Valle Del Sol, Inc.

During our compliance testing of sliding fee discounts for the Organization, there was one instance in which the sliding fee encounter did not have a corresponding sliding fee scale application on file. We note that the compliance finding was immaterial to the program overall.

During our compliance testing of sliding fee discounts for the Organization, there was one instance in which the sliding fee was calcuated incorrectly. We note that the compliance finding was immaterial to the program overall.

Audit adjustments were necessary to correct errors in the current year consolidated financial statements totaling $3,662,932. The current period adjustments were related to an increase in accrued liabilities of approximately $3,662,932 resulting in a decrease in net income of $3,662,932.

Recommendation: Management’s close supervision and review is the best means to ensure all requirements are met. We recommend implementation of a second level independent review over the demographic data and income verification information entered into the patient billing system in order to ensure the financial classification is correct.

Criteria: The Health Centers Program, 42 U.S.C. § 245b(k)(3)(G)(i) states that “the center has prepared a schedule of fees or payments for the provision of its services consistent with locally prevailing rates or charges and designed to cover its reasonable costs of operation and has prepared a corresponding schedule of discounts to be applied to the payment of such fees or payments, which discounts are adjusted on the basis of the patient’s ability to pay.”

Condition: During our testing of sliding fee discounts for the Organization, there were two instances in which the sliding fee was calculated incorrectly.

Context: We randomly selected twenty-five sliding fee discounts to test for compliance. Two of the twenty-five sliding fee selections was incorrectly calculated.

Questioned Costs: None

Cause: Front desk administers the sliding fee application to patient. The sliding fee is then calculated and confirmed by eligibility and returned to the front desk for approval and proper charge. In this case, the proper fee was not charged based on the determination made by Valle Del Sol.

Effect: The patient may not receive the discount they are eligible for and noncompliance with Federal requirements and terms of the grant which may result in withdrawal or revocation of the grant given by the Federal agency.

Criteria: The OMB Circular No. A-122 § (A)(2) states that “costs should be reasonable for the performance of the award and be allocable thereto, conform to any limitations or exclusions set forth in these principles or in the award as to types or amount of cost item, be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the organization, be accorded consistent treatment, be determined in accordance with generally accepted accounting principles (GAAP) and must be adequately documented.”

Condition: During our testing of the patient population, there was one instance in which a patient was not eligible to be covered under the Mercy Care City of Phoenix ARPA award and was improperly invoiced.

Context: We randomly selected the patient population for eligibility compliance. There was one exception from the sample of 40, where a patient was improperly included in the covered population of the award.

Questioned Costs: None.

Cause: Improper determination by billing staff made by including the patient in the COP ARPA award when the patient’s zip code was not included in the allowable City of Phoenix zip codes. The patient visit was not an allowable reimbursement.

Effect: Unallowable behavioral health encounter invoiced to passthrough entity for reimbursement.

Recommendation: Eligibility determination should be reviewed thoroughly by Management since Management will ultimately send invoices to Mercy Care for reimbursement.

Criteria: The OMB Circular No. A-122 § (A)(2) states that “costs should be reasonable for the performance of the award and be allocable thereto, conform to any limitations or exclusions set forth in these principles or in the award as to types or amount of cost item, be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the organization, be accorded consistent treatment, be determined in accordance with generally accepted accounting principles (GAAP) and must be adequately documented.”

Condition: During our testing of eligibility and allowable costs, there were twelve instances where reimbursement rates were calculated and invoiced incorrectly.

Context: Twelve exceptions out of the sample of forty had patients who were undercharged as new reimbursement rates weren't used.

Questioned Costs: None.

Cause: A formal fee schedule was not received from Mercy Care; instead, a listing of allowable or reimbursable CPT codes was received. Due to the familiarity with Mercy Care fees used across other grants, Valle del Sol created a fee schedule based on the fees that the Clinic was aware of at the start of the award period. Further, this schedule was not updated when Mercy Care's other fee schedules were updated, resulting in partially incorrect invoicing and reimbursement for part of the current year.

Effect: The Clinic may have requested an incorrect reimbursement due to the use of a noncurrent fee schedule and noncompliance with Federal requirements and terms of the grant which may result in withdrawal or revocation of the grant given by the Federal agency.

Recommendation: Management is and will encourage communication with the granting agency to confirm that all rates used for reimbursement are accurate.