Finding Text
Assistance Listing Number, Federal Agency, and Program Name - 93.498, Department of Health and Human Services, COVID-19 - Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2021-004 Criteria - In order to comply with program rules, nonfederal entities must establish and maintain effective internal controls over the federal award, as prescribed by 2 CFR 200.303(a). For Provider Relief Funds, the terms and conditions of the grant, according to U.S. Department of Health and Human Services (HHS), require that the Corporation report certain information accurately into the HHS PRF Reporting Portal in order to attest to the utilization of the funding received. Specifically, the HHS June 11, 2021 post-payment reporting notice provides specific guidance on the calculation of lost revenue and amounts to be reported in the portal. Condition - The Corporation did not follow the reporting requirements outlined in the HHS June 11, 2021 post-payment notice. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - N/A - refer to context below Context - The detailed testing of lost revenue reported in the PRF portal revealed an overstatement of $9.9 million through period 3 (the latest period for which the Corporation submitted lost revenues). Two of the Corporation's subsidiaries, Rumford Hospital and Bridgton Hospital, received target distributions and reported their respective lost revenue at both the subsidiary and parent level. Excluding the overstatement, the aggregate lost revenue reported should have been approximately $64.9 million in comparison to $78.9 million reported. Total payments received through Period 3 were approximately $32.9 million. The corrected lost revenue still exceeded the aggregate Periods 1 - 3 payments and, thus, did not result in questioned costs. Additionally, the Rumford Community Family Health Center, Inc. portal period 1 submission indicated that approximately $207,000 of targeted distribution payments were transferred to the parent entity; however, the parent entity portal period 1 submission did not include the approximately $207,000 transfer. Further, the approximately $207,000 of lost revenue was not appropriately transferred between entities related to the targeted distribution transfer. Cause and Effect - The Corporation designed controls related to identification of allowable lost revenue to be entered into the portal for submission to HHS, which included a review of the final lost revenue calculation; however, the review process did not effectively identify lost revenue for targeted distributions that needed to be reduced on the Corporation portal submission or the transfer of lost revenue from Rumford Community Family Health Center, Inc. to the parent. The failure to have an effective control in place caused the Corporation to overstate the amount of the actual lost revenue available for use in the Period 2 and 3 portal submissions. Recommendation - We recommend that the review process include specific procedures to ensure that lost revenue amounts have not been included more than once and that the lost revenue reported in the portal submission follows the guidance provided by the HHS. Further, we recommend that the lost revenue calculation be updated in the next available portal submission. Views of Responsible Officials and Corrective Action Plan - A misinterpretation of the guidance has been corrected and the submissions in fiscal year 2023 are now in compliance with the reporting requirements.