Rinaldi Convalescent Hospital v. Department of Health Services

[375]

Opinion

JOHNSON, J.

Following an audit by the Department of Health Services, Rinaldi Convalescent Hospital (Rinaldi) was ordered to reimburse the department for the cost of adult diapers and dietary supplements improperly charged to the Medi-Cal program. Rinaldi sought review of this order by way of a petition for writ of mandate in the superior court. The court denied the writ and Rinaldi appeals. We reverse.

Facts and Proceedings Below

Rinaldi is a skilled nursing facility (SNF) licensed and certified by the department to provide health care services to eligible beneficiaries of the Medi-Cal program. The costs of providing such services are reimbursed on a per diem basis as defined and limited by the department’s regulations.

Certain Medi-Cal beneficiaries, the “medically needy,” have sufficient income to pay a portion of the cost of their care in a SNF. These beneficiaries are required to apply their income (minus certain allowances) to the cost of their SNF care. The amount the beneficiary must pay toward the cost of her care, referred to as her “share of cost,” reduces the amount Medi-Cal must pay the SNF for the beneficiary’s care. Naturally, the allowances the beneficiary is permitted to exclude from her income in calculating her share of cost increases the amount Medi-Cal must pay the SNF for the beneficiary’s care.

In the present case, a department audit for the period July 1, 1989, through October 31, 1992, determined Rinaldi improperly allowed certain medically needy patients to exclude from their income the cost of adult diapers and nutritional supplements. It is undisputed the adult diapers were prescribed by the patients’ doctors, not for incontinence, but to prevent the patients from digging and scratching and opening wounds in their genital and rectal areas. It is also undisputed the nutritional supplements were prescribed by doctors treating patients with decubiti, a form of skin eruption, to replace protein lost due to these open wounds.

Rinaldi appealed the audit to the department, which issued a final decision upholding the auditors’ disallowance of the cost of the diapers and nutritional supplements. Rinaldi was ordered to repay approximately $46,000 in excess per diem payments.