(a) A nursing home company which fails to or has failed to make any monthly payment as required by its mortgage with the New York State Housing Finance Agency or the New York State Medical Care Facilities Finance Agency within five days after such payment is due, shall become subject to the default avoidance method as set forth in this section.

(b) On the sixth day after a payment as set forth in subdivision (a) of this section becomes due, the trustee of the mortgage repayment escrow account, or the agency, shall notify the State Commissioner of Health that a nursing home company has not made a required payment.

(c) Upon receipt by the State Commissioner of Health of such notice from the trustee, or the agency, the State Commissioner of Health shall communicate with the nursing home company to determine if the payment will be forthcoming.

(d) If by no later than the 15th day following the date the payment was due it has not yet been received by the trustee and/or the agency, the trustee and/or the agency shall on the same day notify the State Commissioner of Health of such failure to make the required payment and the State Commissioner of Health shall advise the Department of Social Services of the name of the nursing home company which has not made a monthly payment as required by its mortgage. The Department of Social Services shall then advise the local social services districts with respect to which the nursing home company has filed medicaid claims that the next medicaid payment to be made to the respective nursing home company which has failed to make the required mortgage payment shall be made by means of a check payable to the operating escrow reserve account of the nonpaying nursing home company.

(e) Such Medicaid payment shall remain on deposit in the operating escrow reserve account until the nursing home company draws checks as required pursuant to the mortgage. Such checks shall be transmitted to the State Department of Health forthwith.

(f) Upon receipt of the checks the State Commissioner of Health shall countersign each check and forward same to the appropriate payee.

(g) To avoid undue hardship to a nursing home company which is more than one month in arrears in its payments at the time these regulations, as embodied in this section, become effective, the State Commissioner of Health is authorized to establish special payment schedules for payment of a portion of the sum then due as specified in subdivision (e) of this section. These schedules shall require the approval of the agency.