Finding Text
2022-004 Change in methodology for the calculation of lost revenues
Identification: 93.498 United States Department of Health and Human Services, Provider Relief Fund; Noncompliance Finding/Material Weakness; Reporting Compliance Requirement
Criteria: The Provider Relief Fund (PRF) was established under the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116‐136, 134 Stat. 563) and the Coronavirus Relief and Response Supplemental Appropriations Act (Pub. L. No. 116‐260). The PRFs are to be used to prevent, prepare for, and respond to coronavirus. The PRFs are to reimburse recipients only for health care related expenses or lost revenues that are attributable to coronavirus. The PRF funds may not be used to reimburse expenses or losses that have been reimbursed for other sources or that other sources are obligated to reimburse.
Condition: The Medical Center changed the methodology for calculating lost revenues from the Period 1 reporting submission to the Period 4 reporting submission. The Medical Center used the alternative reasonable method for calculating lost revenues in both submissions. The alternative reasonable methodology required a narrative describing the methodology, including an explanation of why the methodology is reasonable for the circumstances and a description establishing how lost revenues were attributable to coronavirus. In addition, due to a change in the methodology from the Period 1 reporting period, the Medical Center was required to submit in the narrative, a written justification to support and explain the lost revenue methodology change. The Medical Center's narrative described the calculation of lost revenues under the new methodology as being 2019 actual revenues by department versus 2020, 2021, and 2022 actual revenues by department computed on a monthly basis
and accumulated by quarter. In reviewing the Medical Center's calculation, the revenues by month and department for 2020, 2021, and 2022 were compared to the same month and department for 2019 as described in the narrative, however in determining the lost revenues for each month, the Medical Center only included those departments that had a loss for the month and excluded all other departments with gains. As noted above, the narrative also did address the justification for changing the methodology.
Cause: The Medical Center's calculation of lost revenues was not accurately described in the Medical Center's narrative submitted in the reporting portal and a justification for the change was not included in the narrative.
Effect: Unknown.
Questioned Costs: Unknown.
Perspective Information: We recalculated lost revenues based on the method intended by management in their supporting worksheets.
Repeat Finding: This finding was not reported in the previous year.
Recommendations: We recommend policies and procedures over federal grant reporting be strengthened to ensure the Medical Center's calculation of lost revenues is accurately described in the Medical Center's narrative and that the justification for changing the lost revenue calculation from previous reporting is included in the narrative.
Views of Responsible Officials: The Medical Center experienced turnover in key accounting personnel during the month leading up to the deadline for the Period 4 reporting submission. It was not the intent of management to change Period 1 reporting methodology, however, we encountered difficulties in transitioning the PRF accounting from the prior CFO to the interim CFO. Prior to completing future submissions, we will implement a procedure to double check the computations and review revised lost revenue calculations for prior reporting periods.