INTEGRAL CARE

2024-001 U.S. Department of Health and Human Services Passed-through the Texas Department of State Health Services FFAL #93.958 Mental Health Block Grant (Federal Award) (Contract numbers HHS000502700001, HHS001108400004, HHS001204800001, and H79SM085571-01) Health Community Collaboratives (State Award – No FFAL) Allowable Costs Cash Management Non-Material Noncompliance Significant Deficiency in Internal Control Criteria: Section 2 CFR 200.414 establishes that recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 10 percent of modified total direct costs (MTDC). The recipient or subrecipient is authorized to determine the appropriate rate up to this limit. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. The de minimis rate does not require documentation to justify its use and may be used indefinitely. Once elected, the recipient or subrecipient must use the de minimis rate for all Federal awards until the recipient or subrecipient chooses to receive a negotiated rate. Per 2 CFR 200.1, modified total direct cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs and with the approval of the cognizant agency for indirect costs. TxGMS follow this same guidance. Condition: The Center did not exclude charges for patient care when calculating modified total direct costs (MTDC). Cause: Due to the Center improperly calculating modified total direct costs (MTDC), an indirect rate other than the 10% de minimis indirect cost rate elected by the Center and allowed under the Uniform Guidance and TxGMS was being charged to and reimbursed by the federal and state grants. Effect: Insufficient procedures and internal controls over cash management resulted in noncompliance. Questioned Costs: Mental Health Block Grant – Total known questioned costs due to error in calculating MTDC amounted to $5,139. Projected or likely questioned costs as a result of the error are approximately $39,283. Healthy Community Collaboratives - Total known questioned costs due to error in calculating MTDC amounted to $26,426. Projected or likely questioned costs as a result of the error are approximately $88,200. Context/Sampling: Mental Health Block Grant – A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $843,000 of reimbursements out of total reimbursements of approximately $5,850,000. Healthy Community Collaboratives - A nonstatistical sample of 3 out of 12 reimbursement requests for the fiscal year were selected for cash management testing. For the 3 reimbursements selected, we tested approximately $949,000 of reimbursements out of total reimbursements of approximately $2,750,000. Repeat Finding from Prior Years: No. Recommendation: We recommend that the Center establish and adhere to policies and procedures, including internal controls, to ensure compliance with cash management requirements as established by 2 CFR 200.414 and 2 CFR 200.1 and TxGMS. Views of Responsible Officials: Management agrees with the finding.