State of California Department of Health Care Services Provider Name Fiscal Period Provider Number 48 MC530 Adj. Page or As Increase As No. Exhibit Line Col. Sch Line Reported (Decrease) Adjusted Report References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F RECLASSIFICATIONS OF REPORTED COSTS 12 10.1(4) 55 14 8A-2 55.00 Interest - Other $1,307,709 ($533,869) $773,840 * Not Reported 8A-2 165.11 Administration - Other - Nonlabor * (30,981) 533,869 502,888 * To reclassify the provider's adjustment of members' interest expense to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 13 Not Reported 8A-2 5.04 Plant Operations and Maintenance - Other - Nonlabor * $291,014 ($4,199) $286,815 * Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 502,888 (6,553) 496,335 * 10.1(4) 35 14 8A-2 35.00 Leases and Rentals 0 10,752 10,752 To reclassify lease and rental expenses to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 14 Not Reported 8A-2 105.04 Skilled Nursing Care - Other - Nonlabor * $289,559 ($8,989) $280,570 * Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 496,335 8,989 505,324 * To reclassify telephone expenses to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 15 Not Reported 8A-2 105.04 Skilled Nursing Care - Other - Nonlabor * $280,570 ($3,195) $277,375 * Not Reported 8A-2 160.04 Activities - Other - Nonlabor * 16,327 (143) 16,184 Not Reported 8A-2 170.04 Inservice Education - Nursing - Other - Nonlabor * 2,011 (77) 1,934 Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 505,324 3,415 508,739 * To reclassify dues and subscriptions expenses to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 *Balance carried forward from prior/to subsequent adjustments Page 4 This is trial version www.adultpdf.com State of California Department of Health Care Services Provider Name Fiscal Period Provider Number 48 MC530 Adj. Page or As Increase As No. Exhibit Line Col. Sch Line Reported (Decrease) Adjusted Report References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F RECLASSIFICATIONS OF REPORTED COSTS 16 Not Reported 8A-2 165.07 Administration - Facility License Fees $0 $49,495 $49,495 * Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 508,739 (49,495) 459,244 * To reclassify facility license fees to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 17 Not Reported 8A-2 165.08 Administration - Liability Insurance $0 $68,446 $68,446 Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 459,244 (68,446) 390,798 * To reclassify liability insurance expenses to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 18 Not Reported 8A-2 165.01 Administration - Salaries and Wages * $638,978 ($85,183) $553,795 * Not Reported 8A-2 165.02 Administration - Fringe Benefits * 219,185 (28,935) 190,250 * Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 390,798 (1,929) 388,869 * Not Reported 8A-2 165.03 Administration - Medical Records - Salaries and Wages 0 85,183 85,183 Not Reported 8A-2 165.04 Administration - Medical Records - Fringe Benefits 0 28,935 28,935 Not Reported 8A-2 165.06 Administration - Medical Records - Other - Nonlabor 0 1,929 1,929 To reclassify medical records expenses to the appropriate cost centers. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 19 Not Reported 8A-2 105.03 Skilled Nursing Care - Agency Staff $0 $49,552 $49,552 Not Reported 8A-2 105.04 Skilled Nursing Care - Other - Nonlabor * 277,375 (49,552) 227,823 * To reclassify nurse registry expenses to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 20 Not Reported 8A-2 165.07 Administration - Facility License Fees * $49,495 ($27,559) $21,936 Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 388,869 27,559 416,428 * To reclassify non-facility license fees to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 *Balance carried forward from prior/to subsequent adjustments Page 5 This is trial version www.adultpdf.com State of California Department of Health Care Services Provider Name Fiscal Period Provider Number 48 MC530 Adj. Page or As Increase As No. Exhibit Line Col. Sch Line Reported (Decrease) Adjusted Report References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F RECLASSIFICATIONS OF REPORTED COSTS 21 Not Reported 8A-2 10.03 Housekeeping - Agency Staff $0 $72,286 $72,286 Not Reported 8A-2 10.04 Housekeeping - Other - Nonlabor * 98,896 (72,286) 26,610 * To reclassify housekeeping agency costs to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 Medi-Cal Bulletin 375 22 Not Reported 8A-2 65.03 Dietary - Agency Staff $0 $93,569 $93,569 Not Reported 8A-2 65.04 Dietary - Other - Nonlabor * 390,853 (93,569) 297,284 * To reclassify dietary agency costs to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 23 Not Reported 8A-2 10.04 Housekeeping - Other - Nonlabor * $26,610 $416 $27,026 Not Reported 8A-2 105.04 Skilled Nursing Care - Other - Nonlabor * 227,823 (416) 227,407 * To reclassify housekeeping supply expenses to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 24 Not Reported 8A-2 90.00 Laboratory $27,151 $553 $27,704 Not Reported 8A-2 105.04 Skilled Nursing Care - Other - Nonlabor * 227,407 (553) 226,854 * To reclassify laboratory supply expenses to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 25 Not Reported 8A-2 105.04 Skilled Nursing Care - Other - Nonlabor * $226,854 ($15,000) $211,854 * Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 416,428 15,000 431,428 * To reclassify the administrative portion of medical directors fees to the appropriate cost center. 42 CFR 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2302.4 and 2302.8 *Balance carried forward from prior/to subsequent adjustments Page 6 This is trial version www.adultpdf.com State of California Department of Health Care Services Provider Name Fiscal Period Provider Number 48 MC530 Adj. Page or As Increase As No. Exhibit Line Col. Sch Line Reported (Decrease) Adjusted Report References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F ADJUSTMENTS TO REPORTED COSTS 10.1(4) 55 14 8A-2 55.00 Interest - Other * $773,840 26 To adjust interest expense for the provider's elimination of members' $23,012 interest from the cost report, that would create a credit balance, to net a zero balance in conjunction with adjustment 12. 42 CFR 413.20 and 413.24 / CMS Pub. 15-1, Sections 2300 and 2304 27 To eliminate bond interest expense for Magnolia Court building not (795,803) related to patient care. ($772,791) $1,049 42 CFR 413.9(c)(3) / CMS Pub. 15-1, Sections 202.2 and 2102 28 Not Reported 8A-2 60.01 Laundry and Linen - Salaries and Wages * $117,318 ($65,365) $51,953 Not Reported 8A-2 60.02 Laundry and Linen - Fringe Benefits * 39,850 (22,203) 17,647 Not Reported 8A-2 60.04 Laundry and Linen - Other - Nonlabor * 22,737 (12,668) 10,069 Not Reported 8A-2 65.01 Dietary - Salaries and Wages * 275,534 (8,420) 267,114 Not Reported 8A-2 65.02 Dietary - Fringe Benefits * 114,847 (3,510) 111,337 Not Reported 8A-2 65.04 Dietary - Other - Nonlabor * 297,284 (11,945) 285,339 * To eliminate the residential care portion of expenses, based on the appropriate apportionment factor of patient days, for proper allocation of costs. 42 CFR 413.24 / CMS Pub. 15-1, Section 2302.8 29 Not Reported 8A-2 165.01 Administration - Salaries and Wages * $553,795 ($38,583) $515,212 * Not Reported 8A-2 165.02 Administration - Fringe Benefits * 190,250 (13,106) 177,144 * Not Reported 8A-2 165.11 Administration - Other - Nonlabor * 431,428 (37,161) 394,267 * To eliminate the residential care portion of expenses, based on the appropriate apportionment factor of accumulated costs, for proper allocation of costs. 42 CFR 413.24 / CMS Pub. 15-1, Section 2302.8 *Balance carried forward from prior/to subsequent adjustments Page 7 This is trial version www.adultpdf.com State of California Department of Health Care Services Provider Name Fiscal Period Provider Number 48 MC530 Adj. Page or As Increase As No. Exhibit Line Col. Sch Line Reported (Decrease) Adjusted Report References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F ADJUSTMENTS TO REPORTED COSTS 30 Not Reported 8A-2 5.04 Plant Operations and Maintenance - Other - Nonlabor * $286,815 ($5,121) $281,694 * Not Reported 8A-2 105.04 Skilled Nursing Care - Other - Nonlabor * 211,854 (5,520) 206,334 * To abate guest rooms and rental revenues against the appropriate cost centers. 42 CFR 413.5 and 413.9 / CMS Pub. 15-1, Section 2328 Not Reported 8A-2 65.04 Dietary - Other - Nonlabor * $285,339 31 To abate guest meals against the appropriate cost center. ($8,523) 42 CFR 413.5 and 413.9 / CMS Pub. 15-1, Section 2328 32 To abate bazaar revenue against related costs. (6,080) 42 CFR 413.5 and 413.9 / CMS Pub. 15-1, Section 2328 33 To eliminate general supplies expenses due to lack of (1,585) documentation. ($16,188) $269,151 42 CFR 413.20 and 413.24 / CMS Pub. 15-1, Sections 2300 and 2304 10.1(4) 140 14 8A-2 140.00 Beauty and Barber ($107,094) 34 To reverse the provider's abatement of beauty and barber revenue $53,916 against a nonreimbursable cost center. 42 CFR 413.9, 413.20 and 413.24 / CMS Pub. 15-1, Section 2328 35 To reverse the provider's elimination of beauty and barber expenses. 53,178 42 CFR 413.9, 413.20 and 413.24 CMS Pub. 15-1, Sections 2300, 2304 and 2328 36 To include the cost of beauty and barber in a nonreimbursable cost center. 53,178 42 CFR 413.53(a) and 413.9(b)(1) $160,272 $53,178 CMS Pub. 15-1, Sections 2102.1, 2200.1, 2304 and 2328 CCR, Title 22, Section 51511(d) *Balance carried forward from prior/to subsequent adjustments Page 8 This is trial version www.adultpdf.com State of California Department of Health Care Services Provider Name Fiscal Period Provider Number 48 MC530 Adj. Page or As Increase As No. Exhibit Line Col. Sch Line Reported (Decrease) Adjusted Report References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F ADJUSTMENTS TO REPORTED COSTS 37 Not Reported 8A-2 5.04 Plant Operations and Maintenance - Other - Nonlabor * $281,694 ($57) $281,637 To abate vending machine revenue against related costs. 42 CFR 413.5 and 413.9 / CMS Pub. 15-1, Section 2328 Not Reported 8A-2 105.04 Skilled Nursing Care - Other - Nonlabor * $206,334 38 To eliminate the remaining utilization review expense due to the fact ($1,500) that the State performs its own utilization review. CMS Pub. 15-1, Section 2126 CCR, Title 22, Sections 50009.1 and 51159 39 To abate other private ancillary revenue against related costs. (23,137) 42 CFR 413.5 and 413.9 / CMS Pub. 15-1, Section 2328 40 To eliminate personal care items not included in the rate. (369) CCR, Title 22, Section 51511 ($25,006) $181,328 41 Not Reported 8A-2 105.01 Skilled Nursing Care - Salaries and Wages * $1,986,884 ($18,948) $1,967,936 To abate private duty nurse revenue against related costs. 42 CFR 413.5 and 413.9 / CMS Pub. 15-1, Sections 2104.2 and 2328 42 Not Reported 8A-2 165.01 Administration - Salaries and Wages * $515,212 ($25,903) $489,309 Not Reported 8A-2 165.02 Administration - Fringe Benefits * 177,144 (6,049) 171,095 To adjust owner's/administrator's compensation based on the State guidelines. SPA, Section (III)(J) / W&I Code, Section 14126.023(f) Medi-Cal Bulletin 371 / 42 CFR 413.102 CMS Pub. 15-1, Sections 901, 902.3, 904, and 1005 43 10.1(4) 40 14 8A-2 40.00 Property Taxes $6,174 ($1,401) $4,773 To eliminate property tax expense not related to patient care. 42 CFR 413.9(c)(3) / CMS Pub. 15-1, Section 2102.3 *Balance carried forward from prior/to subsequent adjustments Page 9 This is trial version www.adultpdf.com State of California Department of Health Care Services Provider Name Fiscal Period Provider Number 48 MC530 Adj. Page or As Increase As No. Exhibit Line Col. Sch Line Reported (Decrease) Adjusted Report References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F ADJUSTMENTS TO REPORTED COSTS Not Reported 8A-2 165.11 Administration - Other - Nonlabor * $394,267 44 To abate miscellaneous revenue against related costs. ($6,741) 42 CFR 413.5 and 413.9 / CMS Pub. 15-1, Section 2328 45 To eliminate patient television costs. (1,442) 42 CFR 413.5 and 413.9(c)(3) / CMS Pub. 15-1, Section 2106.1 46 To reflect the proper accrual of other insurance applicable to the (1,036) audit period. 42 CFR 413.5 and 413.24 / CMS Pub. 15-1, Sections 2300 and 2302.1 47 To reconcile the reported expense to agree with the provider's trial (2,142) balance. ($11,361) $382,906 42 CFR 413.20 and 413.24 / CMS Pub. 15-1, Sections 2300 and 2304 *Balance carried forward from prior/to subsequent adjustments Page 10 This is trial version www.adultpdf.com State of California Department of Health Care Services Provider Name Fiscal Period Provider Number 48 MC530 Adj. Page or As Increase As No. Exhibit Line Col. Sch Line Reported (Decrease) Adjusted Report References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F ADJUSTMENT TO REPORTED STATISTICS 48 Not Reported 7 5.00 Plant Operations and Maintenance (Square Feet) 0 695 695 Not Reported 7 10.00 Housekeeping 0 165 165 Not Reported 7 60.00 Laundry and Linen 0 152 152 Not Reported 7 65.00 Dietary 0 1,630 1,630 11.1 (1 of 3) 10 2 7 75.00 Patient Supplies 0 100 100 11.1 (1 of 3) 40 2 7 105.00 Skilled Nursing Care 11,282 112 11,394 Not Reported 7 155.00 Social Services 04949 Not Reported 7 160.00 Activities 0 400 400 Not Reported 7 165.00 Administration 0 1,018 1,018 Not Reported 7 165.00 Medical Records 0 232 232 Not Reported 7 170.00 Inservice Education - Nursing 0 136 136 11.1 (1 of 3) 85 2 7 N/A Total Statistics - Square Feet 11,670 4,689 16,359 11.1 (1 of 3) 85 2 7 N/A Total Statistics - Square Feet 11,670 3,994 15,664 11.1 (1 of 3) 85 2 7 N/A Total Statistics - Square Feet 11,670 3,829 15,499 To adjust square footage statistics to agree with prior year's audited amounts. 42 CFR 413.24 and 413.50 / CMS Pub. 15-1, Sections 2304 and 2306 Page 11 This is trial version www.adultpdf.com . Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F ADJUSTMENTS TO REPORTED COSTS Not Reported 8A-2 165.11 Administration. Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F RECLASSIFICATIONS OF REPORTED COSTS 21 Not Reported 8A-2 10.03 Housekeeping. References Cost Report Audit Report Explanation of Audit Adjustments Adjustments HOLLENBECK PALMS JULY 1, 2007 THROUGH JUNE 30, 2008 ZZT05115F RECLASSIFICATIONS OF REPORTED COSTS 12 10.1(4) 55 14 8A-2 55.00