Finding Text
Finding: Allowable Costs/Cost Principles and Reporting
U.S. Department of Health and Human Services
Direct Program: COVID-19 Provider Relief Fund and the American Rescue
Plan (ARP) Rural Distribution - 93.498
Criteria or Specific Requirement – Activities Allowed/Unallowed and Cost Principles (Pub L. No. 116-136, 134 Stat. 563 and Pub L. No. 116-139, 134 Stat. 622 and 623). The Provider Relief Fund (PRF) was established in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136) to reimburse, through grants or other mechanisms, eligible health care providers for increased expenses or lost revenue attributable to Coronavirus Disease (COVID-19). Entities that received more than $10,000 (either one time or in the aggregate) are required to report the uses of their funds, including the lost revenue reimbursement and documentation of how the lost revenue was calculated. In addition, management is responsible for establishing and maintaining effective internal controls over costs directly and indirectly charged to federal awards.
Condition – The Hospital claimed and reported COVID-19-related supply expenses within the HHS PRF portal that were eligible to be reimbursed via other sources.
Questioned Costs – $147,682 of expenses were charged and reported which were available to be reimbursed by other sources. This was calculated by taking the supply expenses and multiplying this amount multiplied by the Hospital's internally calculated Medicare reimbursement rate.
Context – Upon testing the compliance requirements of this program, it was determined certain expenditure items were being claimed and reported incorrectly as they were not "Medicare-affected" to reduce the portion of expense to be reimbursed by another source.
Effect – The Hospital submitted and reported expenses which did not adhere to the terms and conditions of the award.
Cause – The guidance provided by HHS to providers across the country as to how to report their COVID-19-related expenses and lost revenues is, at times, difficult to comprehend and apply. The Hospital incorrectly applied guidance.
Identification as a Repeat Finding – Not applicable.
Recommendation – The Hospital should continue to improve understanding of the nuances within the guidance as it relates to charging and reporting direct expenses. Additionally, the Hospital should implement additional controls over future reporting periods to help ensure guidance is followed.
View of Responsible Official and Planned Corrective Actions – The Hospital agrees with this finding. See separate auditee document for planned corrective action.