BALTIMORE MEDICAL SYSTEM, INC.

Health Center Program Cluster ALN Nos. 93.224 and 93.527 U.S. Department of Health and Human Services Award No. 2 H80CS00800, June 1, 2023 - May 31, 2024 Award No. 5 H80CS00800, June 1, 2022 - May 31, 2023 Award No. 2 H8FCS41036, April 1, 2023 - March 31, 2023 Criteria or Specific Requirement – Procurement, Suspension & Debarment – 2 CFR 200.320 Condition – The Organization did not comply with their policy governing procurement requirements for the purchase of goods and services charged to federal awards. Cause – Support was not maintained for the procurement policy being followed including bids that were required to be obtained. Effect or potential effect – A competitive bidding process may not have been followed within the guidelines or the procurement policy. Questioned cost – Unknown Context – A sample of two procurements were tested out of the total population of 17 procuremen…

Corrective action: Management agrees with the recommendation to maintain support for all bids obtained and the conclusions reached as part of the procurement process. The procurement audit sample contained expenses incurred by a Provider Staffing Agency. We were unable to provide support that we obtained multiple bids from staffing agencies. Going forward we will confirm rates via email and maintain the documentation supporting the fact that we are obtaining quotations from an adequate number of qualified sources. In addition, the following actions are being taken: • The Procurement Policy is being sent out to all relevant personnel to remind them of the procedures that must be followed before making purchases…

Health Center Program Cluster ALN Nos. 93.224 and 93.527 U.S. Department of Health and Human Services Award No.2 H80CS00800, June 1, 2023 - May 31, 2024 Award No.5 H80CS00800, June 1, 2022 - May 31, 2023 Award No.3 H8FCS41036, April 1, 2021 - March 31, 2023 Criteria or Specific Requirement – Reporting – 2 CFR 200.328 and 2 CFR 200.329 Condition – The Organization is required to prepare and submit an annual Uniform Data System (UDS) report for each calendar year and an annual Federal Financial Report (FFR) for each grant year for the Health Center Cluster. These reports are to be prepared using accurate financial information. Cause – The Organization was unable to provide supporting documentation that agreed to the line items tested in the reports. The Organization’s practice management system was incorrectly set up to classify certain adjustments as sliding fee discounts and a manua…

Corrective action: Management agrees with the recommendation to ensure the required reports are prepared using accurate information and supporting documentation for federal grant reports are maintained. • All system generated reports will be maintained in the preparation of the UDS and FFR reports. • A report will be run out of the practice management system identifying qualified sliding fee discounts to be included in the UDS report. Anticipated date of completion: December 31, 2026 Contact person responsible – Margaret Boemmel, CFO

Federal Award Agency: U.S. Department of Health and Human Services Federal Awards: 93.224 / 93.527 – Health Center Program Cluster, 93.566 - Refugee and Entrant Assistance State/Replacement Designee Administered Programs, and 93.526 – Grants for Capital Development in Health Centers Criteria: The auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) that accurately presents total federal expenditures for each program, including information on pass-through awards and subrecipients. This is required by the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200, §200.510(b)). Condition: During the audit of the auditee's SEFA for the year ended December 31, 2022, we noted discrepancies related to incorrect identification of Assistance Listing Numbers for certain grants, as well as difficulty providing initial suppo…

Corrective action: Finding: During the audit of the auditee's SEFA for the year ended December 31, 2022, we noted discrepancies related to incorrect identification of Assistance Listing Numbers for certain grants, as well as difficulty providing initial supporting detail for balances of expenditures for certain Federal programs. The auditee lacks sufficient internal controls over the preparation and review of the SEFA. Specifically, there is no established process to reconcile federal expenditures reported on the SEFA to the auditee's underlying accounting records. A formal review process involving an individual independent of the preparation was not conducted to ensure the SEFA was complete and accurate befor…

Federal Award Agency: U.S. Department of Health and Human Services Federal Awards: 93.224 / 93.527 – Health Center Program Cluster, 93.566 - Refugee and Entrant Assistance State/Replacement Designee Administered Programs, and 93.526 – Grants for Capital Development in Health Centers Criteria: Under 45 CFR Part 75.512, the Uniform Guidance requires that audited consolidated financial statements and related data collection form are submitted by the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period. Condition: The audit of the Organization for the year ended December 31, 2022, had a submission deadline of September 30, 2023. The Organization did not complete and submit their audit for the year ended December 31, 2022, to the federal clearinghouse until January 2026. Cause: Significant delays stemming from Finding 2022-001…

Corrective action: Finding: The audit of the Organization for the year ended December 31, 2022, had a submission deadline of September 30, 2023. The Organization did not complete and submit their audit for the year ended December 31, 2022, to the federal clearinghouse until November 2025. Significant delays stemming from Finding 2022-001 caused the required audit procedures and the ultimate completion date to extend beyond the regulatory deadline. Views of responsible officials and planned corrective actions: Management agrees with the recommendation to implement procedures and controls to ensure future audits are completed timely. During 2022 and 2023, Baltimore Medical System had significant staff turnover…

Federal Award Agency: U.S. Department of Health and Human Services Federal awards: 93.224 / 93.527 – Health Center Program Cluster Criteria: Under this selected program, eligible individuals receive a sliding fee discount on amounts owed for health center services based on family size and income levels in comparison to the federal poverty guidelines. The Organization should maintain records providing evidence that the patients included under this program are eligible. Condition: During the compliance testing of 44 sample items, there was two instances where the Organization applied a sliding fee discount to a patient who had not submitted any documents regarding their income level or family size and we could not determine whether the patient should have been included as a sliding fee patient, and one instance where the patient had properly submitted their forms, but the Organization a…

Corrective action: Finding: Under this selected program, eligible individuals receive a sliding fee discount on amounts owed for health center services based on family size and income levels in comparison to the federal poverty guidelines. The Organization should maintain records providing evidence that the patients included under this program are eligible. During the compliance testing of 44 sample items, there was two instances where the Organization applied a sliding fee discount to a patient who had not submitted any documents regarding their income level or family size and we could not determine whether the patient should have been included as a sliding fee patient, and one instance where the patient had …

Federal Award Agency: U.S. Department of Health and Human Services Federal awards: 93.224 / 93.527 – Health Center Program Cluster Criteria: Under this selected program, the Organization must conduct all procurement transactions in a manner providing full and open competition in accordance with federal regulations. Condition: During the compliance testing, we identified that the Organization does have an internal procurement policy in accordance with the federal regulations, however, there appears to be a lack of controls around the documentation of following the existing procurement policies in place for all the Organization’s purchases in 2022 with federal funds. Effect: Currently, there is no known monetary impact, improper expenditure of funds or questioned costs identified. However, if the Organization does not strengthen the internal controls in regard to their procurement p…

Corrective action: Finding: The Organization does have an internal procurement policy in accordance with the federal regulations, however, there appears to be a lack of controls around the documentation of following the existing procurement policies in place for all the Organization’s purchases in 2022 with federal funds. there is no known monetary impact, improper expenditure of funds or questioned costs identified. However, if the Organization does not strengthen the internal controls in regard to their procurement policy, there is a possible effect on the ability of the Organization to obtain additional funding under this program if they are not following the federal regulations when it comes to procuremen…