Auditors flag $70.6M in misspent Covid aid to rural, tribal hospitals
Summary
A federal audit of 30 tribal and rural health providers that received Provider Relief Fund payments during the pandemic found that 14 did not comply with the program's rules. Twelve spent $70.6 million on unallowable costs -- salaries over the federal pay cap, expenses with no supporting records, costs unrelated to Covid-19 -- and two could not support or had miscalculated $19.7 million in lost-revenue claims. The 14 noncompliant providers had received $570.8 million in pandemic aid altogether. 's Health Resources and Services Administration agreed to seek repayment.
How the sample was built
The audit drew its 30 providers from a much larger pool: 4,516 Indian Health Service and rural providers that received and kept one or more PRF payments, totaling roughly $25.2 billion. selected the 30 by weighing payment size, geography, and organizational structure -- each of the 30 had received more than $5 million in PRF payments, and together they spanned 20 states. Two were Indian Health Service facilities; the other 28 were part of rural hospital systems. It is not a claim that every recipient of PRF money misused it -- it is a close read of a deliberately weighted sample, and even so, fewer than half of the providers examined came through clean.
View data as table
| Used PRF funds properly | 16 |
|---|---|
| Did not comply / may not have complied | 14 |
Where the $70.6 million went
The largest single category, $36 million, is expenses two providers themselves told were not related to COVID-19 -- one provider alone accounted for $35.2 million of it, describing the spending in its own expenditure report as personnel and general-administration costs unconnected to the pandemic. The next-largest category, $20.4 million, is money that was reimbursed -- or already set to be reimbursed -- by other funding sources, including $19.7 million in lost revenue one provider was obligated to recover elsewhere. The remaining categories: $10.3 million in expenses with no supporting documentation at all, $1.9 million in costs charged but never actually incurred, $1.23 million in salaries paid to 72 executives and employees above the federal Executive Level II pay cap, and $765,562 in expenses claimed more than once.
View data as table
| Unrelated to COVID-19 | 36,000,000 | 2 providers -- $35.2M in personnel/admin costs the provider itself said weren't COVID-related, plus $749,640 in an unrelated equipment rental and accrued bonuses |
|---|---|---|
| Reimbursed by other sources | 20,400,000 | 6 providers -- including $19.7M in lost revenues one provider was already set to recover elsewhere |
| Not documented | 10,300,000 | 3 providers -- no supporting records for reclassified salary costs, lab-testing expenses, or a promised later correction |
| Charged but not incurred | 1,900,000 | 2 providers -- including unemployment-insurance costs the state had already forgiven |
| Over the executive salary cap | 1,234,994 | 4 providers -- 72 executives and employees paid above the $197,300-$199,300 federal Executive Level II limit |
| Duplicate expenses | 765,562 | 4 providers -- the same salaries, equipment, or lab costs claimed more than once |
A separate dispute over how to count 'lost revenue'
Beyond its formal findings, raised a question it did not turn into a recommendation. let providers calculate pandemic-era lost revenue quarter by quarter, counting only the quarters where revenue fell short and ignoring the ones where it recovered. re-ran the math for 27 of the 30 providers -- who had reported $2.3 billion in lost revenue under that method -- using a full-year comparison instead. Under the stricter method, those 27 providers would not have been able to claim $1.5 billion of what they reported, and could not have applied that much PRF money against it. pushed back directly: it told it was legally required to let providers use "any reasonable" method to estimate losses, and that 's alternate math was at odds with the flexibility Congress and 's own guidance had promised.
What happens now
's three recommendations are narrower than the $1.5 billion dispute: return or replace the $70,590,911 in unallowable expenditures at the 12 providers, return or replace the $19,709,036 in unsupported or miscalculated lost revenue at 2 providers, and work with 2 more providers to sort out $382,656 in expenses that may or may not have been allowable. agreed with all three and told it would review the underlying records and seek repayment as appropriate -- but the report itself makes clear providers aren't required to hand cash back if they can instead show unreimbursed COVID-era losses that offset the unallowable amount, so "return" and "repay" won't necessarily mean the same dollar changing hands twice.
The takeaway
- Nearly half the sample failed a compliance test built to be favorable to providers. These were 30 providers picked in part because of how much PRF money they'd received -- not a random draw -- and still, 14 of 30 didn't fully comply with terms they had personally attested to.
- The biggest chunk of the misspending wasn't a gray area. $36 million of the $70.6 million came from just two providers, the largest single piece of it $35.2 million one provider itself told in its own expenditure report was not related to COVID-19 -- not a disputed judgment call, but the provider's own account of where its money went.
- A second, larger dispute is still open and contested. 's $1.5 billion recalculation under a stricter lost-revenue method never became a formal recommendation, and has already told , in writing, that it disagrees with the underlying premise -- a live disagreement about the rules, not a closed finding.
"Unallowable expenditures" and "questioned costs" are audit terms describing spending could not verify met the program's terms -- not, on their own, a finding of fraud. Providers can offset unallowable amounts with documented, unreimbursed COVID-era losses instead of returning cash outright. The $1.5 billion figure in the Other Matters section is 's own recalculation under a method it did not require to adopt, and disputes that framing; it is presented here as a live disagreement between the audit and the agency, not a resolved finding. No individual provider, official, or employee is named in this piece; the audit's findings are institutional, against 12-14 providers out of the 30 sampled.
Sources(2) ▾
- U.S. Department of Health and Human Services, Office of Inspector General, Fourteen of Thirty Selected Indian Health Service and Rural Providers Did Not Comply or May Not Have Complied With Terms and Conditions and Federal Requirements for Expending Provider Relief Fund Payments (A-09-23-01001) (2026-02-20) — The primary document -- a 33-page performance audit of Provider Relief Fund (PRF) compliance at 30 selected Indian Health Service (IHS) and rural providers. Read in full: Why Did This Audit, What Found, What Recommends, Background, How We Conducted This Audit, all Findings subsections (salary limit, unsupported costs, unallowable costs, costs charged but not incurred, costs reimbursed by other sources, duplicate expenses, inaccurate/unsupported lost-revenue calculations), the potentially-unallowable-expenditures finding, causes, all three Recommendations, the Other Matters section on lost-revenue methodology, and 's written comments with 's response. oig.hhs.gov · original document
- Congressional Research Service, The Provider Relief Fund: Frequently Asked Questions (CRS Report R46897) (2022-04-07) — An independent Congressional Research Service explainer on the Provider Relief Fund, read via its EveryCRSReport.com mirror. Confirms, from a separate publication process, the $178 billion combined appropriation across the CARES Act ($100B), the Paycheck Protection Program and Health Care Enhancement Act ($75B), and the Consolidated Appropriations Act, 2021 ($3B) -- the same total the audit report cites -- and the general and targeted distribution structure that gave IHS and rural providers multiple ways to receive PRF payments. everycrsreport.com · original document
Comments
Always open. Logged-in readers can annotate paragraphs in place.
The Provider Relief Fund paid hospitals and clinics for COVID-19-era expenses and lost patient revenue -- $178 billion appropriated by Congress, $145.9 billion of it distributed to providers. HHS's Office of Inspector General audited 30 Indian Health Service and rural providers⧉ that together received nearly $1.56 billion of it, and found that 14 did not comply, or may not have complied, with the program's terms. Twelve of them spent $70.6 million on costs the fund was never meant to cover; two others could not support, or had miscalculated, $19.7 million in lost-revenue claims. The 14 noncompliant providers had received $570.8 million in pandemic aid combined.