Bonta

Under the Medi-Cal health care program, a health care provider can be reimbursed annually for depreciation on buildings and equipment that are used to provide services to Medi-Cal patients. Under applicable regulations, the depreciation is based on the historical cost of the asset, which is generally the provider’s cost of acquiring and significantly improving it. The provider sets forth these figures in yearly cost reports that may be audited.

The Medi-Cal health care provider here, Redding Medical Center (Redding), made current claims for depreciation reimbursement, which the Department of Health Services (DHS) timely audited. Redding maintained that DHS was foreclosed from requiring Redding to submit documentation of the historical costs of the claimed depreciable assets if those costs had been previously reported in a cost report that was considered true and correct under Welfare and Institutions Code section 14170 because it was not audited or reviewed within three years of the close of the period covered by the report or, if later, of the date of its submission.

We disagree with Redding. If a health care provider continues to claim depreciation, it must stand…