Cherokee Health Systems

“Review of form 990 ----------------------------------------------------------- the form 990 is distributed to and reviewed by board members prior to filing with the irs.”

“Conflict of interest policy ----------------------------------------------------------- the conflict of interest policy is discussed in person with each potential board member. When management becomes aware of a potential conflict, it is discussed in depth with upper management and the board.”

“Review of compensation ----------------------------------------------------------- the executive committee of the board of directors reviews the ceos compensation annually. Surveys from similar organizations, such as nachc and mgma, are also used to make sure compensation is in line with comparable-sized organizations. Board members provide feedback from the community and work with the ceo to discuss and establish performance criteria. The ceo reviews the annual compensation for all senior management. Surveys from similar organizations (nachc or mgma) are also used to make sure compensation is in line with comparable-sized organizations. Annual performance is reviewed against predetermined targets and the ceo provides feedback from the community and various program staff at chs. The ceo and management staff work together to discuss and establish performance criteria.”

“Availability of governing documents ----------------------------------------------------------- the organization makes its governing documents, conflict of interest policy and financial statements available to the public upon request.”

“PRIOR PERIOD ADJUSTMENTS ----------------------------------------------------------- During 2017, the Organization determined it had not properly billed the state Medicaid program for certain patient encounters from January 1, 2012, through December 31, 2016. The Organization entered into a repayment plan with the state to repay $7,032,851 over a five-year period without interest, beginning July 1, 2017 (see Note 7). Accordingly, $1,406,570 is included in current liabilities, and $5,626,281 is included in noncurrent liabilities as of June 30, 2017. The effect of this error correction decreased unrestricted net assets as of July 1, 2016, by $6,428,229. This adjustment decreased the previously-reported 2016 change in net assets by $1,345,492. In 2016 and prior, the Organization did not record settlements due from third-party payers in the proper accounting period. The effect of this error correction increased unrestricted net assets as of July 1, 2016, by $176,115. This adjustment decreased the previously-reported 2016 change in net assets by $7,278. In 2016 and prior, the Organization's estimates for self-insurance costs incurred but not reported were higher than necessary. The effect of this change in estimation increased unrestricted net assets as of July 1, 2016. This adjustment did not have an effect on the previously-reported 2016 change in net assets, as the accrual had been consistently overstated for several years. In 2016 and prior, the Organization did not accurately record the effect of escalating rent expense. The effect of this error correction decreased unrestricted net assets by $80,510 as of July 1, 2016. This adjustment decreased the previously-reported 2016 change in net assets by $8,691.”

“Changes in net assets ----------------------------------------------------------- $15,093 represents the change in interest in net assets of the east tennessee foundation.”