CHRISTUS Health

Section III – Federal Award Findings and Questioned Costs Finding 2023-001 – Internal Control Deficiency and Noncompliance over Activities Allowed or Unallowed Identification of the federal program: Federal Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Assistance Listing No.: 93.498 COVID – 19 Provider Relief Funds and American Rescue Plan (ARP) Rural Distribution Award Period of Performance: January 1, 2020 – June 30, 2023 Criteria or Specific Requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 states 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 and lost revenues that are attributable to coronavirus. Condition: CHRISTUS Health did not consistently retain documentation to evidence approval of certain expenses incurred related to COVID-19. Also, certain payroll expenses related to COVID-19 were calculated using current pay rates as opposed to pay rates in effect at the time the payroll expenses were incurred. Finding 2023-001 – Internal Control Deficiency and Noncompliance over Activities Cause: CHRISTUS Health did not have controls in place to ensure amounts recorded as COVID-19 related expenses were reviewed and approved. CHRISTUS Health did not use appropriate pay rates when calculating labor costs to treat COVID-19 patients in the provider relief fund report (the Portal Submission) submitted to Health Resource Services Administration (HRSA). Effect or potential effect: Lack of documentation of controls could lead to noncompliance. Charging expenses to the program using incorrect pay rates could result in overcharging the program. Questioned Costs: $237 Context: CHRISTUS Health reported $65,505,801 of total expenses for the Period 4 and 5 HRSA Portal Submissions relating to Provider Relief Funding (PRF) Phase 4 General Distributions and American Rescue Plan (ARP) Rural Payments. Because a material weakness was issued in the prior year related to lack of documentation of controls surrounding expenses, we did not test and rely on controls for expenses in the current audit as the finding had not been remediated for the entire audit period. We selected 95 disbursements from the $65,505,801 of total expenses reported. Total program related expenditures that were charged specifically to a COVID related Activity Code within the Payroll IT System were $3,166,654. Of the 95 selected disbursements, 10 disbursements related to the COVID Activity Code. For payroll costs charged to the COVID Activity code, the amount charged to the award was calculated using the actual hours incurred multiplied by the pay rate at the time the portal submission was prepared, instead of the pay rate in effect at the time the hours were incurred. The 10 selections totaled $11,759. We recalculated the amount charged to the program using the pay rates in effect at the time the hours were incurred resulting in four overcharges totaling $237, four undercharges totaling $846, and two correct charges in which the current pay rate happened to match the pay rate at the time the hours were incurred. Identification as a repeat finding, if applicable: The finding is a repeat finding of 2021-001 and 2022-001. Recommendation: CHRISTUS Health should refine its process to retain documentation evidencing that each expense charged to the program is reviewed and approved. Only actual expenses should be charged to the program. View of Responsible Officials: Management agrees with the finding and will implement corrective action.