Marillac Clinic Inc. dba PrimeHealth

Federal Agency: US Department of Health and Human Services Federal Program: Congressionally Delegated Spending for Construction Projects AL Number: 93.493 Award Period: 1/1/25 – 12/31/25 Type of Finding: Significant deficiency in Internal Control Over Compliance and Compliance Criteria or Specific Requirement 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement and suspension and debarment. The Organization should have internal controls designed to ensure compliance with these provisions. Condition and Context During our testing over Suspension and Debarment, noted one instance in which the Organization was unable to locate documentation that a suspension and debarment check was performed prior to entering into a transaction with a vendor. Effect Noncompliance results in possible Federal funds provided to ineligible vendors. Questioned Costs None identified. Cause The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation We recommend the Organization implement a process to ensure that procurement and suspension and debarment documentation is retained. Views of Responsible Officials The Organization acknowledges that, in one instance, documentation evidencing that a suspension and debarment check was performed prior to engaging a vendor could not be located. While this appears to be an isolated occurrence, we recognize the importance of maintaining complete and auditable documentation to demonstrate compliance with 2 CFR Part 200 requirements. In response, the Organization has strengthened its internal controls to ensure that all vendors are properly screened and that such screenings are consistently documented. We have implemented the use of a compliance monitoring system (Compliatric), which maintains a centralized vendor registry and performs monthly screenings against federal exclusion and debarment databases, including SAM.gov and OIG exclusion lists. This system provides an auditable log of all screening activity. These enhanced controls were implemented effective June 9, 2025. Additionally, the Organization has completed a retrospective review of all active vendors to confirm that appropriate suspension and debarment screenings have been performed and documented. Going forward, any potential matches identified through the screening process will be escalated to the Risk and Compliance Manager and/or CFO for review and validation. If a match is confirmed, the Organization will immediately discontinue use of the vendor and terminate the relationship in accordance with federal requirements.

Federal Agency: US Department of Health and Human Services Federal Program: Congressionally Delegated Spending for Construction Projects Pass-Through Agency: N/A AL Number: 93.493 Award Period: 1/1/25 – 12/31/25 Type of Finding: Significant deficiency in Internal Control Over Compliance and Compliance Criteria or Specific Requirement 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement and suspension and debarment. The Organization should have internal controls designed to ensure compliance with these provisions. Condition and Context During our testing over Procurement noted two instances in which the Organization was unable to locate documentation that agreements with vendors related to the infrastructure project included the Buy America domestic preference provisions in each agreement, or obtained a BABA (Build America, Buy America) waiver. Effect Noncompliance results in possible federal funds provided to ineligible vendors. Questioned Costs None identified. Cause The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation We recommend the Organization implement a process to ensure that procurement agreements with vendors related to infrastructure projects include the Buy America domestic preference provisions in each agreement, or a process to obtain a BABA (Build America, Buy America) waiver. Views of Responsible Officials The Organization was unable to locate documentation demonstrating that procurement agreements included the required Buy America (BABA) provisions or evidence of an approved waiver. In response, the Organization has implemented enhanced internal controls to ensure compliance going forward, including updates to the Procurement Policy to require inclusion of Buy America provisions or documented waivers in all applicable contracts, standardized contract templates with all required federal clauses, and a mandatory pre-award compliance checklist to verify inclusion of these elements. Additionally, procurement documentation is now maintained in a centralized system to ensure proper retention and accessibility, staff have been trained on these requirements, and ongoing compliance is monitored through quarterly reviews and required pre-execution approval for all federally funded contracts. These corrective actions have been implemented and are currently in effect.

Criteria or Specific Requirement Per Title 42 Chapter 1 Subchapter D Section 51c303(f), “Health centers must have a schedule of fees or payments for the provision of their health services consistent with locally prevailing rates or charges designed to cover their reasonable costs of operation. They are also required to have a corresponding schedule of discounts applied and adjusted on the basis of the patient’s ability to pay.”

Condition and Context During our testing of forty sliding fee discounts for health center patients qualifying for reduced charge visits, we identified one visit where a sliding fee application could not be found to support the slide provided.

Effect Potential that a patient would not receive the appropriate sliding fee discount.

Questioned Costs None identified.

Cause Clerical error in which the sliding fee application was not saved in the patients file.

Recommendation We recommend the Organization to review internal controls in regards to retaining the completed sliding fee applications in the patients record to support the sliding fee discount provided to the patient.

Views of Responsible Officials Management agrees that this was a clerical error and an isolated incident. To improve the process and minimize errors, eligibility applications will now be processed at the Grand Junction, Colorado office by a different eligibility staff. This team will enter applications into the electronic medical record system and maintain either paper or digital copies for one year to ensure no applications are lost. This new procedure will provide an additional safeguard in the application process.

Criteria or Specific Requirement 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement and suspension and debarment. The Organization should have internal controls designed to ensure compliance with these provisions.

Condition and Context During our testing over suspension and debarment, we noted one instance in which the Organization was unable to locate documentation that a suspension and debarment check was performed prior to entering into a transaction with a vendor.

Effect Noncompliance results in possible federal funds provided to ineligible vendors.

Questioned Costs None identified.

Cause The Organization does not have internal controls in place to ensure compliance with federal regulations or the terms and conditions of the federal award.

Recommendation We recommend the Organization implement a process to ensure that procurement and suspension and debarment documentation is retained.

Views of Responsible Officials The Organization has a program called Compliatric that the Organization can load all of its vendors into and it will check on a monthly basis the registries for Debarment and Exclusions from Federal Programs with a log to track this screening. The Organization has changed the accounts payable process to include adding all new vendors to the Compliatric list for screening compliance. The Organization feels this will ensure ongoing compliance of all vendors on a monthly basis going forward. Any matches will require either the Risk and Compliance Manager or the CFO to review and validate the match or identify that the match is an error. If validation is found to be correct all purchasing and use of that vendor will be terminated going forward.

Criteria or Specific Requirement Per Title 42 Chapter 1 Subchapter D Section 51c303(f), “Health centers must have a schedule of fees or payments for the provision of their health services consistent with locally prevailing rates or charges designed to cover their reasonable costs of operation. They are also required to have a corresponding schedule of discounts applied and adjusted on the basis of the patient’s ability to pay.”

Condition and Context During our testing of forty sliding fee discounts for health center patients qualifying for reduced charge visits, we identified two visits where a sliding fee application could not be found to support the slide provided. We noted that both visits selected by our random sample were related to the same patient.

Effect Potential that a patient would not receive the appropriate sliding fee discount.

Questioned Costs None identified.

Cause Clerical error in which the sliding fee application was not saved in the patients file.

Recommendation We recommend the Organization to review internal controls in regards to retaining the completed sliding fee applications in the patients record to support the sliding fee discount provided to the patient.

Views of Responsible Officials Management agrees that this is a clerical error and an isolated incident. Currently, eligibility staff receives completed applications, scans them into the electronic health record, and discards the hard copy. To minimize error, the procedure will be changed, whereby staff maintains hard copies for the week, and at the end of the week verifies that all applications have been scanned into the system. This will act as a double check of the scanning process.