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Financial Stability
Once a provider is issued a Certificate of Authority to enter into a continuing care contract, audited financial statements and reserve reports must be submitted to CDSS on an annual basis.
Various financial and reserve requirements are mandated by continuing care contracts statues (Chapter 10, Division 2 of the California Health and Safety Code). These reserves help to assure that providers will have sufficient financial resources available to meet future obligations to residents. Providers must recalculate reserves each year and submit reports to CDSS with their annual audited financial statement.
Audited financial statements must be prepared by an accountant who has been licensed by the California State Board of Accountancy as a certified public accountant. The audit of the financial statements must be in compliance with the latest edition of the American Institute of Certified Public Accountant's industry audit guide for the provider of health care services.
CDSS reviews the annual audited financial statements. In the event the review determines that a provider is in unsound financial condition, CDSS will exercise its statutory authority to require corrective measures to be taken.
When a provider fails to comply with statutory requirements, CDSS may levy administrative fines, file liens on property, seek a court appointed administrator to take over operation of an ailing community or revoke Certificate of Authority.