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FINDING 2025-002 USDA LOAN COVENANTS COMPLIANCE Federal programs Federal Assistance Listing Number 10.766 U.S. Department of Agriculture (USDA) Direct Award, Community Facilities Loans and Grants Material Weakness Criteria The Hospital is required to maintain a minimum of 90 days of cash on hand for each fiscal year. Condition The Hospital’s days of cash on hand at June 30, 2025 was less than the required 90 days. Cause The Hospital implemented a new accounting and EHR system in May 2023 and experienced significant delays in being able to bill and process claims. In addition, there was a cyberattack on the Hospital’s claims processing clearinghouse in February 2024 that took the Hospital offline from processing claims. These two events had a negative and material impact on the Hospital’s cash collections over the last two years. Effect The Hospital was unable to maintain its days of cash on hand at 90 days or more at June 30, 2025. Questioned costs None. Perspective/Context The majority of the EHR implementation issues and subsequent cyberattack were outside of Hospital management’s control and directly related to issues associated with the accounting and EHR system vendor and clearinghouse vendor. Hospital management notified its USDA representatives and received a waiver from the required 90 days of cash on hand for the period ended June 30, 2025. Recommendation We suggest Hospital management continue working with its accounting and EHR system vendor to resolve issues affecting its operating results. Additionally, the Hospital should review current operating expenditures to determine if they can be reduced to improve overall cashflow. Views of responsible officials and planned corrective actions The Hospital has made several changes to its system since the initial implementation and has contracted with a third party vendor to make improvements in its billing and collection processes. These changes are expected to result in cash collection improvements. Additionally, the Centers for Medicare and Medicaid Services (CMS) approved the State of Nebraska’s preprint and provider assessment waiver that governs Nebraska’s Medicaid Directed Payment Program (Program). CMS’ approval of the Program is for the period July 1, 2024 through December 31, 2024 and January 1, 2025 to December 31, 2025 only, with future years subject to an annual approval by CMS. These additional funds are also expected to significantly improve the Hospital’s days of cash on hand by the end of fiscal year 2026. Hospital management notified its USDA representatives and received a waiver from the 90 days of cash on hand for the period ended June 30, 2025.