Louisiana Health Care Quality...

LOUISIANA HEALTH CARE QUALITY FORUM

FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31,2013 AND 2012

Louisiana Health Care Quality Forum Baton Rouge, Louisiana

Table of Contents December 31, 2013 and 2012

Page

Independent Auditor's Report 1-2

Financial Statements:

Statements of Financial Position 4

Statements of Activities 5

Statements of Functional Expenses 6-7

Statements of Cash Flows 8

Notes to the Financial Statements 9-16

Other Supplemental Information:

Schedule of Expenditure of Federal Awards 18

Other Independent Auditor's Reports and Findings, Recommendations, and Responses:

Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 20-21

Independent Auditor's Report on Con^liance for Each Major Program and on Intemal Control Over Con^liance Required by 0MB Circular A-133 22 - 23

Schedule of Findings and Questioned Costs 24 - 25

TLirilLlll CERTIFIED PUBLIC ACCOUNTANTS A PROFESSIONAL CORPORATION

www.djcpa.com John N. Durnin, CPA Members of Dennis E. James, CPA American Institute of CPAs Lyle E. Lambert, CPA Society of Louisiana CPAs Paul M. Riggs, Jr., CPA

Jared R. Lauderdale, CPA

May 20, 2014

Independent Auditor's Report

Ms. Cindy Munn, Executive Director and Members of the Board of Directors


Report on the Financial Statements

We have audited the accompanying financial statements of the Louisiana Health Care Quality Forum (a nonprofit organization), which comprise the statements of financial position as of December 31, 2013 and 2012, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements.

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

401 East Thomas Street • Hammond, Louisiana 70401 • 985 345 6262 • Fax: 985 345 9987

Louisiana Health Care Quality Forum May 20, 2014

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Louisiana Health Care Quahty Forum as of December 31, 2013 and 2012, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconcihng such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated May 20, 2014, on our consideration of the Louisiana Health Care Quality Forum's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and comphance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Louisiana Health Care Quality Forum's internal control over financial reporting and compliance.

Respectfully submitted.

Durnin & James, CPAs (A Professional Corporation)


Statements of Financial Position December 31, 2013 and 2012

2013 2012

Assets

Current Assets: Cash and Cash Equivalents Investment Securities Accounts Receivable Prepaid Expenses

Total Current Assets

$ 2,213,334 1,429,197 1,710,307

425,177

5,778,015

$ 2,036,298 1,379,067 1,584,923

379,430

5,379,718

Property & Equipment: Facility Construction Furniture and Equipment Less: Accumulated Depreciation

Total Property & Equipment

Other Assets: Other Assets

6,515 1,381,600 (654,852)

733,263

5,076 918,666

(406,445)

517,297

3,531

Total Other Assets - 3,531

Total Assets $ 6,511,278 $ 5,900,546

Liabilities and Net Assets

Liabilities: Accounts Payable Payroll Liabilities Accrued Expenses Other Liabilities Deferred Revenue

$ 207,169 47,848

297,364 422,302 93,855

$ 34,827

1,050,596

17,198

Total Liabilities 1,068,538 1,102,621

Net Assets: Ten^orarily Restricted Unrestricted

1,408,878 4,033,862

1,422,530 3,375,395

Total Net Assets 5,442,740 4,797,925

Total Liabilities and Net Assets $ 6,511,278 $ 5,900,546

The accompanying notes are an integral part of these financial statements.

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Louisiana Health Care Quality Forum Baton Rouge, Louisiana Statements of Activities

For the Years Ended December 31, 2013 and 2012

2013

Unrestricted Net Assets: Unrestricted Revenues and Gains:

In-Kind Revenue Cooperative Agreement Revenue Sponsorships and Contributions Program Income Investment Income Gain / (Loss) on Disposal of Fixed Assets Other Income

Total Unrestricted Revenues and Gains Net Assets Released from Restrictions

Total Unrestricted Revenues, Gains, & Other Support

10,892 6,324,713

43,500 67,363

312 (1,014) 180,953

6,626,719 1,451,286

8,078,005

2012

287,824 4,862,321

46,500 307,413

612 (2,646)

155,822

5,657,846 712,464

6,370,310

Expenses: Program Services:

DHH HIE lAPDU REC Specialists LaPOST PABI Summit

Supporting Services: G&A

Total Expenses

Change in Unrestricted Net Assets

550,339 4,121,761 458,591

1,398,814 9,723

113,069

11,212

756,029 7,419,538 658,467

464,035 3,199,791

2,134,484 18,852

108,918 949

16,099

668,494 6,611,622

(241,312)

Ten^orarily Restricted Net Assets: Contract Revenue Cooperative Endeavor Agreements Program Income Net Assets Released from Restrictions

Change in Temporarily Restricted Net Assets

201,409 819,959 416,266

(1,451,286)

(13,652)

150,000 1,218,125

1,415 (712,464) 657,076

Change in Net Assets

Net Assets - Beginning of the Year

Net Assets - End of the Year

644,815

4,797,925

$ 5,442,740

415,764

4,382,161

$ 4,797,925


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Statement of Functional Expenses For the Year Ended December 31, 2013

Proaram Services Support

Total DHH HIE lAPDU REC Specialists LAPOST Summit G&A Total

In-Kind Expense $ - $ 8,511 $ $ 2,381 $ E - $ 3 $ 10,892 Bank Charges - - - - - - 537 2,080 2,617 Business Registration Fees 3,025 8,004 1,528 70 - 13 - 882 13,522 Participation Costs - Analytics - 186,577 - - - - - - 186,577 Participation Costs - LaHIE - 1,882,281 - 2,350 - - - - 1,884,631 PIP Consultants 3,060 - 2,025 817,336 3,500 - - - 825,921 Accounting Fees 25,721 112,966 22,750 92,040 - - - 18,813 272,290 Communication / Media - - - - - - - 1,995 1,995 Legal Fees 3,611 110,981 420 6,421 - 1,403 - 13,848 136,684 Outside Contract Services 557 47,301 3,629 35,256 - 6,311 150 42,953 136,157 Professional Consultants 151,333 168,740 10,000 - - 1,400 - 117,765 449,238 Other Meetings - 5,000 - - - (500) 6,397 329 11,226 Summit - - - - - - 477 - 477 Depreciation 5,992 217,140 - 2,996 - 2,541 - 28,491 257,160 Equipment Rental - - - - - - - 4,558 4,558 Rent - 52,063 - - - - - 52,671 104,734 FacOities and Equipment - Other - - - - - - - 5,009 5,009 Sponsorships & Contributions 1,250 16,458 833 7,708 - 8,325 - 8,875 43,449 Advertising 833 76,821 2,711 4,567 - 1,748 100 14,831 101,611 Dues and Subscriptions 9,250 22,500 143,750 - - - - 15,788 191,288 Educational Events 4,357 - - - - - - - 4,357 Insurance 731 51,082 656 955 12 171 - 23,728 77,335 Meals 1,007 2,442 1,927 246 - 5,964 2,534 6,868 20,988 Other Costs - Operations 1,466 2,498 1,788 1,302 2 9,335 180 2,535 19,106 Postage 68 2,763 8 1,038 - 184 - 1,275 5,336 Printing and Copying 900 4,055 1,150 743 - 10,185 65 12,933 30,031 Committee / Board Meetings - - - - - - - 395 395 Supplies 416 3,172 1,545 453 - 557 44 8,263 14,450 Telephone 689 10,323 280 444 - 609 - 15,011 27,356 Travel 27,108 94,306 22,912 56,342 1,877 2,274 728 9,908 215,455 HRA Expenses 4,139 4,262 1,260 1,953 - 41 - 7,749 19,404 General Paid Time Expense 1,890 5,414 2,143 1,930 - 83 - 2,356 13,816 40IKMatch 2,607 9,523 1,218 8,083 108 2,019 - 13,417 36,975 Health Insurance 42,780 76,910 11,468 20,359 (69) 641 - 25,486 177,575 PayroU Processing Fees 2,403 8,203 497 2,990 44 545 - 2,221 16,903 PayroU Tax Expense 17,173 65,823 16,110 23,498 310 4,287 - 19,391 146,592 Salaries 237,973 865,642 207,983 307,353 3,939 54,933 - 275,605 1,953,428

The accompanying notes are an in

$ 550,339 $ 4,121,761 $ 458,591 $ 1,398,814 $ 9,723 E 113,069 $ 11,212 3 756,029 $ 7,419,538

The accompanying notes are an in tegral part of these financial statements.

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Statement of Functional Expenses For the Year Ended December 31, 2012

Proaram Services Support

Total DHH HIE RFC Specialists LAPOST PABI Summit G&A Total

In-Kind Expense $ - $ 287,472 $ 352 $ - $ $ $ 3 $ 287,824 Bank Charges - - - - - - - 1,215 1,215 Business Registration Fees - - - - - - - 5 5 Participation Costs - Analytics - - - - - - - - -Participation Costs - LaHIE - - - - - - - - -PIP Consultants 2,040 - 1,033,079 10,244 - - - 125 1,045,488 Accounting Fees 27,909 92,240 54,582 - - - - 16,469 191,200 Communication / Media - 2,688 1,125 - 14,976 - 2,370 3,564 24,723 Legal Fees 9,570 57,120 2,580 - - - - 7,220 76,490 Outside Contract Services 3,103 47,925 4,351 - 2,498 - 304 25,493 83,674 Professional Consultants 41,517 1,287,581 377,695 - - - - 84,827 1,791,620 Other Meetings - 6,675 1,675 - 4,847 - - 1,615 14,812 Summit - - - - - - 9,536 - 9,536 Depreciation 11,833 220,928 5,255 - 7,627 - - 36,338 281,981 Equipment Rental - - - - - - - 6,553 6,553 Rent - 52,063 - - - - - 54,794 106,857 FacOities and Equipment - Other - - - - - - - 570 570 Sponsorships & Contributions - - - - 500 - - - 500 Advertising - 24,672 1,332 - 448 - 200 30,192 56,844 Dues and Subscriptions 2,181 4,063 - - - - - 10,316 16,560 Educational Events - - - - - - - 1,796 1,796 Insurance 754 42,365 892 15 164 - - 21,618 65,808 Meals 1,378 4,891 263 - 3,367 85 2,433 3,955 16,372 Other Costs - Operations 402 3,114 460 - 4,492 - - 8,944 17,412 Postage 29 894 39 - 87 - - 1,526 2,575 Printing and Copying 296 2,369 2,139 - 295 35 83 10,776 15,993 Committee / Board Meetings - - - - - - - 239 239 Supplies 397 4,009 913 - 147 - 683 5,769 11,918 Telephone 229 1,554 501 - 490 - - 15,360 18,134 Travel 32,626 133,159 272,226 2,694 2,933 829 490 2,884 447,841 HRA Expenses 22 151 1,493 - - - - - 1,666 General Paid Time Expense 2,051 6,712 858 - 228 - - 302 10,151 40IKMatch 1,611 9,736 6,476 46 2,285 - - 9,280 29,434 Health Insurance 31,490 76,696 31,063 - 487 - - 27,056 166,792 PayroU Processing Fees 6,046 17,074 6,866 122 1,292 - - 6,153 37,553 PayroU Tax Expense 20,303 56,140 23,302 417 4,442 - - 19,512 124,116 Salaries 268,248 757,500 304,967 5,314 57,313 - - 254,028 1,647,370

The accompanying notes are an in

$ 464,035 $ 3,199,791 $ 2,134,484 $ 18,852 $ 108,918 $ 949 $ 16,099 3 668,494 $ 6,611,622

The accompanying notes are an in tegral part of these financial statements.

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Louisiana Health Care Quality Forum Baton Rouge, Louisiana Statements of Cash Flows

For the Years Ended December 31, 2013 and 2012

2013 2012

Cash Flows from Operating Activities: Increase in Net Assets $ 644,815 $ 415,764 Adjustments to reconcile increase in net assets to net cash

provided (used) by operating activities: Depreciation 257,160 281,981 Loss on Disposal of Fixed Assets 1,014 2,646 Gain / Loss on Investments (4,663) (38,691) Decrease / (Increase) in Operating Assets:

Accounts Receivable (125,384) 756,142 Prepaid Expenses (45,747) (26,616) Other Assets 3,531 (3,531)

Increase / (Decrease) in Operating Liabilities: Accounts Payable 172,342 (9,573) Payroll Liabilities 47,848 -Accrued Expenses (753,232) (46,418) Other Liabilities 422,302 -Deferred Revenue 76,657 17,198

Net Cash Provided by Operating Activities 696,643 1,348,902

Cash Flows from Investing Activities: Purchase of Furniture and Equipment (474,141) (16,497) Purchase of Investments (45,466) (1,340,375)

Net Cash Used in Investing Activities (519,607) (1,356,872)

Net (Decrease) Increase in Cash and Cash Equivalents 177,036 (7,970)

Cash and Cash Equivalents - Beginning of the Year 2,036,298 2,044,268

Cash and Cash Equivalents - End of the Year $ 2,213,334 $ 2,036,298


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Notes to the Financial Statements For the Years Ended December 31, 2013 and 2012

Introduction

The Louisiana Health Care Quality Forum (the "Quality Forum") is a private, nonprofit organization whose mission is to lead evidence-based, collaborative initiatives to improve the health of the people of Louisiana. The Quality Forum is governed by a 15 member volunteer Board of Directors with dozens of other stakeholders actively working in the Quality Forum areas of focus. The Quality Forum works to improve the quality of health and health care throughout Louisiana in a cost effective and transparent manner, and functions as a "leaming system" to assist providers and health systems improve the quality of care provided to Louisiana's Medicaid, uninsured, and privately insured.

1. Summary of Signiflcant Accounting Policies

A. Basis of Accounting

In accordance with generally accepted accounting principles, the accompanying financial statements have been prepared on the accrual basis of accounting, whereby revenues are recognized when eamed and expenses are recognized when incurred.

B. Basis of Presentation

The Quality Forum follows FASB Accounting Standards Codification (ASC) 958, Not-for-Profit Entities, with regard to its financial statement presentation. Under ASC 958-210-45, the Quality Forum is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. As of December 31, 2013, the Quality Forum had only unrestricted net assets and temporarily restricted net assets.

The statements of activities and statements of functional expenses present expenses of the Quality Forum's operations functionally between program services and general & administrative. General & administrative expenses include those expenses which cannot be functionally categorized are allocated between functions based on management's estimate of usage applicable to conducting those functions.

Additionally, the Quality Forum is required to present a statement of cash flows.

C. Cash and Cash Equivalents

For reporting purposes, the Quality Forum considers all highly liquid investments available for current use with an original maturity of three months or less to be cash equivalents.

D. Fixed Assets

Fixed assets are recorded at historical cost and depreciated over the estimated useful lives of the assets using the straight-line and declining balance methods. Contributed property and equipment is recorded at fair value at the date of donation. The following is a summary of the estimated useful lives used:


Notes to the Financial Statements (Continued) For the Years Ended December 31, 2013 and 2012

Furniture 7 Years Equipment 5 Years Con^uters 3 Years

The Quality Forum capitalizes all assets that cost in excess of $1,000 with a useful life exceeding one year. Routine repairs and maintenance are expensed as incurred.

E. Contributions

The Quality Forum follows ASC 958-605 for accounting for contributions received. Under ASC 958-605, contributions are recorded as restricted if they are received with donor stipulations that limit the use of the donation. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are classified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donor restricted contributions whose restrictions are met in the same reporting period are reported as temporarily restricted and as net assets released from restriction in the same reporting period.

All contributions are considered available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support which increases those net asset classes.

F. Concentration of Risk

Source of Funding:

The Quality Forum receives the majority of its support from a contract with the Louisiana Department of Health and Hospitals (DHH) and from federal grants associated with the American Recovery Reinvestment Act of 2009 (ARRA) received from the U.S. Department of Health & Human Services (HHS). During each of the years ended December 31, 2013 and 2012, approximately 13% and 25%, respectively, of the total support of the Quality Forum was received from DHH. During each of the years ended December 31, 2013 and 2012, approximately 66% and 59%, respectively, of the total support of the Quality Forum was received from HHS.

Cash on Deposit and Uninsured Balances:

At December 31, 2013 and 2012, the balances in the Quality Forum's cash, money market mutual funds, and other investments not covered from loss by the FDIC totaled $3,389,738, and $1,522,939, respectively (see Note 2).

G. Functional Expense Reporting

The cost of providing program and support services has been summarized on a functional basis in the Statements of Activities and Statements of Functional Expenses. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Quality Forum.

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H. Fair Value Measurements:

Fair value is the price the Quality Forum would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants. For those assets and liabilities recorded or disclosed at fair value, fair value is determined based upon the quoted market price, if available. If a quoted market price is not available for identical assets, fair value is determined based upon the quoted market price of similar assets or the present value of expected future cash flows considering the risks involved, including counterparty performance risk if appropriate, and using discount rates appropriate for the duration. The fair values are assigned a level within the fair value hierarchy, depending on the source of the inputs into the calculation:

Level 1: Inputs based upon quoted prices in active markets for identical assets.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset (or liability), either directly or indirectly.

Level 3: Inputs are unobservable for the asset.

I. Advertising

Advertising costs are expensed as incurred. Advertising expense amounted to $101,611 and $56,844 for the years ended December 31, 2013 and 2012, respectively.

J. Income Taxes

The Quality Forum is a not-for-profit organization that is exempt from income taxes under Section 501 (c)(3) of the Internal Revenue Code and classified by the Internal Revenue Service as a public charity. However, income from certain activities not directly related to the Quality Forum's tax-exempt purpose is subject to taxation as unrelated business income.

The Quality Forum has adopted ASC 740-10, Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in any entity's financial statements. The interpretation requires recognition and measurement of uncertain income tax positions using a "more-likely-than-not" approach. The adoption of this interpretation had no material impact on the Quality Forum's financial statements at December 31, 2013.

The Quality Forum's tax returns for the years ended December 31, 2012, December 31, 2011, and December 31, 2010 remain open and subject to examination by taxing authorities.

K. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assun^tions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

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2. Cash and Cash Equivalents

Cash and cash equivalents at December 31, 2013 and 2012, consisted of the following:

2013 2012

Bank Operating Account $ 1,864,947 $ 1,642,759 Money Market Mutual Fund 98,405 143,872 Sayings Account 249,982 249,667

Total Cash and Cash Equivalents $ 2,213,334 $ 2,036,298

Bank and savings accounts on deposit with a commercial bank were insured by the Federal Deposit Insurance Corporation (FDIC). On October 14, 2008, the FDIC announced its temporary "Transaction Account Guarantee Program" (TAG?), which provided full coverage for non-interest bearing transaction deposits at the FDIC. The unlimited insurance coverage was temporary and expired on December 31, 2012.

For the years ended December 31, 2013 and 2012, the money market account is invested with Fidelity Investments in its Fidelity Municipal Money Market. This money market fund is invested 100% in municipal obligations.

3. Investments

At December 31, 2013, the Quality Forum had $1,429,197 in investments that consisted of the following:

iShares 20-1- Year Treasury Bond ETF $ 162,772 PIMCO 15+ Year US TIPS Index ETF 169,340 iShares Core S&P 500 ETF 282,188 IQ Hedge Multi-Strategy Tracker ETF 150,209 Vanguard Total World Stock Index Fund 144,342 Guggenheim Managed Futures Strategy CL H 123,110 Cambria Global Tactical ETF 107,415 SPDR DB International Government Inflation-Protected Bond 90,481 Other Mutual Funds 199,340

Total Mutual Funds $ 1,429,197

For the years ended December 31, 2013 and 2012, the Quality Forum had $27,472 and $38,691, respectively, in investment gains included in the Statement of Activities as Other Income.

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4. Accounts Receivable

Accounts receivable at December 31, 2013 and 2012, consist of the following:

2013 2012

United States Department of Health and Human Services $ 1,210,545 $ 780,712

Louisiana Department of Health and Hospitals 436,859 642,004 Various 62,903 162,207

Total $ 1,710,307 $ 1,584,923

Management of the Quality Forum has assessed all receivables at December 31, 2013 and 2012, as fully collectible; therefore, no allowance for doubtful accounts has been recorded.

5. Property and Equipment

A summary of property and equipment for the years ended December 31, 2013 and 2012 is as follows:

2013 2012

Facility Construction $ 6,515 $ 5,076 Furniture & Equipment 1,381,600 918,666

1,388,115 923,742 Less: Accumulated Depreciation (654,852) (406,445)

Total $ 733,263 $ 517,297

Depreciation expense for the years ended December 31, 2013 and 2012 amounted to $257,160 and $281,981, respectively.

6. Contract Revenue

On May 2, 2011, the Quality Forum signed a Memorandum of Understanding (MOU) with Franciscan Missionaries of Our Lady Health Systems, Inc. (FMOL). The MOU states that FMOL will provide the Quality Forum $150,000 - $50,000 upon execution of the agreement and $25,000 on the first day of June, September, and December 2011, and March 2012. The Quality Forum will use the funding for the support of the LaPOST Coalition, which is a group of concerned Louisiana healthcare providers and citizens developing the Louisiana Physician Order for Scope of Treatment form (LaPOST) to help document the wishes of a qualified patient in a physician's order.

On October 8, 2012, the Quality Forum signed a Memorandum of Understanding (MOU) with Franciscan Missionaries of Our Lady Health Systems, Inc. (FMOL). The MOU states that FMOL will provide the Quality Lorum $285,000 - $75,000 upon execution of the agreement and $30,000 on the first day of November 2012, January 2013, April 2013, July 2013, October 2013, January 2014, and April 2014. The Quality Forum will use the funding for clergy, patient, and community member education. The original MOU signed with the Quality Forum states that the Quality Forum will use the funding for outreach education efforts supporting Catholic education about LaPOST. FMOL modified the wording in their board

13



minutes and requested that the Quality Forum not limit outreach and education efforts to the Catholic faith, but to also expand their outreach and education efforts to include all clergy, patient, and community members. No amendments to the original MOU were requested by FMOL.

7. Cooperative Agreement Income

In March and April 2010, the Quality Forum was awarded two federal grants through the United States Department of Health and Human Services in the aggregate amount of $18,567,318. These awards were issued under the authority of the American Recovery and Reinvestment Act of 2009 (ARRA). In addition, the Quality Forum was awarded a Cooperative Endeavor Agreement with the Department of Health and Hospitals of the State of Louisiana, which was obtained due to these two federal awards.

The first of the two federal grants is the Louisiana Health Information Exchange (HIE) grant that promotes health information technology (HIT). This program targets developing widespread and sustainable HIE capacity in support of the meaningful use definition that qualifies providers for the Medicare and Medicaid incentive payments. The project period runs from March 15, 2010 through March 14, 2014. The approved budget is $10,583,000 and is awarded in three separate funding streams of $1,000,000 for planning, $3,786,273 for nationwide inter-state HIE, and $5,796,727 for sub-national / regional intra-state HIE activities.

The other federal grant awarded in 2010 is the Regional Extension Center (REC). This grant requires the Quality Forum to set up a REC that will help primary care providers and critical access hospitals to inclement electronic medical records and to achieve meaningful use of those systems within their practices or clinics. The project period is from April 6, 2010 through April 5, 2014 and the approved budget is for $7,984,318. On March 24, 2014, the project period was extended for an additional year.

On July 1, 2012, the Quality Forum entered into a Cooperative Endeavor Agreement with the Louisiana Department of Health and Hospitals (DHH). In fiscal year 2013, DHH has a statutory dedication of $642,000 in the budget of Medical Vendor Administration, $642,000 available in Federal Funds, and a statutory dedication of $819,959 as a state match from the DHH Office of the Secretary. The total amount of funding for Fiscal Year 2013 is $2,103,959. In fiscal year 2014, DHH has a statutory dedication of $642,000 in the budget of Medical Vendor Administration and $642,000 available in Federal Funds. The total amount funding for Fiscal Year 2014 is $1,284,000. Future funding will be determined by funds made available. Amendments to the CEA will be submitted for future fiscal years.

The Quality Forum has also been contracted by DHH to provide technical and consultative support as described in detail in the State Medicaid HIT Plan and Implementation-Advance Planning Document Update (lAPDU). LHCQF will provide support for the following initiatives: Medicaid Specialist Outreach, Patient-Centered Medical Home Transformation, HIE Integration Assistance, and EHR/LaHlE Promotional Activities. These services are included under the CEA with DHH and condensation is milestone based depending on performance.

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8. Fair Value Measurements

The following table reflects assets and liabilities that are measured and carried at fair value on a recurring basis as of December 31, 2013:

Financial Assets: Cash & Cash Equivalents Investment Securities

Quoted Prices in Active

Markets for Identical Assets

(Eevel 1)

e 2,213,334 1,429,197

Significant Other

Observable Inputs

(Eevel 2)

Significant Unobservable

Inputs (Level 3)

Carrying Value

2,213,334 1,429,197

9. Retirement Plans

Effective on May 16, 2013, the Quality Forum enrolled in the Louisiana Health Care Quality Forum 401(k) Plan. This plan is for the exclusive benefit of all eligible employees and their beneficiaries with the intention to provide a measure of retirement security for the future. To be eligible to participate, an employee must have completed one year of service or worked 1000 hours. The amount an employee can contribute to the plan is limited by the Internal Revenue Service in the amount that can be contributed as Salary Deferral. The amount of the Quality Forum's contribution to the plan is at the discretion of the Board of Directors; the Board of Directors has established a 4% employer contribution rate.

The Quality Forum's contributions to the plans for the years ended December 31, 2013 and 2012 amounted to $36,975 and $29,434, respectively.

10. Leases

The Quality Forum is committed for office equipment under a non-cancelable operating lease with an expiration date of May 19, 2015, with monthly lease payments of $569.79. The Quality Forum leased new office space beginning April 26, 2010, for an annual base rent amount of $104,126, through the expiration date of June 30, 2015. The agreement sets forth future renewal options. Future minimum lease payments related to these leases are as follows:

Years Ending December 31, 2014 2015

Total Future Minimum Lease Payments

110,963 54,912 165,875

The Quality Forum's payments for leases for the years ended December 31, 2013 and 2012 amounted to $109,292 and $113,410, respectively.

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11. Temporarily Restricted Net Assets

The Quality Forum classified $1,408,878 and $1,422,530 of net assets as temporarily restricted for the years ended December 31, 2013 and 2012, respectively. These funds are designated as follows and are expected to be used for the following purposes before the expiration of the grants and / or contracts.

2013 2012

Department of Health & Hospitals $ 1,178,496 $ 1,275,311 LaPOST 219,862 103,740 POLST 10,520 2,836 Regional Extension Center (REC) 40,643

Total Ten^orarily Restricted Net Assets $ 1,408,878 $ 1,422,530

12. Date of Management's Review

Subsequent events have been evaluated through May 20, 2014, which is the date the financial statements were available to be issued.

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Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2013

Federal Grantor/ Pass-Through Grantor / Program Title

Federal Federal CFDA Disbursements/ Grant Number Number Expenditures

United States Department of Health and Human Services Direct Funding:

State Grants to Promote Health Information T echnology

Health Information Technology Regional Extension Centers Program

Total United States Department of Health and Human Services

90HT0050/01

90RC0049/01

93.719

93.718

3,344,659

1,311,328

4,655,987

Total Expenditures of Federal Awards 4,655,987

Note 1 - Basis of Presentation This schedule of expenditures of federal awards includes the federal grant activity of the Louisiana Health Care Quality Forum and is presented on the modified cash basis of accounting. The information in this schedule is presented in accordance with the requirements of 0MB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the financial statements.

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Other Independent Auditor's Reports and Findings, Recommendations, and Responses

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May 20, 2014

Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with

Government Auditins Standards



We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Louisiana Health Care Quality Forum (a nonprofit organization), which comprise the statement of financial position as of December 31, 2013, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated May 20, 2014.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Louisiana Heath Care Quality Forum's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Louisiana Health Care Quality Forum's internal control. Accordingly, we do not express an opinion on the effectiveness of the Louisiana Health Care Quality Forum's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weaknesses, yet important enough to merit attention by those charged with governance

Our consideration of the internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Louisiana Health Care Quality Forum's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws,

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• 401 East Thomas Street • Hammond, Louisiana 70401 • 985 345 6262 • Fax: 985 345 9987 •


regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization's internal control and compliance. Accordingly, this communications is not suitable for any other purpose.

This report is intended solely for the information and use of management, the Louisiana Legislative Auditor, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

Respectfully submitted,

Durnin & James, CPAs (A Professional Corporation)

91




May 20, 2014

Independent Auditor's Report on Compliance for Each Major Program and on Internal Control over Compliance Required by 0MB Circular A-133


Louisiana Health Care Quahty Forum Baton Rouge, Louisiana

Report on Compliance for Each Major Federal program

We have audited the Louisiana Health Care Quality Forum's compliance with the types of compliance requirements described in the 0MB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the Louisiana Health Care Quality Forum's major federal programs for the year ended December 31, 2013. The Louisiana Health Care Quality Forum's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Managements Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditors Responsibility

Our responsibility is to express an opinion on compliance for each of the Louisiana Health Care Quality Forum's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards apphcable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Louisiana Health Care Quality Forum's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Louisiana Health Care Quality Forum's comphance.

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401 East Thomas Street • Hammond, Louisiana 70401 • 985 345 6262 • Fax: 985 345 9987


Opinion on Each Major Federal Program

In our opinion, the Louisiana Health Care Quality Forum complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2013.

Report on Internal Control over Compliance

Management of the Louisiana Health Care Quality Forum is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Louisiana Health Care Quality Forum's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with 0MB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Louisiana Health Care Quality Forum's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of 0MB Circular A-133. Accordingly, this report is not suitable for any other purpose.

This report is intended solely for the information and use of management, the Louisiana Legislative Auditor, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

Respectfully submitted,

Durnin & James, CPAs fA Professional Comoration)

9^


Schedule of Findings and Questioned Costs For the Year Ended December 31, 2013

We have audited the basic financial statements of the Louisiana Health Care Quality Forum as of and for the year ended December 31, 2013, and have issued our report thereon dated May 20, 2014. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of 0MB Circular A-133. Our audit of the financial statements as of December 31, 2013 resulted in an unmodified opinion.

Section I - Summarv of Auditor's Reports

1. Report on Internal Control and Compliance Material to the Financial Statements

Type of Opinion Issued X Unmodified Disclaimer

Modified Adverse

Intemal Control: Material Weakness Significant Deficiencies

Yes Yes

X X

No No

Compliance: Compliance Material to the Financial Statements Yes X No

2. Federal Awards

Intemal Control: Material Weakness Significant Deficiencies

Yes Yes

X X

No No

Type of Opinion on Compliance for Major Programs X Unmodified Disclaimer

Modified Adverse

Are there findings required to be reported in accordance with Circular A-133, Section .510(a)? Yes X No

Was a management letter issued? Yes X No

3. Identification of Major Programs:

CFDA Numberf s) Name of Federal Program (or Cluster) 93.718 ARRA - Louisiana Health Information Exchange Cooperative Agreement 93.719 ARRA - Regional Extension Center Cooperative Agreement

Dollar threshold used to distinguish between Type A and Type B Programs : $300,000

Is the auditee a "low-risk" auditee, as defined by 0MB Circular A-133? Yes X No

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Schedule of Findings and Questioned Costs For the Year Ended December 31, 2013

Section II - Financial Statement Findings

No matters were reported.

Section III - Federal Award Findings and Questioned Costs

No matters were reported.

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