patient’s account. Questioned Costs: N/A Context: Exceptions were noted in 18 of the 34 sliding fee patients tested. Effect: Lack of effective internal control procedures could result in unintentional or intentional errors that may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Cause: Lack of oversight and lack of training over sliding fee applications and calculations. Recommendation: Management should take steps to ensure procedures over sliding fee applications are properly designed and operating effectively. Management’s Response: Management agrees with the finding.

FINDING NO. 2022-004: Ineffective Internal Controls over Expenditure Report Preparation Federal Program Name Health Center Program Project NO. H80CS00680-21-00, H80CS00680-20-03 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (Uniform Guidance) requires that a non-federal entity’s financial management system, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of the reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to federal statutes, regulations, and the terms and conditions of the federal award. Health Resources & Services Administration (HRSA) also implements various quarterly and annual reporting deadlines at the grant agency level. Condition: The Organization’s internal controls over the preparation and review of grant expenditure reports were not properly followed during the current fiscal year. Certain expenditure reports submitted to HRSA were not timely filed: • The Medicaid cost report is due to Illinois Healthcare and Family Services (HFS) within 180 days after the close of the Clinic’s fiscal year. The Organization filed this report on September 8, 2022 for year-end June 30, 2021. • The Medicare cost report is due to Centers for Medicare & Medicaid Services (CMS) on November 30, 2021 but was not submitted until December 6, 2021. Questioned Costs: N/A Context: Exceptions were noted in 2 of the 4 reports tested. Effect: Untimely or inaccurate expenditure reporting could result in either overstatements or understatements of expenditures to granting agencies. A return of grant funds could be requested from the granting agencies. Cause: Lack of oversight by the Organization’s personnel. Recommendation: The Organization should create a system of internal controls to ensure all expenditure reports are submitted accurately and timely filed. Management’s Response: Management agrees with the finding.

FINDING NO. 2022-003: Ineffective Internal Controls over Sliding Fee Revenues Federal Program Name Health Center Program Project NO. H80CS00680-21-00, H80CS00680-20-03 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: The Organization is responsible for establishing and maintaining an internal control system over sliding fee and clinic service eligibility requirements. Specifically, 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 follows: • Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the Federal Poverty Guidelines (FPG); • A full discount is applied to fees for health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; • Fees for health center services are discounted based on graduations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and • No sliding fee discount is applied to fees for health center services provided to individuals and families within 200 percent or more of the FPG. Condition: During the compliance testing of the Uniform Guidance “Special Tests and Provisions – Sliding Fee Applications” requirements, we noted the following exceptions: • Three (3) out of thirty-four (34) were missing applications. • Fourteen (14) out of thirty-four (34) sliding fee adjustments were calculated incorrectly based on the sliding fee schedule. • One (1) out of thirty-four (34) sliding fee adjustments were not properly applied to the patient’s account. Questioned Costs: N/A Context: Exceptions were noted in 18 of the 34 sliding fee patients tested. Effect: Lack of effective internal control procedures could result in unintentional or intentional errors that may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Cause: Lack of oversight and lack of training over sliding fee applications and calculations. Recommendation: Management should take steps to ensure procedures over sliding fee applications are properly designed and operating effectively. Management’s Response: Management agrees with the finding.

FINDING NO. 2022-004: Ineffective Internal Controls over Expenditure Report Preparation Federal Program Name Health Center Program Project NO. H80CS00680-21-00, H80CS00680-20-03 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (Uniform Guidance) requires that a non-federal entity’s financial management system, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of the reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to federal statutes, regulations, and the terms and conditions of the federal award. Health Resources & Services Administration (HRSA) also implements various quarterly and annual reporting deadlines at the grant agency level. Condition: The Organization’s internal controls over the preparation and review of grant expenditure reports were not properly followed during the current fiscal year. Certain expenditure reports submitted to HRSA were not timely filed: • The Medicaid cost report is due to Illinois Healthcare and Family Services (HFS) within 180 days after the close of the Clinic’s fiscal year. The Organization filed this report on September 8, 2022 for year-end June 30, 2021. • The Medicare cost report is due to Centers for Medicare & Medicaid Services (CMS) on November 30, 2021 but was not submitted until December 6, 2021. Questioned Costs: N/A Context: Exceptions were noted in 2 of the 4 reports tested. Effect: Untimely or inaccurate expenditure reporting could result in either overstatements or understatements of expenditures to granting agencies. A return of grant funds could be requested from the granting agencies. Cause: Lack of oversight by the Organization’s personnel. Recommendation: The Organization should create a system of internal controls to ensure all expenditure reports are submitted accurately and timely filed. Management’s Response: Management agrees with the finding.