UMH NY Corp.

Condition In the Homes' Period 1 reporting submissions, the Homes methodology for calculating lost revenues was Option iii. The Home erroneously selected Option ii. Option ii would not be appropriate as the Homes used the 2020 Budget as the base year when calculating lost revenues for quarter one and quarter two of 2021. Therefore, the Homes should have selected Option iii and the methodology was to use budget-to-actual patient revenues utilizing the 2020 Budget that was approved prior to March 27, 2020 as the base year. Corrective Action Plan Corrective Action Planned: The necessary corrective action plan has been instituted as the methodology for calculating lost revenue was correctly identified in our Period 2 reporting submissions as Option iii. In regards to the Period 1 reporting, the Homes misinterpreted the criteria in the Lost Revenues Guide (released August 2021) needed to utilize Option ii. Since the 2020 Budget was the most recent budget approved prior to March 27, 2020, the Homes believed it was meeting the criteria of Option ii when comparing the actual revenues of both 2020 & 2021 to the budgeted revenue of 2020. It wasn?t until after the Homes? Period 1 reports were submitted that the Homes? understanding of the Option ii criteria was updated based upon discussions with the Homes? advisors, and therefore, the Homes updated the methodology selected in Period 2 to Option iii. It was at that point the Homes understood that in order for Option ii to be utilized, the Homes would have needed to compare its actual 2021 revenues to budgeted 2021 revenues approved prior to March 27, 2020. This was not possible for the reasons explained later. It is important to note that regardless of whether Option ii or Option iii was marked as the methodology on the submission, the Homes would have utilized the same lost revenue calculation and would have reported the same amount of lost revenue in Period 1 either way. Although the Homes erroneously marked Option ii instead of Option iii in the Period 1 reporting submissions, the Homes believes its calculation of lost revenues to be reasonable. The Homes believes that its methodology (comparing the actual 2020 and 2021 revenues to the 2020 budget) is reasonable because the 2020 budget is the best estimate available for the Homes? anticipated actual 2020 and 2021 revenues, if the pandemic had not occurred. The pre-pandemic 2020 budget includes the anticipated rates, occupancy trends, market conditions, regulatory environment, etc. which the Homes expected at the time, and with no knowledge of the forthcoming pandemic. The Homes has not used, and does not consider it appropriate to use, the Homes 2021 budget because a) it was not established and approved by March 27, 2020, b) it is not eligible to be used in the calculations based on the computation guidelines and c) it was prepared using estimated pandemic-impacted patient care revenue estimates, making it unsuitable for comparison to periods not impacted by the pandemic. Additionally, the Homes? choice to use the 2020 budget is conservative in comparison to subsequent periods because the Homes is essentially forfeiting the rate increases that went into effect in 2021. Name(s) of Contact Person(s) Responsible for Corrective Action: Kyle Harchar, VP of Finance Anticipated Completion Date: March 22, 2022. This is the date of our Period 2 reporting submissions in which Option iii was correctly selected as the lost revenue calculation methodology.