Deeper Than the Headlines: Compliance with Grant Management

Which entity is the largest grant-making organization in the federal government? If you guessed HHS, then you are right. HHS provides more grants than any other group in the federal government. And as most compliance officers know, risk and enforcement tends to follow the money. Your compliance program should understand the grants your healthcare organization is receiving because the OIG has its eye on grant management. In fact, the OIG has dedicated an entire website page to Grant Fraud.

In 2013, HHS provided over $340 Billion in grants. One of the highlights on the OIG website regarding grant compliance is the work OIG is engaged in with looking at the grants associated with relief for Hurricane Sandy. Other examples include grants associated with Head Start, mental health, substance abuse and research grants associated with studies.

At the grantee level, a common problem uncovered by OIG reviews is that grantees lack robust financial management systems. Some grantees cannot even account for specific grants on a grant-by-grant basis. Without this basic ability, grantees cannot account for costs associated with specific grant awards. The Office of Management and Budget (OMB) also has published numerous circulars in relation to grants management and associated cost principles for Federal grant awards.

By way of example, the OIG reported enforcement actions related to grants in their most recent semiannual report to Congress. In audits of two tribes, OIG identified improper administration of Low Income Home Energy Assistance Program (LIHEAP) grant funds. Grant funds totaling $1.2 million for one tribe and almost $600,000 for the other tribe were not administered in compliance with Federal laws, regulations, and guidance. These funds could have been used to provide additional benefits to eligible LIHEAP beneficiaries. Errors occurred because of insufficient internal controls, and in some cases, because staff circumvented existing internal controls. (See OIG reports on the Three Affiliated Tribes, A07-16-04230, and the Turtle Mountain Band of Chippewa Indians, A-07-16-04233.)

Another example comes from grant funds associated with Hurricane Sandy. $8.1 million in funds were awarded to the Economic Opportunity Commission of Nassau County, Inc. (EOC), for construction and other expenses resulting from Hurricane Sandy. EOC claimed costs that did not comply with Federal requirements. Of the $3.6 million in costs that OIG reviewed, $3 million complied with applicable Federal requirements. However, EOC claimed $614,278 in unallowable costs because it

(1) claimed construction costs, salaries, and fringe benefits on the basis of budgeted, not actual, costs;

(2) claimed construction management and design costs that were not allocable to the grant; and

(3) claimed costs that had been separately reimbursed by insurance.

The OIG has created a self-disclosure program for those who have received grants but have identified non-compliance with the associated rules and regulations. OIG evaluates the reported results of each internal investigation under the provider self-disclosure protocol to determine the appropriate course of action. The self-disclosure guidelines are available on the OIG website here.

Lastly, one of the OIG most recent videos from their series “Eye on Oversight” focuses on Grant Management. It can be viewed here.

If your compliance program hasn’t considered the risks associated with grants, it should. The OIG certainly is.