Introduction

Sen. Charles Grassley, R-Iowa, says that his investigators have found evidence of abuses by corporate dental chains treating children on Medicaid.

For months now, Grassley’s staff has been asking questions of three dental chains serving poor children on Medicaid. Each is owned by a private-equity firm. The chains are Kool Smiles, Small Smiles and ReachOut HealthCare America.

“We’re finding that these dental practices, under pressure from owners who are not licensed dentists, have been providing services with the highest Medicaid reimbursement levels more often than less expensive, arguably more appropriate services,” Grassley said. “There are legitimate concerns that children are receiving unnecessary care, sometimes in a traumatic way, and taxpayers are paying for it.”

Earlier this week, a joint investigation by the Center for Public Integrity and FRONTLINE, revealed that the Atlanta-based chain Kool Smiles’s business model of serving kids on Medicaid has led to complaints that it over-treats children. The company has been accused by regulators in Georgia and Connecticut of overusing expensive stainless-steel crowns to treat small cavities.

Kool Smiles vigorously denies this, saying that it offers quality care to children in dire need. It is the largest Medicaid dental chain with 129 offices in 15 states and the District of Columbia.

Grassley said, “You have dentists under pressure to perform more services than may be necessary — giving a child a crown instead of a filling, for example — because of a bonus payment structure that creates the wrong incentives.”

As reported by CPI and FRONTLINE, one of Kool Smiles most controversial practices is its dentists’ heavy use of stainless-steel crowns to restore decayed baby teeth. Crowns are more profitable than fillings for dentists, because they can charge more for them. Kool Smiles provided analysis intended to show that it doesn’t overbill Medicaid but offers services at a lower cost than other dental providers.

Grassley said the problem was rooted in the structure of these chains, saying that it claims that dentists own the practices but in reality they do not have control.

“These “owner dentists” are effectively ghost owners who maintain none of the traditional aspects of ownership of their operations, allowing the corporate investors to have control over clinical operations,” Grassley said.

The senator is also looking at Aspen Dental Management, another corporate dental chain owned by private-equity firms. Aspen Dental does not accept Medicaid, but Grassley said there are concerns that “the company promotes unnecessary treatment plans with exorbitantly expensive credit arrangements.”

CPI and FRONTLINE also investigated Aspen Dental and found that its business model of serving patients who cannot afford a dentist had led to complaints of overtreatment and loading patients who cannot afford it with debt.

Aspen Dental denies this. It says it offers services to people that other dentists ignore.

Senator Grassley said he expects to issue a staff report on his findings on companies that serve children on Medicaid. His investigation in Aspen Dental is on-going.