HOW TO PREPARE FOR AN HRSA AUDIT

We’re helping you prepare by answering some common queries about the PRF audit:
 
Will My Organization Have to Complete a PRF Audit?

The HRSA requires organizations to complete a federal Single Audit when they expend more than $750,000 of federal funding in one year, regardless of whether those federally sourced funds came directly from the federal government or were passed from a state or local government. Healthcare providers who received $10,000 or more from the PRF during a given period must report on usage.

For many providers, this is the first time they’ve received over $750,000 in federal funding. As a result, these providers will need to complete the Single Audit for the first time.

Other providers, especially physician practices, don’t meet the Single Audit expense threshold, but that doesn’t mean they’re free from audit obligations. While they may not have to complete a Single Audit, if they received funding from the PRF, they may need to complete a HRSA-required audit—and the data requests for these audits are, in some cases, more involved than those for the Single Audit.
 
What Will the HRSA’s PRF Audit Look Like?

The audit will address the data used by the providers to report on their usage of PRF money. That means they will need to provide support for lost revenue and expenses that justify the use of the funds that they received.

The HRSA is going to drill down on the revenue numbers, specifically looking at the general ledger (GL) and other select revenue tests. On the expenses side, they’re going to look at the GL, invoice dates, payments and more.

To complete this audit, HRSA will require a significant amount of supporting documentation. Ideally, most of these documents should already have been copied and set aside as support in anticipation of financial reporting requirements. Below is a partial list of items that could be requested during the audit:

• General Ledger details
• Listing of expenses reimbursed with PRF payments grouped into specified categories
• Listing of patient care revenue by payer
• Listing of other sources of assistance
• Listing of expenses reimbursed with the other assistance received
• Detailed inventory listing of IT supplies
• Budget attestation from CEO or CFO and board minutes showing ratification of the budget before March 27, 2020
• Documentation of lost revenue methodologies
• Audit financial statements
• CMS cost reports for Medicare and Medicaid
• Other supporting documentation

If certain documentation isn’t available, providers will need to request copies from their vendors. Missing documentation may make it difficult to justify the use of funds, in which case, providers may have to repay a portion or all of their provider relief funding.

It’s possible that certain expenses were not allowable under PRF. However, that doesn’t necessarily mean providers will have to repay their funds. Providers may have other lost revenue or expenses that would be allowed under PRF — but only if they have the documentation to prove it. That’s why it’s crucial that providers have all relevant documentation for expenses and lost revenue over the periods they received provider relief funding.
 
What Challenges Should I Anticipate When It Comes to Completing This Audit?

According to the2022 BDO Healthcare CFO Outlook Survey, 35% of the respondents identified CARES Act/PRF reporting as a regulatory concern.

Much of this concern likely stems from a lack of resources as well as audit inexperience. Many providers who will have to complete an HRSA audit don’t have the necessary resources to dedicate to navigating the process. In addition, they may not know the type, scope or timeframe of documentation they need to pull. They may also struggle to locate certain documentation, especially documentation that’s more than two years old.

Finding the right people to sift through the information to ensure it is accurate and ready for the audit can be extremely difficult, especially if the documents are not filed electronically. This problem is even greater right now, given the professional services labor shortage that makes it difficult to hire the right people for the job if they aren’t already employed at your organization.
 
What Should My Next Steps Be?

To get ready for a potential HRSA audit, there are at least three immediate steps you should take:

• Select a responsible point person. One person should be responsible for coordinating the process to ensure that nothing falls through the cracks or is overlooked.
• Keep your PRF filing reports on hand. Pull any related supporting documentation and collate it into one place if it isn’t already.
• Identify what support is needed by doing a gap analysis. Determine where you need additional support or expertise and seek to close these gaps before the notification of any audit process.

Insufficient documentation may result in the recapture of provider relief funding by the HRSA. Fortunately, a lack of documentation is preventable with the right support and resources in place.

Contact one of our professionals for more information.