Internal control deficiency and noncompliance over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting related to expenses attributable to coronavirus reported in the provider relief fund reports.
Identification of the federal program:
Assistance Listing Number 93.498
• COVID-19 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution
• U.S. Department of Health and Human Services
• Federal award identification number – Not Applicable
• Federal award year:
– Period 4 – January 1, 2020 to December 31, 2022
– Period 5 – January 1, 2020 to June 30, 2023
Criteria or specific requirement (including statutory, regulatory or other citation):
Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The terms and conditions of the award requires the following:
• The recipient certifies that the payment will only be used to prevent, prepare for, and respond to coronavirus, and that the payment shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. The burden of proof is on the recipient to maintain documentation that shows how expenses prevent, prepare for, and respond to coronavirus.
• The recipient certifies that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.
• The recipient shall adhere to the reporting requirements on provider relief fund payments for payments received exceeding $10,000 in the aggregate during the payment received period. The recipient must register in the provider relief fund reporting portal and submit reports as specified by Health and Human Services.
• The recipient certifies that all information it provides as part of any application for the payment, as well as all information and reports relating to the payment that it provides in the future at the request of Health and Human Services or the Health and Human Services inspector general, are true, accurate and complete, to the best of its knowledge.
• The recipient shall maintain appropriate records and cost documentation including, as applicable, documentation described in 45 CFR 75.302 – financial management and 45 CFR 75.361 through 75.365 – record retention and access, and other information required by the future program instructions to substantiate the reimbursement of costs under this award.
Condition:
During our testing over healthcare related expenses included in the provider relief fund reports, we observed management did not have effective internal controls in place to ensure expenses complied with the terms and conditions of the award. This resulted in an overstatement of expenses included in the provider relief fund reports.
Cause:
Management did not have effective internal controls in place over the compliance requirement as stated in the criteria or specific requirement section above.
Effective or potential effect:
Expenses submitted in the provider relief fund report were not supported by adequate documentation to substantiate that these funds were used for health care-related expenses attributable to coronavirus.
Questioned costs:
$952,828 – Assistance Listing Number 93.498. See corresponding award identification number in the identification of federal award section above.
Questioned costs were computed by taking the total expenses not supported by adequate documentation at Huntington Ambulatory Surgery Center LLC of $948,707 and Torrance Memorial Medical Center of $4,121 for a total of $952,828.
Context:
During our testing over health care-related expenses attributable to coronavirus at Huntington Ambulatory Surgery Center LLC, we observed management submitted $948,707 in expenses that were not supported by adequate documentation to substantiate that these funds were used for health care-related expenses attributable to coronavirus. The burden of proof is on the recipient to maintain documentation that shows how expenses prevent, prepare for, and respond to coronavirus.
During our testing over health care-related expenses attributable to coronavirus at Torrance Memorial Medical Center, we observed management submitted duplicated expenses which were reimbursed in the prior period in the amount of $4,121.
During our testing over health care-related expenses attributable to coronavirus at Huntington Medical Foundation, we observed management did not have evidence of internal controls regarding the review and approval of the expenses used to substantiate the payments received in the provider relief fund report. Total expenses in the provider relief fund report was $1,062,349.
Identification as a repeat finding, if applicable:
No.
Recommendation:
We recommend management develop and implement effective internal controls to ensure expenses comply with the terms and conditions of the award. This will ensure expenses submitted in the provider relief fund reports are supported by adequate documentation to substantiate that these funds are used for health care-related expenses attributable to coronavirus.
Views of responsible officials:
The entity has excess lost revenues to cover all payments received (excluding the expenses submitted). Therefore, no refund is required for any payments received. Since the program has ended, the management has implemented the following procedures for future grants:
1) An education session occurred on February 15, 2024, with the relevant parties across Huntington Health entities to formally implement a review process whereby the Controller will review the support files prior to filings being made related to grant applications/programs across any of Huntington’s entities. Documentation of this review will be retained in the central file repository. These steps and controls will be updated and documented in the departmental policy.
2) A central folder on the Huntington Hospital’s main accounting drive has been created. This folder will be populated with all support for filed figures related to grant applications/programs across the hospital’s various entities. The support will be validated as having been placed into this folder as part of the reporting out process by the accounting manager and Controller handling the reporting. Files will be retained in this central drive for a minimum of 7 years. These steps and controls will be updated and documented in the departmental policy.