Finding 1218262 (2025-002)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2025
Accepted
2026-06-24

AI Summary

  • Core Issue: There is a significant deficiency in internal controls over compliance related to the sliding fee discount program for the Health Center Program.
  • Impacted Requirements: The Organization failed to apply sliding fee discounts consistently, which may lead to noncompliance with federal requirements under the Public Health Services Act.
  • Recommended Follow-Up: Establish formal monitoring procedures for the discount program, including designated responsibilities, regular testing, and documentation of reviews to ensure compliance.

Finding Text

Finding Type: Significant deficiency in internal controls over compliance and nonmaterial noncompliance related to Special Tests and Provisions Information on the Federal Program: Program Name: Health Center Program Cluster (93.224/93.527) Federal Awards Project Title: Health Center Program Award Period: February 1, 2024 – January 31, 2025 and February 1, 2025 – January 31, 2026 Award Number: H80CS26642 Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Criteria: In accordance with Section 330(k)(3)(G) of the Public Health Services Act (42 U.S. Code § 254b), as an FQHC, the Organization must have a sliding fee discount program in which patient charges are adjusted based on the patient’s ability to pay. Condition: Through testing a statistically valid sample of 25 individual patient balances, we noted three instances in which the sliding fee discount applied was inconsistent with the Organization’s policy. Two patients did not receive the appropriate discount and one patient received a discount but did not have an active sliding fee application for the service date the sliding fee discount was applied. Cause: The Organization’s discounting process is manual and lacks a formal monitoring procedure to help ensure compliance with the sliding fee discount program, increasing the risk of errors occurring and remaining undetected. Effect: Sliding fee discounts may not be consistently applied in accordance with policy, resulting in potential noncompliance with federal program requirements if errors are not timely identified and corrected. Questioned Costs: None Repeat Finding: No Recommendation: The Organization should establish formal monitoring procedures over the sliding fee discount program. These procedures should include designated responsibility for review, defined frequency and sample sizes of testing, and consideration of system-specific risks, including increased sampling for the Dental system due to its higher level of manual processing. The procedures should also require documentation of review work, timely correction of identified errors, and supervisory oversight to ensure consistent execution. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding and will develop and implement the recommendations above.

Corrective Action Plan

Condition Found: Through testing a statistically valid sample of 25 individual patient balances, we noted four instances in which the sliding fee discount applied was inconsistent with the Organization’s policy. Three patients did not receive the appropriate discount and one patient received a discount but did not have an active sliding fee application for the service date the sliding fee discount was applied. Individual(s) Responsible for Corrective Action: Lori Slicer, Revenue Cycle Manager (organization-wide sliding fee discount monitoring procedure across the medical and dental service lines). Crystal Kinsman, Dental Practice Manager (dental-specific monitoring, with increased sampling of the Dental system given its higher level of manual processing). Heidi Melbostad, Chief Executive Officer and Compliance Officer (sliding fee discount schedule redesign and oversight). Planned Corrective Action: Management is addressing this finding through both an immediate interim action and a comprehensive redesign, together with an ongoing monitoring control. Interim action (completed): the Board approved revised nominal fee levels on 2026-04-27, effective 2026-04-28, establishing Category A as the most favorable discount category, consistent with Section 330(k)(3)(G) of the Public Health Service Act. Full corrective action: management will complete a comprehensive redesign of the Sliding Fee Discount Program, including separate schedules for the medical and dental service lines, data-driven evaluation of tier thresholds and fee levels, and replacement of the percentage-based payment option with a clearer flat-fee structure, for Board review and approval. Ongoing monitoring control: management will establish a documented monitoring procedure over sliding fee discount application across both the medical and dental service lines, including a defined monthly sample drawn from each service line with increased sampling of the Dental system given its higher level of manual processing, verification that an active sliding fee application is on file for each service date, documented review results, timely correction of identified errors, and supervisory sign-off, with error rates reviewed at least quarterly. Anticipated Completion Date: Interim nominal fee revision effective 2026-04-28 (completed). Comprehensive Sliding Fee Discount Program redesign and ongoing monitoring procedure to be Board-approved and operational by 2026-08-24.

Categories

Internal Control / Segregation of Duties Special Tests & Provisions Subrecipient Monitoring Reporting Significant Deficiency

Other Findings in this Audit

  • 1218260 2025-002
    Material Weakness Repeat
  • 1218261 2025-002
    Material Weakness Repeat
  • 1218263 2025-003
    Material Weakness Repeat
  • 1218264 2025-003
    Material Weakness Repeat
  • 1218265 2025-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.224 HEALTH CENTER PROGRAM $1.51M
97.008 NON-PROFIT SECURITY PROGRAM $37,281
93.527 GRANTS FOR NEW AND EXPANDED SERVICES UNDER THE HEALTH CENTER PROGRAM $7,461