Legacy Community Health Services, Inc

HIV Emergency Relief Projects Grants – Assistance Listing No. 93.914 U.S. Department of Health and Human Services Harris County Health Department March 1, 2024 – February 29, 2025 and March 1, 2025 – February 28, 2026

HIV Care Formula Grants – Assistance Listing No. 93.917 U.S. Department of Health and Human Services Houston Regional HIV/AIDS Resource Group, Inc. April 1, 2024 – March 31, 2025 and April 1, 2025 – March 31, 2026

Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S. Department of Health and Human Services H80: May 1, 2024 – April 30,2025 and May 1, 2025 – April 30, 2026 H8K: September 1, 2023 – August 31, 2024 H8L: September 1, 2023 – December 31, 2024 H8N: September 1, 2024 – August 31, 2025 H2E: May 1, 2023 – August 31, 2024

Family Planning Services – Assistance Listing No. 93.217 U.S. Department of Health and Human Services EveryBody Texas April 1, 2024 – March 31, 2025 and April 1, 2025 – March 31, 2026

State HIV Services Grant Programs Texas Department of State Health Services Houston Regional HIV/AIDS Resource Group, Inc. September 1, 2023 – August 31, 2024, and September 1, 2024 – August 31, 2025

Criteria or specific requirement – Allowable Costs and Cost Principles (45 CFR 75.430) and TxGMS

Condition - The Organization did not comply with federal and state cost principle requirements.

Cause - The cost allocation plan used by the organization distributed costs to multiple federal and state programs using a budgeted full time equivalent (FTE) basis without subsequent reconciliation to actual time and effort records.

Effect or potential effect - Amounts charged to Assistance Listing Numbers 93.914, 93.917, 93.224, 93.527, 93.217, and the Texas State HIV Service Grants were not supported by complete time and effort records.

Questioned costs – ALN 93.914 HIV Emergency Relief Projects Grants - $1,571,196; ALN 93.917 HIV Care Formula Grants - $125,729; ALN 93.224 and 93.527 - Health Center Program Cluster $145,203; ALN 93.217 Family Planning Services - $202,495; State HIV Services Grant Programs - $124,550. Questioned costs were quantified using amounts allocated to multiple programs through the Organization's cost allocation plan.

Context – Expenditures from each major program were tested. Indirect costs that were allocated across multiple programs were based on budgeted FTE data rather than actual time and effort reports. These indirect costs were identified as errors and represent questions costs of: • HIV Emergency Relief Project Grants – $1,571,196 • HIV Care Formula Grants – $125,729 • Health Center Program Cluster – $145,203 • Family Planning Services Grants – $202,495 • State HIV Services Grant Programs – $124,550 As a result, the Organization was unable to demonstrate compliance with federal cost principles requirements. The sampling methodology is not and is not intended to be statistically valid.

Identification as a repeat finding, if applicable – Yes, see 2024-002.

Recommendation – The Organization should develop a process to support the time and effort used as a basis of allocation for programmatic expenditures.

HIV Care Formula Grants - Assistance Listing No. 93.917 U.S. Department of Health and Human Services Houston Regional HIV/AIDS Resource Group, Inc. April 1, 2024 - March 31, 2025 and April 1, 2025 - March 31, 2026

State HIV Services Grant Programs Texas Department of State Health Services Houston Regional HIV/AIDS Resource Group, Inc. September 1, 2023 – August 31, 2024, and September 1, 2024 – August 31, 2025 Criteria or specific requirement – Eligibility Condition – Program benefits were extended to individuals for whom eligibility supporting documentation was not available.

Cause – The Organization relies on its practice management systems to conduct a portion of the eligibility screening required for these programs. During the prior fiscal year, a new practice management system was implemented. During this time, the Organization provided training and support in an effort to minimize disruption following this change. However, some new processes appear to have not been followed as the Organization transitioned to the new system and some documentation was noted to be missing or not obtained for transactions occurring during the fiscal year.

Effect or potential effect – Weaknesses in internal control over compliance present the potential for noncompliance with federal and state eligibility requirements. As a result, program benefits were provided to an individual that did not meet the eligibility requirements of the State HIV Services Grant Programs.

Questioned costs – State HIV Services Grant Programs - $779; Questioned costs were quantified using the value of benefits provided to program participants that were not eligible to receive benefits from the program.

Context – The Organization's controls to ensure compliance with eligibility requirements are not consistently operating as designed for the impacted programs. In addition, a sample of 25 transactions were tested from a population of approximately 5,075 State HIV Services Grant Programs transactions, with 1 instance of benefits being received by an individual that did not qualify to receive such benefits. The sampling methodology is not and is not intended to be statistically valid.

Identification as a repeat finding, if applicable – Yes, see 2024-003

Recommendation – The Organization should review the eligibility policy and procedures to ensure compliance with the ALN 93.917 HIV Care Formula Grants and Texas Department of State Health Services State HIV Services Manuals and other authoritative guidance while considering improvements that can be made for both potential program beneficiaries and personnel. Continued education efforts and internal audit processes should continue as well.

HIV Emergency Relief Projects Grants – Assistance Listing No. 93.914 U.S. Department of Health and Human Services Harris County Health Department March 1, 2023 – February 29, 2024 and March 1, 2024 – February 28, 2025

HIV Care Formula Grants – Assistance Listing No. 93.917 U.S. Department of Health and Human Services Houston Regional HIV/AIDS Resource Group, Inc. April 1, 2023 – March 31, 2024 and April 1, 2024 – March 31, 2025

State HIV Services Grant Programs Texas Department of State Health Services Houston Regional HIV/AIDS Resource Group, Inc. September 1, 2022 – August 31, 2023, September 1, 2023 – August 31, 2024, and April 1, 2023 – August 31, 2023 Criteria or specific requirement – Allowable Costs and Cost Principles (45 CFR 75.430) and TxGMS

Condition - The Organization did not comply with federal and state cost principles requirements.

Cause - The cost allocation plan distributed costs across multiple federal and state programs using a budgeted full time equivalent (FTE) basis without subsequent reconciliation to time and effort records.

Effect or potential effect - Amounts charged to Assistance Listing Numbers 93.914, 93.917, and the Texas State HIV Service Grants were not supported by complete time and effort records.

Questioned costs – ALN 93.914 HIV Emergency Relief Projects Grants - $1,781,943; ALN 93.917 HIV Care Formula Grants - $91,994; State HIV Services Grant Programs - $222,122.

Context – Expenditures from each major program were tested. • HIV Emergency Relief Project Grants - Indirect costs that were allocated across multiple programs were noted to be based on budgeted FTE data rather than underlying time and effort reports. These indirect costs identified as errors and represent questioned costs of $1,781,943. • HIV Care Formula Grants - Indirect costs that were allocated across multiple programs were noted to be based on budgeted FTE data rather than underlying time and effort reports. These indirect costs identified as errors and represent questioned costs of $91,994. • State HIV Services Grant Programs - Indirect costs that were allocated across multiple programs were noted to be based on budgeted FTE data rather than underlying time and effort reports. These indirect costs identified as errors and represent questioned costs of $222,122. For the indirect expenditures isolated and noted to be errors, the Organization’s cost allocation plan utilized budgeted full time equivalents (FTE) as a basis for that allocation of cost. As a result the Organization was unable to demonstrate compliance with federal cost principles requirements. Identification as a repeat finding, if applicable – No, this is not a repeat finding. Recommendation – The Organization should develop a process to support the time and effort used as a basis of allocation for programmatic expenditures.

HIV Emergency Relief Projects Grants – Assistance Listing No. 93.914 U.S. Department of Health and Human Services Harris County Health Department March 1, 2023 – February 29, 2024 and March 1, 2024 – February 28, 2025

Criteria or specific requirement – Eligibility Condition – Program benefits were extended to individuals residing outside the designated service area or for whom eligibility was expired.

Cause – The Organization relies on its practice management systems to conduct a portion of the eligibility screening required for this program. During the fiscal year, a new practice management system was purchased and implemented. During this time, the Organization provided training and support in an effort to minimize disruption following this change. However, some new processes appear to have not been followed as the Organization transitioned to the new system and some documentation was noted to be missing or not obtained for transactions occurring during the fiscal year.

Effect or potential effect – Program benefits were provided to individuals that did not meet the eligibility requirements of this federal program.

Questioned costs – None

Context – A sample of 25 transactions were tested from a population of approximately 25,575 transactions, with 4 instances of benefits being received by individuals that did not qualify to receive such benefits. The sampling methodology is not and is not intended to be statistically valid.

Identification as a repeat finding, if applicable – Not a repeat finding

Recommendation – The Organization should review the eligibility policy and procedures to ensure compliance with the HIV Emergency Relief Project Grants Manual and other authoritative guidance while considering improvements that can be made for both potential program beneficiaries and personnel. Continued education efforts and internal audit processes should continue as well.