A report from the state auditor’s office, issued Monday, showed the Agency of Human Services overpaid 17 unnamed health care providers by $7 million using federal Covid-19 relief money.
The report focused on $92.7 million in aid disbursed in three separate rounds by the agency through the Health Care Stabilization grant program, revealing that 21 of the 39 payments reviewed were too large or should not have been made at all.
The $7 million in overpayments accounted for 8% of the total funds audited.
“The first year of the pandemic greatly disrupted Vermont’s health care system, and the Agency of Human Services acted quickly to deploy federal COVID money to allow health facilities to pay their bills,” State Auditor Doug Hoffer said in a statement. “By moving so quickly, though, the application review process was not comprehensive.
“As a result, millions were distributed to entities who had not demonstrated they needed it, or to some whose use of funds was contrary to state and federal rules,” Hoffer said.
The state could be on the hook for overpayments if the federal government decides to recoup grants “that fail to comply with the allowable uses,” according to the report. The Agency of Human Services has no current plans to ask providers — which include hospitals, nursing homes, drug treatment centers, among other locations — to repay the state.
In a response to the auditor’s report, the agency’s interim secretary, Jenney Samuelson, called the grant program a success.
“AHS is prepared for any recoupments should that be required, but given that there is no evidence of fraudulent intent, there has been no evidence of a need for recoupment to date,” Samuelson said in her March 7 response.
The agency is conducting a “post-award validation” process, which it had planned since the beginning of the grant program, Samuelson said.
The federal stabilization grants were intended to support health care providers that had lost revenue because of the pandemic. Providers could also receive reimbursement for Covid-related expenses such as personal protective equipment, telecommunications infrastructure and ad hoc medical facilities. The money could not be used to pay wages or bonuses.
To speed up disbursement, the agency used a risk-based system to review applications, devoting the most time to the applications from providers whose revenues were most impacted by the pandemic. As a result, the agency neglected to review some applications and supporting documentation, the report said.
The risk formula also did not consider the size of each grant, leading to some Health Care Stabilization payments “exceeding $100,000 receiving no review or verification,” the report found.
In some instances, the agency did not account for Covid relief received by applicants through other state and federal programs, leading to overpayment. In other cases, providers were reimbursed for expenses not covered by the grant program, according to the auditor’s office.
“If the federal government identifies overpayments or improper use of COVID funds, the taxpayers of Vermont will be the ones who shoulder the burden of paying the money back,” Hoffer said.
