Finding Text
Finding 2021-002 - Significant Deficiency in Internal Control
Assistance Listing No.: 93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP)
Rural Distribution
Federal Agency: U.S. Department of Health and Human Services
Pass-through Agency: Not Applicable
Award Number/Year: Not applicable/2020
Compliance Requirement: Reporting
Questioned Costs: Not determinable. Criteria: Provider Relief Funds and American Rescue Plan (ARP) Rural Distribution (PRF) payment amounts must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by the U.S. Department of Health and Human Services (HHS). Activities allowed have been defined as expenses used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. Recipients may choose to apply PRF payments toward lost revenues using one of three options: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted and actual patient care revenues or Option iii: calculated by any reasonable method of estimating revenues. Condition and Context: In the Manor’s Period 1 and 2 submissions, the Manor incorrectly reported lost revenues under Option i. rather than Option iii. Option i. would not be appropriate as the Manor only included actual resident revenues from skilled nursing and excluded from actual resident revenue amounts attributable to personal care and independent living services. Therefore, the Manor should have selected Option iii. This is not a statistically valid sample.
Effect: The amounts reported to Health Resources & Services Administration (HRSA) were not in accordance with established U.S. Department of Health and Human Services reporting guidance (the Guidance).
Cause: Management misinterpreted the Guidance and erroneously reported expenses in their Period 1 submission and reported lost revenue under the wrong option in their Period 1 and 2 submissions.
Recommendation: We recommend that management review their process and procedures to ensure that lost revenues are calculated in accordance with U.S. Department of Health and Human Services reporting guidance. In addition, the Manor should correct future reporting submissions to report lost revenues under the proper option to align with their methodology.
View of Responsible Officials: The Manor agrees with the finding and misinterpreted the guidance. The Manor agrees that they should have selected option iii as independent living revenues were not affected and personal care was undergoing renovations and thus the comparison of actual personal care revenues was not appropriate. Management will correct the error in future filings.