Under the Affordable Care Act (ACA) the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) is tasked with ensuring the proper expenditure and management of ACA-funded grant awards.  As a result, the OIG has conducted a series of reviews of health centers’ compliance with all federal requirements and grant terms related to ACA-funded grant awards.

On December 15, 2016, the OIG issued its latest health center report, this time focused on a New Access Point (NAP) grantee.  The OIG reviewed the health center’s financial management controls over the NAP funds and assessed the allowability of claimed costs under the NAP award.  The OIG determined that the health center failed to maintain management practices that separately tracked and accounted for grant funds and compared actual grant expenditures to the approved budgeted amounts for those expenditures.  Because the health center did not provide adequate documentation to support the costs charged to the NAP award, the OIG was only able to verify that $150,000 of the total $1,354,167 NAP funds awarded were allowable.

The OIG recommended that the Health Resources and Services Administration (HRSA) require the health center to refund the remaining $1,204,167 of unverifiable NAP grant funds to the federal government or work with the health center to determine what portion of the claimed costs were allowable. The OIG also recommended that HRSA ensure that the health center implement improvements to its financial management systems to provide for the accurate, current, and complete disclosure of the financial results of its NAP award and all other HHS-sponsored project or program.

The report serves as a cautionary tale to health centers, including those who recently received NAP awards.  A lack of familiarity with the applicable federal requirements and grant terms and conditions related to fiscal operations is not a defense for the absence of sound management practices with respect to a federal grant award. Health centers should:

• Review the accompanying Notice of Award document(s);
• Become familiar with the application of the enclosed grant terms, conditions, and federal requirements; and,
• Adequately train applicable staff on the implementation necessary to comply with the grant terms, conditions and federal requirements.

To learn more about federal grants management join us for Two Years and Counting…A Comprehensive Review and Discussion of the Uniform Grant Guidance  on February 7 & 8 or contact an attorney at Feldesman Tucker Leifer Fidell LLP at (202) 466-8960.