FAC Explorer

Finding 1236327 (2025-001)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2025
Accepted
2026-09-24
Audit: 411956
Organization: Shalom Health Care Center, Inc. (IN)
Auditor: BARNES DENNIG & CO LTD

AI Summary

  • Core Issue: Employees did not follow the Organization's policy for determining family size when approving sliding fee discounts, leading to incorrect discount levels for some patients.
  • Impacted Requirements: Compliance with 45 CFR § 75.303 and Health Center Program requirements for maintaining effective internal controls and written policies for the Sliding Fee Discount Program.
  • Recommended Follow-Up: Annually communicate the sliding scale and family definitions to staff, and implement a second review process for discount levels to ensure accuracy.

Finding Text

Finding 2025-001, Significant Deficiency, Special Tests and Provisions Identification of federal program: U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 Health Center Program Cluster Criteria: 45 CFR § 75.303 requires non-federal entities to establish and maintain effective internal controls that provide reasonable assurance that federal awards are managed in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Health Center Program requirements further require health centers to maintain and consistently implement written policies and procedures governing the administration of the Sliding Fee Discount Program. Federally Qualified Health Centers are required to maintain and implement a Sliding Fee Discount Program (SFDP) that includes policies and procedures for assessing patient eligibility, determining family size and income, and applying discounts in accordance with the approved SFDP methodology. Condition: The Organization maintained an approved sliding fee discount schedule and consistently applied the established fee schedule based on the family-size determination recorded by staff. However, Organization employees approving sliding fee discounts for patients did not follow the Organization’s prescribed policy as it relates to the determination of family size. Certain patients who applied for discounted services were assigned the improper sliding fee discount level, based on the Organization’s established sliding fee discount scale. Context: Exceptions were identified in 3 of 40 applications tested. Cause: Formal policy documents, as well as the publicly distributed 2025 sliding fee schedule for the Organization, stated that the definition of family for the purpose of family size determination is a group of two or more persons related by birth, marriage, or adoption who live together. However, the actual definition of family used by Organization staff when processing sliding fee discount applications was based on legal marital status and number of dependents under the Internal Revenue Code. Additionally, the Organization has a formal policy for how it will calculate annual income for sliding fee discount applicants. Out of the forty applicants that were tested, three had an incorrect sliding fee discount assigned to them. Potential effect: Certain applicants may have received higher sliding fee discounts than they should have, based on Organization policy. Conversely, other applicants may have qualified for a higher discount level than what was allotted to them. Questioned costs: None. Recommendation: We recommend that the Organization annually communicate the sliding scale and family definitions to staff processing sliding fee discounts. Additionally, we recommend that a second individual review the sliding fee discount level assigned to applicants, including reviewing income calculations and family size determinations, to ensure that levels assigned are aligned to information provided by the applicant. Views of responsible officials and planned corrective actions: See attached management response to finding and corrective action plan.

Corrective Action Plan

Significant Deficiency Over Financial Reporting – The following steps have been taken or will be taken to address Finding 2025-001: • Shalom Health Care Center, Inc. has been updated the verbiage in the Sliding Fee Discount Schedule policy and procedures so that the definition of family in the policy better matches the procedures that were being implemented. • Shalom Health Care Center, Inc will be reviewing the updated Sliding Fee Discount Schedule policy and procedures with all employees. • Shalom Health Care Center, Inc will also make sure there is another level of review to make sure that the sliding fee discounts are assigned accordingly based on income and household size. Management did challenge this as being a Significant Deficiency and believes that it should be listed as a note. Management believes additional consideration should be given to the nature, scope, and impact of the exceptions before concluding that the matter constitutes a significant deficiency in compliance with 42 CFR 51c.303(f). The Organization maintained a Board of Directors approve Sliding Fee and Discount Program policy which highlight the family definition and income definition, maintained and annually updated its sliding fee discount schedule in accordance with applicable federal poverty guidelines. The issue identified by the auditors did not involve the design of the discount schedule itself or the incorporation of the federal poverty guidelines. Rather, the exceptions resulted from staff members applying an interpretation of family size that differed from the definition established in the Organization's internal policy when processing individual applications. Accordingly, management believes the audit report should clearly distinguish between an error in applying the Organization's internal methodology and a violation of a federal compliance requirement. Management has requested that the auditors identify the specific provision of 42 CFR 51c.303(f) that was allegedly violated in each of the three cited cases. Management does agree that the procedures did not follow the policy and that this is more of an issue of process and controls. Management respectfully disagrees with the Finding 2025-001, particularly the classification given as a Significant Deficiency and the characterization of the exceptions as noncompliance with the federal requirement cited in the finding. Management requested the auditors to reconsider whether the circumstances support classification as a Significant Deficiency. At a minimum, management requests that the finding clearly distinguish between (1) compliance with the federal requirement and (2) the Organization's internal procedures for determining family size and calculating the sliding fee discount. Based on the limited number of exceptions, the absence of questioned costs, the lack of evidence of intentional noncompliance, and the fact that the Organization maintained and updated its sliding fee schedule in accordance with the applicable poverty guidelines, management believe that the finding should have given a lesser finding classification and a note in the audit report.)

Categories

Special Tests & Provisions Eligibility Significant Deficiency Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1236326 2025-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.224 HEALTH CENTER PROGRAM $2.14M