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Senate report recommends ouster of large dental chain from Medicaid program

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One of the nation’s largest dental chains for children should be thrown out of the Medicaid program for encouraging dentists to perform unnecessary treatments to boost profits, a new U.S. Senate report concludes.

A two-year Senate investigation of dental chains owned by private-equity firms found that Small Smiles’ business model deceptively gave managers rather than dentists control over the clinics. The report said that management set daily production goals and awarded dentists bonuses based on the amount of work they do, resulting in overbilling and poor quality of care.

“Fortunes should not be made on Wall Street by sacrificing proper care for the underprivileged,” says the 1,500-page, bipartisan report put out by Sens. Charles Grassley, R-Iowa, and Max Baucus, D-Mont.

Small Smiles described the report as outdated, saying in a written statement, “We do not believe that this report adequately reflects the current operations.”

Last year, the company changed hands while in Chapter 11 bankruptcy. The new owner, Nashville, Tenn.-based CSHM, says it has no affiliation with the previous owner and has a new management team that is trying to fix the problems at Small Smiles. The company operates 63 clinics in 19 states and the District of Columbia.

In a letter to Grassley and Baucus last November, the inspector general for the Department of Health and Human Services cited the ownership change as one reason he didn’t exclude Small Smiles from the Medicaid program despite repeated problems found during clinic inspections.

"We've taken action to help CSHM improve its quality of care and management," the IG's office said in a statement Monday.

A joint investigation by the Center for Public Integrity and PBS Frontline last year found complaints about unnecessary and substandard care at Kool Smiles, another corporate chain owned by private-equity investors. Grassley’s office said it tried to investigate Kool Smiles but the company didn’t cooperate.

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The report recommended that the HHS inspector general exclude not only Small Smiles from Medicaid but “any other corporate entity that employs a fundamentally deceptive business model resulting in a sustained pattern of substandard care.”

Kool Smiles defended the quality of its care and said it cooperated with Grassley’s investigation. Geoffrey Freeman, a company spokesman, said, “We respect the findings of Senators Grassley and Baucus and are committed to public transparency regarding our ownership structure and the role we play in supporting Kool Smiles dentists to provide care in the best interests of their patients.”

Twenty-two states and the District of Columbia forbid anyone other than a dentist from owning a dental practice. The Senate report said that while Small Smiles claims dentists own individual clinics, the dentists have little to no control over those offices. The report urges states to enforce their laws.

Cutting off Medicaid reimbursements could fatally wound Small Smiles, which specializes in treating children on government assistance.

Problems at Small Smiles first came to light in 2008 when Washington, D.C.’s WJLA-TV aired video of a 4-year-old boy strapped down to a so-called “papoose board” while screaming and kicking in terror. His mother was not allowed to be in the room. The dentist in charge admitted that the board was used to speed up treatments. Former employees alleged that bonuses were given for the amount of work done as well as for “converting” routine visits into major treatments. In the broadcast, the lead dentist scolds his staff for not billing enough and converting enough cases.

In 2010, the Justice Department fined Small Smiles $24 million as part of an agreement to settle charges of overbilling state Medicaid programs. Attorney General Eric Holder said at the time, “Many of these centers performed unnecessary and often painful dental procedures on unsuspecting, helpless children.”

Government monitors continued to find problems at a number of Small Smiles’ clinics. At a Manassas, Va., clinic in the fall of 2011, a monitor reported that 42 percent of the baby root canals performed by one dentist were medically unjustified. Of 34 patient records reviews, 26 of them were strapped down and 20 were not given enough numbing medication, leading the monitor to question whether children struggled with the dentist because they were in pain.

Senate staff later interviewed the dentist listed as the owner of the Manassas clinic, who said Small Smiles gave her the office without giving her any profits from it. She said she didn’t know any of the names of the dentists who worked there.

Twice last year the HHS inspector general threatened to exclude Small Smiles from the Medicaid program. But in a letter to Grassley and Baucus, Inspector General Daniel R. Levinson said Small Smiles fixed the problems by selling the Manassas clinic, paying a $100,000 penalty and addressing other concerns.

The new owner of Small Smiles’ management company said only five of the 20 inspection reports mentioned in the Senate report fell under its watch. “The new team immediately initiated an aggressive turnaround effort premised on patient care, clinical excellence and regulatory compliance,” the company’s statement said.

The changes included eliminating production-based pay for dentists, the statement said. CSHM also disputed the allegation that owners of individual clinics were not involved in their management and said local clinics hire their own staff.

The Senate report also criticizes ReachOut Healthcare America, which runs mobile clinics that treat children at schools. Senate investigators concluded unscrupulous dentists and lack of control by ReachOut led to children being treated without their parents’ permission.

In October 2011, a dentist for ReachOut America put stainless-steel crowns on 4-year-old Isaac Gagnon at his preschool in Camp Verde, Ariz., even though Gagnon’s parents left instructions for their child not to be treated, the report said.

A spokesman for ReachOut America declined to respond.

The inspector general said in his letter that a problem with excluding dental offices from Medicaid is that some children have few choices for getting dental care.

However, the Senate report said, “If states and Medicaid are having difficulty recruiting good dentists to serve such a vulnerable population due to lack of reimbursement, how are private investors so successful at producing huge profits from those allegedly inadequate Medicaid reimbursements?”