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By J. Scott Moody and Catherine Konieczny | Federalism In Action

Half a decade after the Affordable Care Act (ACA) was enacted, lawmakers are still struggling to budget for the unforeseen consequences. While dental coverage for children must be provided under the Children's Health Insurance Program (CHIP), the level of coverage for adults varies by state.  However, one other thing is guaranteed - dental insurance coverage does not guarantee access to dental treatment.

The history of expanded coverage for children has shown how the private sector has risen to meet demand created by government programs. Medicaid coverage began in 1965 with Early and Periodic Screening Diagnostic and Treatment (EPSDT) benefits required for children. To expand coverage for children caught in the gap between Medicaid and private insurance, the State Children's Health Insurance Program (SCHIP) was introduced in 1997, and was reauthorized ten years later in 2007.1

DSO toolsThe dental offices responsible for meeting the increased demand for treatment were mostly large dental firms. The total number of firms increased by 14% from 1992 to 2007, with large firms operating multiple locations increasing from 157 to 3,009.2 What these increases indicate is that large firms with access to capital and experience were the ones who were able to open up new offices and employ dentists. The difference is that today there are undue regulations preventing and limiting new firms from forming and providing treatment to new Medicaid patients.

There are barriers to care even after a patient has obtained insurance. For instance, without dentists who can accept Medicaid and provide care efficiently, citizens who are promised access to dental care will simply not get it. The most frequently cited reasons for not getting dental care are uncovered services and dentists not accepting Medicaid patients.3

There are many reasons why dentists would not take on Medicaid-insured patients:

  • High administrative burdens of Medicaid filing
  • Low reimbursement rates resulting in low financial returns
  • Comparative economic loss when there is a surplus of other, higher-paying patients

Expanding coverage alone does not ensure an adequate supply of providers, and raising reimbursement rates does not effectively address low financial returns. The concern for all states, expanding Medicaid or not, is how to encourage dentists to take on the influx of Medicaid-insured patients so that coverage results in cost-effective treatment.

Dental Service Organizations (DSOs), also known as Dental Management or Support Organizations, are organizations that make it easier for dentists to provide efficient care by giving dentists more time to work with patients, providing office space for newly graduated dentists, managing complex billing, reducing cost per patient, and employing economies of scale (i.e. buying in bulk).

ACA Further Strains Dental Coverage for Medicaid Patients

All states can expect an increase in demand for care following the enactment of the ACA. The average increase in the number of individuals that could gain dental benefits through Medicaid is 51.9% for adults and 15.9% for children.4 Patients who purchased marketplace plans will demand care, in addition to patients newly covered by Medicaid expansions, adding further pressure.

Already less than 10% of dentists report treating adult Medicaid patients; children fare better at an average of 25%.5 There is not yet an equal surge in new dental offices available to treat patients. Although graduation rates at dental schools are increasing, those increases are highest in pediatric dentistry and do not directly equate to offices accepting new patients.6

Affording More Time to Treat Patients

Dentists supported by DSOs spend a higher percentage of their time in the office treating patients - an average of 91.9% of hours, versus 88% for practice owners.7 Firm offices were open on average almost two weeks more a year: 50.2 weeks, versus 48.4 weeks for all owners. While dentists can partner with each other, a survey of the field currently shows that most offices are single practitioner. Those single practitioner offices were open less during the year and spent the least amount of time treating patients.8

Offices with more than one dentist can afford to be open longer by staggering dentists' hours to cover more hours of the day. In addition, the dentist has a lower burden from administrative, billing, and non-professional duties, which are provided by a DSO. That translates into more time to accommodate patient schedules and numbers. Such accessibility is necessary if supply is to meet the expanded demand created by the Affordable Care Act and associated state Medicaid expansions.

Helping New Dentists Gain Office Space

In the majority of states, any owner, in whole or in part, must be licensed to practice dentistry; a corporation may not be involved in the collection of fees because a corporation cannot hold a license.9 This prevents chains from forming where the corporation retains any part of ownership of the building or handles billing, despite never performing any clinical work.

Restrictions on corporate practices especially harm newly graduated dentists. Fresh out of school and laden with debt, dentists must partner with another licensed dentist who owns an office that is hiring or already have the accumulated capital to purchase an office themselves. Keeping such restrictions in place slows the ability of new dentists to meet the growing demand of the industry. Areas without already-established offices must wait for dentists to purchase their own offices. Meanwhile investors are kept on the sidelines because of legal technicalities.

Managing Non-Clinical Duties

An important qualifier in rules against corporate ownership is that such an owner cannot receive a fee, based on the opinion that a practicing dentist's loyalties would be divided between their patient care and the interests of the corporation.10 Yet regulations are already in place in every state, including those already permitting corporate practice, that "prohibit corporate and non-licensee interference with dentists' independent performance and clinical judgment."11

The oft-cited argument that corporations have no knowledge of dental care ignores the requirement of complex administrative duties to keep a dental office in operation. For instance, arduous non-clinical tasks such as Medicaid billing, supply management, and general office management are skills necessary to run an efficient office that have nothing to do with the actual dental service provided. Yet, a corporation running a chain of offices gains access to established supply chains and saves dentists the time and hassle of having to find them for themselves. In fact, having specialized experience in navigating the complex billing procedures of Medicaid is the biggest time-saver and a lack of that experience is one of the most-cited reasons for not taking on Medicaid patients.

Merely increasing reimbursement rates for Medicaid procedures does not sufficiently increase access to treatment. Increased rates only lead to a small increase in treatment, with a much higher cost.12 This method also fails to address the initial costs of the billing process, which is the biggest burden to dentists taking on Medicaid patients. It is more cost-effective to rely on a larger firm's experience in billing.

Denying private dentists the benefits from the division of labor forces them to become jacks-of-all-trades, who are then less efficient at every aspect of their practice.

Reducing Cost Per Patient

Despite claims to the contrary, dental chains do not have higher billed costs per patient. Sample industry data for DSO model operators from Indiana and Texas show that the opposite is true. From 2008-2012 dental chains in Indiana averaged 2.23 procedures per patient, at $156.78 per patient, compared to non-chain averages of 3.25 procedures per patient at $224.03 annually per patient. The sample from Texas is even more extreme. The same time period saw averages of 2.86 procedures per patient, at $197.84 per patient annually compared to 4.78 procedures per patient at $329.24 cost per patient.13

Disproportionate Audit and Oversight

There are four Inspector General articles from the Department of Health and Human Services, focusing on Medicaid pediatric dental offices in California,14 Indiana,15 Louisiana,16 and New York.17 Each state's report highlights extreme examples of dentists billing unusually large numbers of procedures but does not represent any legal charge or admissible evidence against any one practice.

However, the report uses some metrics (services per day) that appear to target DSOs directly. It is given that if someone were to specialize in a service (in this case, providing Medicaid dentistry) they will provide a disproportionate amount of that service compared to an average provider, especially when the average includes those who provide very limited access. The articles even acknowledge that some of the high billings could occur for legitimate reasons. The extreme cases exhibit a few outliers who are in violation of pre-existing laws for exhibiting impossible billing, such as performing more fillings in one sitting, on one child, than a single child has teeth. These cases are rare and should be rectified through litigation that does not limit the practice of other dentists.

As a result of these reports, media attention on the few bad actors has mischaracterized dentists in general, many of them affiliated with DSOs. Though professional dental associations have reviewed and cleared these practitioners,18 it is likely that politically motivated attacks like these will create a chilling effect on the market.

Notably, restrictions on dental practice ownership apply only to private practices:

Exceptions the prohibition on corporate practice include permitting employment of doctors and dentists by hospitals, HMOs, insurers, nonprofit and charitable entities, government providers, educational institutions, and companies and unions where doctors and dentists treat only employees or members and their families.19

In essence, new mandates funnel patients into the public sector which is already under great burden, but the private sector is prohibited from taking action unless an individual dentist is sufficiently rich. The thought is that supposedly these large public bodies are somehow immune to cost pressures and limited budgets that the private sector is accused of pandering to greedily.

Limiting competition to the approved public sector only encourages the inefficiencies that have broken Medicaid budgets. Regulations that prevent new businesses from entering the market, in turn, protect current businesses from the cost of their inefficient practices. Unless this protectionism is corrected, and disproportionate DSO oversight removed, there will be no increase in care; there will only be increased costs and patients at a loss for care.

Conclusion

Medicaid dental coverage is a promise made to citizens that the current system cannot fulfill. The best way to meet that demand is to open up investment into dental offices through dental service organizations. Policy makers should seek to repeal or amend laws banning DSOs from forming, and abandon the misguided notions that banned them in the first place.

DSOs provide more efficient dental care by providing dentists with more time to treat the growing patient pool through more office hours that accommodate patient needs. They also remove the barriers to entry that plague newly graduated students who are needed to maintain the dentist-to-patient ratio that makes treatment accessible. Finally, they use experience and size to specialize in administrative tasks, which takes the burden off dentists to be masters of medicine, finance, and Medicaid law.

DSOs are falsely portrayed as greedy profit seekers, but in reality, they are an effective cost-saving strategy that will help stretch limited federal and state funds to provide needed dental access to growing patient populations.

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This article was published by Federalism In Action and State Budget Solutions.

NOTES AND SOURCES

1. "SCHIP: A Decade of Optional Dental Coverage for Kids." Children's Dental Health Project. 1 Nov. 2008. Web. 2 Aug. 2015.

2. Guay, D.M.D, Albert, Thomas Wall, M.A., M.B.A, Bradford Petersen, M.A, and Vickie Lazar, M.A, M.S. "Evolving Trends in Size and Structure of Group Dental Practices in the United States." Journal of Dental Education 76.8 (2012): 1036-044. Web. 1 Aug. 2015. <http://www.jdentaled.org/content/76/8/1036.full.pdf html>.

3. 2014 Survey by ADA: 42.4% of those surveyed cited services not being covered by Medicaid as their reason for not visiting an office, 32% cited difficulty finding a dentist that accepts Medicaid.

4. Yarbrough, M.P.P., Cassandra, Marko Vujicic, Ph.D., and Kamyar Nasseh, Ph.D. "Medicaid Market for Dental Care Poised for Major Growth in Many States." Health Policy Institute. American Dental Association, 1 Dec. 2014. Web. 15 July 2015. <http://www.ada.org/~/media/ADA/Science and Research/HPI/Files/HPIBrief_1214_3.ashx>.

5. Yarbrough, M.P.P., Cassandra, Kamyar Nasseh, Ph.D., and Marko Vujicic, Ph.D. "Key Differences in Dental Care Seeking Behavior between Medicaid and Non-Medicaid Adults and Children." Health Policy Institute. American Dental Association, 1 Sept. 2014. Web. 18 July 2015. <http://www.ada.org/~/media/ADA/Science and Research/HPI/Files/HPIBrief_0814_4.ashx>.

6. The numbers of pediatric dentistry training programs nearly doubled from 39 to 76 and the numbers of first year trainees increased 55% from 247 to 382 from 2002-2009. "2012 Survey of Dental Practice, Pediatric Dentists in Private Practice, Characteristics Report." Health Policy Resources Center. American Dental Association. Web. 21 July 2015 <http://www.aapd.org/assets/1/7/SurveyofDentalPracticeReport.pdf>.

7. Those who were are not owners, employed in an incorporated or unincorporated dental office, or independent contractor. "2012 Survey of Dental Practice, Pediatric Dentists in Private Practice, Characteristics Report." Health Policy Resources Center. American Dental Association. Web. 21 July 2015. <http://www.aapd.org/assets/1/7/SurveyofDentalPracticeReport.pdf>. Pg.32.

8. "2012 Survey of Dental Practice, Pediatric Dentists in Private Practice, Characteristics Report." Health Policy Resources Center. American Dental Association. Web. 21 July 2015. <http://www.aapd.org/assets/1/7/SurveyofDentalPracticeReport.pdf>.

9. Moriarty, Jim, and Martin J. Siegel. "Survey of State Laws Governing the Corporate Practice of Dentistry." Web. 24 July 2015. <http://oversight.house.gov/wp-content/uploads/2012/04/4-25-12-Survey-of-State-Laws-Governing-the-Corporate-Practice-of-Dentistry.pdf>.

10. Steinsmith v. Med. Bd., 85 Cal. App. 4th 458, 462 (Cal. App. 2000) (ellipses in original, quoting 1996 Medical Board of California report).

11. Moriarty, Jim, and Martin J. Siegel. "Survey of State Laws Governing the Corporate Practice of Dentistry." Pg.5 Web. 24 July 2015. <http://oversight.house.gov/wp-content/uploads/2012/04/4-25-12-Survey-of-State-Laws-Governing-the-Corporate-Practice-of-Dentistry.pdf>.

12. Buchmueller, Thomas, Sean Orzol, and Lara Shore-Sheppard. "The Effect of Medicaid Payment Rates on Access to Dental Care Among Children." American Journal of Health Economics 1.2 (2015): 194-223. MIT Press Journals. Web. 2 Aug. 2015. <http://www.mitpressjournals.org/doi/10.1162/AJHE_a_00012>.

13. Based on SBS analysis of Medicaid data obtained via requests made to ASDO and Benevis. The data is available upon request.

14. Murrin, Suzanne. "Questionable Billing For Medicaid Pediatric Dental Services in California." Office of Inspector General. Department of Health and Human Services, 1 May 2015. <http://oig.hhs.gov/oei/reports/oei-02-14-00480.pdf>.

15. Murrin, Suzanne. "Questionable Billing For Medicaid Pediatric Dental Services in Indiana." Office of Inspector General. Department of Health and Human Services, 1 Nov. 2014. <http://oig.hhs.gov/oei/reports/oei-02-14-00250.pdf>.

16. Murrin, Suzanne. "Questionable Billing For Medicaid Pediatric Dental Services in Louisiana." Office of Inspector General. Department of Health and Human Services, 1 Aug. 2014. Web. 24 July 2015. <http://oig.hhs.gov/oei/reports/oei-02-14-00120.pdf>.

17. Ritchie, Brian P. "Questionable Billing For Medicaid Pediatric Dental Services in New York." Office of Inspector General. Department of Health and Human Services, 1 Mar. 2014. Web. 24 July 2015. <https://oig.hhs.gov/oei/reports/oei-02-12-00330.pdf>.

18. http://www.indental.org/Advocacy/Objection-to-WISH-TV

19. Moriarty, Jim, and Martin J. Siegel. "Survey of State Laws Governing the Corporate Practice of Dentistry." Web. 24 July 2015. <http://oversight.house.gov/wp-content/uploads/2012/04/4-25-12-Survey-of-State-Laws-Governing-the-Corporate-Practice-of-Dentistry.pdf>.

Read more: http://www.statebudgetsolutions.org/publications/detail/dental-service-organizations-solve-medicaids-dental-woes#ixzz40vooel4o

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