HEALTH SURVEY PROCESS

COMMUNICATION The Survey process is accomplished via a partnership between CFG, our clients, and HUD. The partnership works together when challenging surveys occur and to ensure compliance is achieved and maintained.  Capital Funding, LLC  Originators  Processing/Underwriting  Asset Management  Loan Review  Borrower  Operator  HUD  Account Executive

INTERNAL PARTNERSHIP Origination Department  Procures the latest Health Survey information for new loan requests being submitted to CFG internal Loan Committee Processing Department  Procures Health Surveys for Loans in Process Asset Management Department  Procures ongoing survey and compliance documentation from the client  Procures the Operator Financials each quarter

INTERNAL PARTNERSHIP Loan Review Department  Monitors all facilities in the portfolio  Loans In Process  CFG Loans in the HUD Queue  Closed HUD Loans  Procures Health Survey and Compliance Documentation  Health, Complaint and Life Safety Surveys and Compliance Documentation FOIA Requests submitted to state agencies Viewing state websites Requests submitted to our clients  TSI Nursing Home Survey Risk Report HUD – TSI Portal  Nursing Home Compare - 5 STAR Rating Medicare.gov  Special Focus Facility (“SFF”) Initiative Certification/CertificationandComplianc/NHs.html

Loan Review Department ( continued )  Reviews Financial information quarterly on all facilities in the Portfolio  Operator Financials are reviewed quarterly and we monitor the following for triggers: DSC Occupancy Ebitdar ( Annualized ) Expense Ratio  Additional detailed analysis may be performed where necessary based on the triggers. INTERNAL PARTNERSHIP

SURVEYS TO MONITOR Annual Health Recertification Complaint Surveys Life Safety Surveys

Survey/Statement of Deficiency (CMS2567) Remedies Letter  Accompanies the CMS2567  Review for Required Compliance Dates and Fines (CMP & DPNA) Compliance Documentation  CMS2567B  Letter of Compliance TSI Nursing Home Survey Risk Report Nursing Home Compare – 5 Star Rating  Medicare.gov Special Focus Facility (“SFF”) Initiative  Certification/CertificationandComplianc/NHs.html DOCUMENTS TO REVIEW

REVIEW DOCUMENTS FOR TRIGGERS 20 or more deficiencies within one survey “G” Level Tags or Higher CMP (Civil Monetary Penalties) DPNA (Denial of Payment for New Admissions) TSI Risk Level – HIGH 5 STAR Rating of 2 or Below SFF – Special Focus Facility

ADDITIONAL ANALYSIS FOR TRIGGERS Additional analysis when a trigger is identified  Review and evaluate additional survey information from all available sources  Prepare a summary of the most current survey information available  Communicate the facility summary to Team Members  Originators  Underwriters  Asset Managers  HUD Account Executive (if necessary)  Request an Action Plan  Asset manager requests from the client (if necessary)  The client requests from the operator  Monitor status until compliance is achieved  Monitor the dates on the deficiency letter (if necessary)  Communicate deadline dates with the client/operator (if necessary)  Monitor status to ensure compliance is maintained  Internal Watch List

REQUEST AN ACTION PLAN Request an explanation of the current situation and how the current situation may have occurred Request an Action Plan to address the current deficiencies to achieve compliance by the due date to avoid CMP or DPNA. Request an Action Plan to improve a 5 STAR Rating at 2 or below. Request a Long Term Action plan to maintain compliance

MONITOR FACILITY STATUS Frequency  Monthly  Quarterly  As Needed Discussions Conference Calls  Borrower and Operator  CFG  HUD Account Executive Additional Monitoring  Internal Watch List Monitor a facility’s status to ensure compliance is achieved and maintained

HELPFUL DOCUMENTS CMS Nursing Home Compare Technical User’s Guide July 2012

HELPFUL DOCUMENTS CFG Internal Document – Survey Summary Form

Q & A NADINE J. SHEPPARD Capital Funding, LLC Senior Loan Review Analyst