Audit Requirements

Independent audit requirements for Provider Relief Fund, American Rescue Plan Rural Distribution, Uninsured Program, and Coverage Assistance Fund payments

Providers that expend a total of $750,000 or more in federal financial assistance, including Provider Relief Fund (PRF), American Rescue Plan (ARP) Rural Distribution, Uninsured Program (UIP), and Coverage Assistance Fund (CAF) payments, during their fiscal year must conduct an independent audit and submit the audit report to HRSA. For PRF and ARP Rural, fiscal year expenditures are determined based on the PRF report(s) that is/are required to be submitted to HRSA for the provider’s fiscal year, as described under Audit Guidelines, below.

Requirements for these audits—often referred to as Single Audit requirements—are set forth by the Office of Management and Budget (OMB) in the Uniform Guidance (45 CFR 75 Subpart F) and annual Compliance Supplements (2 CFR Part 200, Appendix XI). The Compliance Supplements identify PRF, ARP Rural Distribution, UIP, and CAF payments as “other federal assistance.”

The independent audit requirements apply to non-Federal as well as commercial/for-profit entities (for-profit) entities (see definitions and explanations).

In accordance with 45 CFR 75 Subpart F, audit reports are due by the earlier of 30 calendar days after the entity receives the auditor’s report(s) or 9 months after the entity’s fiscal year ends.

• Definition of Entities
• Audit Requirements for Non-Federal Entities
• Audit Requirements for Commercial Organizations
• Audit Submission Process
• Audit Guidelines
• HRSA Review of Independent Audits

Definition of entities

• Non-Federal entity means a state, local government, Indian tribe, institution of higher education, or non-profit organization that carries out a federal award as a recipient or subrecipient.
• Commercial organization means an organization, institution, corporation, or other legal entity, including, but not limited to, partnerships, sole proprietorships, and limited liability companies, that is organized or operated for the profit or benefit of its shareholders or other owners. The term includes small and large businesses and is used interchangeably with “for-profit organization.” 

Audit requirements for non-federal entities

Non-Federal entities must conduct:

• A Single Audit, in accordance with 45 CFR § 75.514 or
• A program-specific audit, in accordance with 45 CFR § 75.507.

Audit requirements for commercial organizations

Commercial organizations have two options for conducting audits, per 45 CFR § 75.216(d) and § 75.501(i):

• A financial-related audit of their Federal award or awards conducted in accordance with Generally Accepted Government Auditing Standards; or
• A Single Audit or program-specific audit, as described above for non-Federal entities

HRSA defers to commercial organizations and their auditors in determining the basis of accounting sufficient to complete their required audits.

Audit submission process

Non-Federal entities must submit audit reports electronically to the Federal Audit Clearinghouse.

Commercial organizations that have reported on their use of PRF funding through the PRF Reporting Portal should submit their audits electronically to the Commercial Audit Reporting Portal.

• The Commercial Audit Reporting Portal uses the same credentials as the PRF Reporting Portal. 
• Once logged in, an organization representative may submit an audit or use the portal to assign the task to an auditor. Organizations may refer to the PRB Commercial Audit Reporting Portal User Guide (PDF - 280 KB) for guidance.

Commercial organizations that have not previously used the PRF Reporting Portal must submit their audits via email to HRSA’s Division of Financial Integrity at PRFaudits@hrsa.gov.

Audit guidelines

The 2024 Compliance Supplement provides information for auditors on the key compliance requirements that should be addressed through an independent audit of PRF, ARP Rural, UIP, and CAF funds. The 2021 Compliance Supplement (PDF - 18 MB), 2022 Compliance Supplement (PDF - 20 MB), and 2023 Compliance Supplement (PDF - 15 MB) are still available for providers, if needed.

Of note, due to the unique period of availability for PRF and ARP Rural expenditures, the Compliance Supplement requires PRF and ARP Rural amounts reported on the Schedule of Expenditures of Federal Awards (SEFA) within a provider’s audit to be based on the provider’s PRF report and to include both expenditures and lost revenues. The PRF report is to be tested as part of providers’ independent audits. For this reason, providers’ PRF and ARP Rural fiscal year expenditures are based on the totals in the PRF report(s) submitted by providers during their fiscal year, and these amounts are used to determine whether the provider met the $750,000 audit threshold. See the table of Reporting Periods for PRF and ARP Rural Distribution Amounts in the Schedule of Expenditures of Federal Awards.

Reporting periods for PRF and ARP rural distribution amounts in the Schedule of Expenditures of Federal Awards (SEFA)

If providers are uncertain regarding the specific amounts/dates of PRF, ARP Rural, UIP, or CAF payments they received, they may request verification of this information from HRSA by sending the following information to ProviderReliefContact@hrsa.gov.

• Provider name
• Provider address
• Provider email address associated with payments
• Name and title of business official making the request
• Date range
• Auditor name and contact information

Requests for financial information from providers, and their respective auditors, regarding payment verification should include specific language indicating the request is for “independent audit requirements.” Requests not specifically indicating “independent audit requirements” within the body of the request will be considered a payment verification for internal provider use. Both types of requests can be made by email to ProviderReliefContact@hrsa.gov or through the Provider Support Line at (866) 569-3522.

Requests must either come from an email domain associated with the recipient of funding or include an attachment with signed authorization on the recipient’s letterhead allowing the release of information to the named auditor.

HRSA review of independent audits

Audit compliance

HRSA is responsible for reviewing audit reports submitted to the Commercial Audit Reporting Portal or via email by commercial (for-profit) entities to determine if they are in compliance with independent audit requirements. If the commercial audit report is deemed non-compliant, HRSA will follow up with the commercial (for-profit) entity to obtain a new and compliant report. 

For non-Federal entities, the Federal Audit Clearinghouse will review the submitted audits for compliance and forward audits with findings to HRSA for review.

Audit resolution

HRSA will review PRF, ARP Rural, UIP, and CAF related audit findings for non-Federal and commercial (for-profit) entities. 

For procedural findings, HRSA will evaluate providers' Corrective Action Plans (CAP) to ensure providers adequately address the findings. If the CAPs are deemed inadequate, HRSA will contact providers to ensure CAPs are strengthened (e.g., through provision of additional data and/or strengthened policies and procedures). 

For monetary findings with questioned costs, HRSA will give providers an opportunity to demonstrate the allowability of costs (for example, through submission of additional supporting documentation). Questioned costs that cannot be substantiated as allowable will be disallowed by HRSA. HRSA will issue a Management Decision Letter (MDL) providing the basis for disallowing the costs and specifying the total amount deemed unallowable. The MDL will include instructions and options for repaying the disallowances.

Audit disputes

Providers who receive an MDL will have an opportunity to dispute the disallowed cost(s). Instructions for disputing disallowed costs will be included in the MDL. HRSA will provide a final determination regarding the allowability of the disputed costs following a fair and impartial review of relevant material.

HRSA-conducted programmatic audits and assessments

As a program integrity measure, HRSA conducts audits and assessments of recipients of COVID-19 Provider Relief program payments—PRF, ARP Rural, Uninsured Program, and Coverage Assistance Fund. Recipients of payments are required by law to submit reports and maintain documentation to ensure that funds have been used for health care-related expenses or lost revenues that are attributable to coronavirus.

The Terms and Conditions require recipients of payments to fully cooperate in audits conducted by HRSA, as well as those of the HHS Office of the Inspector General (OIG) to ensure compliance with programmatic requirements. Recipients shall maintain appropriate records and cost documentation including, as applicable, documentation described in 45 CFR § 75.302 – Financial Management and 45 CFR § 75.361 through § 75.365 – Record Retention and Access. In addition, upon request, the Recipient shall promptly submit copies of such records and cost documentation to HRSA.

PRF and ARP rural audits and assessments

The objectives of the PRF and ARP Rural audits and assessments are:

• Determine whether the PRF disbursements were used in accordance with the Terms and Conditions (T&Cs).
• Confirm that funds were used for healthcare-related expenses and lost revenues attributable to coronavirus.
• Confirm the healthcare-related expenses or lost revenues reimbursed by PRF were not reimbursed or obligated to be reimbursed from other sources.
• Identify any funds that would need to be returned to HRSA.

HRSA will select the providers who will be audited through a risk-based assessment. PRF and ARP Rural audits and assessments test revenues and COVID-19 related expenses which may include rent, insurance, salaries, fringe benefits, utilities, supplies, equipment, IT, and facilities cost. Providers will be required to pay back any overpayments identified during the audits and assessments.

UIP and CAF assessments

The objectives of the UIP and CAF assessments are to verify compliance with the Terms and Conditions, including:

• Whether claims were submitted using applicable Medicare program codes for items and services and reimbursed based on Medicare rates
• The medical necessity of the care provided to the patient
• That the provider did not engage in balance billing of the uninsured patient
• That the provider did not receive reimbursement under UIP or CAF for testing, treating, and vaccine administration when other sources reimbursed the provider or were obligated to reimburse the provider

HRSA will select the providers who will be assessed through a risk-based assessment. HRSA will use statistical sampling to determine which claims to test for each selected provider. Finally, HRSA will extrapolate the claims payment errors to each selected provider’s claims population. Providers may be required to pay back any overpayments identified during the assessments. 

Audit disputes

For monetary findings with questioned costs, HRSA will give providers an opportunity to demonstrate the allowability of costs. Questioned costs that cannot be substantiated as allowable will be disallowed by HRSA. HRSA will issue an MDL providing the basis for disallowing the costs and specifying the total amount deemed unallowable. The MDL will include instructions and options for repaying the disallowances as well as an opportunity to dispute the disallowances. HRSA will provide a final determination regarding the allowability of the disputed costs following a fair and impartial review of relevant material.