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Medicaid: Turmoil in Texas


Most orthodontists have by now heard stories about the issues in Texas involving Medicaid paying for orthodontic treatment. The reports and details vary widely in these often third-hand accounts so we went straight to the source, who agreed to speak with us on the condition of anonymity, to sort fact from fiction. Our source is not only privy to what has happened and will happen but is impacting how all of these issues are to be resolved. For this reason we’ve left all opinions and speculation by the source intact to give insight as to the mindset of those working to clean up what is, by all accounts, a firestorm. Our verified source’s remarks are below in unedited form. We hope the following report will educate and inform.

The comments are solely those of the informant and do not represent those of The Progressive Orthodontist Magazine.

Much of this information came about through a WFAA-TV Channel 8 (Dallas ABC Affiliate) investigation and responses by the Committee on Public Health Hearings.

Following the Money:
Each year leading up to 2010, the amount of orthodontic treatment paid for by Medicaid has increased.

In 2010, Medicaid orthodontists in Texas collected more than $184 million – more than all of the other 49 states combined.

One business alone, Navarro Orthodontics, collected $21.9 million, which is more than the entire amount collected in the state of California. 34 orthodontic / dental businesses collected over a million dollars in Medicaid orthodontic treatment fees. $13 million was spent on transporting Medicaid patients to and from offices.

There are many problems with the existing system. I’ll break it down into 4 categories:

1)     Policy: Though well intentioned, the Handicapping Labio-lingual Deviation (HLD) scoring system did not do the job properly. The system was designed to treat patients with cleft / craniofacial deformity, and truly handicapping malocclusions. Major deficiencies in policy include:

a)    Pay per visit: this was intended to keep the costs down if cases finished fast, but gave a 26 visit standard. Every patient, whether they needed that many or not, were seen 26 times.
b)    Pay per Appliance: again, this was intended to give the practitioner the freedom to treat each patient with the appliance of choice. Some practitioners started placing appliances that were not needed and were only used to make money. Some patients had 10-12 appliances made for them. Things like RPEs were delivered and never turned, or turned once a year. Sometimes appliances were not replaced, just relabeled as something else, and billed as a second appliance. For example, an RPE was no longer turned and therefore called a TPA.
c)    HLD: a good system that was defrauded by over-grading to get approval. Another problem is that there is no standard of measure for each area on the HLD sheet. In my opinion, there should have been training and/or a manual describing how exactly to measure each of the input points on the sheet.
d)    Age: 20,000 patients under age 12 were treated although the minimum age was 12. Providers were allowed to treat under that age if full dentition was in place or if the remaining primary teeth were extracted to mask a transitional dentition. This was a problem, because extractions were ordered to allow the patient to be treated. Also problematic is that TMHP was informing girls that they were too old to qualify unless they became pregnant. If pregnant, benefits were extended. There were 1,181 pregnant girls put in braces under this policy.

2 )    Providers: The biggest issue here is that the HLD sheet is not being scored properly. The scores are being exaggerated by the providers, to make sure that every case is accepted. In a recent hearing of the Texas House of Representatives Public Health Committee, it was noted that many of the Texas House members thought that the bar might have been set too low with the HLD scoring. Many were unaware that this scoring system is the standard used in many states.

The House members were also not aware that the providers were the ones who were defrauding the system by exaggerating the malocclusions and upscoring on the HLD sheets. At one point in the meeting, a congresswoman thought that the legislators might be at fault for not setting the standard high enough.

The government doesn’t even know what is going on or what it has been paying for with the current Medicaid system.

3)    Contractor: Affiliated Computer Services (ACS), a Xerox company, who took over for Electronic Data Systems (EDS), appeared to be understaffed and therefore, non-dental personnel were acting as orthodontists and were reviewing the cases. ACS approved every case that had the proper paperwork. No clinical scrutiny was given to the cases. The contractor was paid on the number of claims processed and each reviewer was also paid by the number of claims processed, or ABC (Activity Base Compensation). They were told that “red flagging”, or actually reviewing the cases and denying, would slow the process down.

4)    Health and Human Services Commission (HHSC): No audits or reviews were done of TMHP (Texas Medicaid and Healthcare Partnership), especially ACS, to insure that the program was being administered with patient and fiscal responsibility. No checks and balances were in place.

Big Business:
The sentiment of many is that orthodontics is a privilege, not a right. The rules and regulations of the dental practice act of Texas, states that every patient should be informed that no treatment is always an option and that not all patients need to be treated. Medicaid has become big business. The laws in Texas and many other states say that only a dentist may own a dental practice. Currently many big corporations and hedge funds are buying up the larger clinic type practices. Not only does that violate the law but it creates questionable practices in terms of patient care: Is it determined by the patients’ needs or by internal corporate policy and profit? Currently a few clinics and individuals are being sued by their banks for not paying on funds that were loaned to start many of the clinics that were and are treating Medicaid patients. This corporate mentality is leaving patients behind, including one young lady in treatment for 9 years who is now too old for funding, but is still in braces. With no more funds available for her treatment, she is left with braces on and no further treatment.

Even though the treatment is free, many complaints are coming in about the quality of care received and other issues.

712 complaints were received in 2010.
Why this many complaints?
Why wasn’t something done sooner?

Many have attempted to change this system in the past, but to no avail. In 2006, a meeting with TMHP, TDA reps and stakeholders in Medicaid was held and recommendations were made for more conservative evaluation of cases by a qualified reviewer to decrease the number of falsely submitted cases. Also suggested was a global fee structure with a 4-milestone payment method. This method suggested no payment for individual appliances – nothing was done with this proposal.
During the Texas House meetings, it was noted by many entities, including House members, that many areas of the policy, and the way the program was administered, were faulty. The question of underutilization was raised in 2007 and so more people were drawn into the system. The problem is that it drew in more orthodontic providers looking to make an easy profit. Soon clinics were opening up everywhere with lots of advertising of free care. Without the need for a referral, the patients were easy to come by. OIG (Office of the Inspector General) and AG (Attorney General) were questioned by the committee members on what was going on. The following actions have been taken:

  1. Hold on payments was initiated on providers that were under investigation.
  2. Currently 31 entities are under investigation. Contracted orthodontists are reviewing existing practices and their patients’ records for fraud in billing and treatment. It was noted that on early analysis, a high amount of fraud was evident.
  3. On questioning of the House members, it was noted that in the future, money would be recovered from providers, TMHP, and its contractor.
  4.  Texas will order further withholding of payments, more recovery of money and future criminal and civil charges brought against many persons and entities that acted fraudulently.
  5. It stands to reason that the federal government will also soon be asking for funds to be repaid, since they provide 50% of the money used to pay for Medicaid.

New System:
It is estimated that approximately 20,000 orthodontic cases are currently in treatment in Texas under Medicaid. The new system attempts to manage the whole system and the existing cases. Three managed care companies are taking over. Delta Dental, Dentaquest, and MCNA dental insurance will be the Texas companies. The three companies, through HHSC, approved the new policy. Each company will follow the new policy but will need to decide individually how to administer it. All cases submitted will be scrutinized by the three managed care providers so that they can make more money.

The new policy has 4 levels:

Level 1: Mixed Dentition
Level 2: Transitional Dentition
Level 3: Adolescent Dentition
Level 4: Adult Dentition

Two of the companies are allowing pediatric dentists and GP’s with 200 CE hours to treat levels 1 and 2. The other company, MCNA, only allows them to treat Level 1 cases.
The new policy is strict, but fair for all cases going forward. For existing patients in treatment, all cases must be resubmitted for evaluation of medical necessity under the new system standards.
A couple of things can happen with these patients.

  1. They apply, are approved, and continue treatment.
  2. If they don’t meet the new standard approved by HHSC, the patients are to be debonded.

Of those who don’t meet the standard, there are 4 groups:

  1. Patients who were justifiably approved under the old system and now won’t score under the new system. These patients may be approved after appeal or there may be some lawsuits to settle this.
  2. Patients who were approved improperly under the old system and now don’t qualify. This brings up continuity of care issues since these patients were told that they were eligible for treatment and are now told they are to be debonded. The question is who should be debonded? What about the cases with extractions, spacing, bite issues, or that are close to finishing? Should their braces be removed? Litigation may also come into play here.
  3. Patients who apply but are being treated by a pedo or GP. These patients might be transferred to an orthodontist.
  4. Patients in treatment whose orthodontists or GPs are not credentialed by the new companies. It is unclear what will happen to this group.

With an estimate of about 5-10% of patients currently in treatment who actually will qualify for continued care, that leaves a lot of patients without a home, which brings up abandonment issues.

As an orthodontic professional who values and honors what I do, I think that this is a call to action. For those doctors treating these cases, fraudulently or legitimately, you should finish the cases. It is ethically right and it’s the right thing to do for the patient and our profession whether or not you get paid for it under the new system.

For those patients who do get left behind, our profession as a whole needs to step up to protect and defend orthodontics. We need to be prepared for questions, to fight the stigma that all orthodontists are bad or crooked, and lastly we should work out something for the patients who are stuck in treatment with no provider. We should start by asking the government to pay for the continuation and finishing of the cases that are currently under treatment. Yes, the orthodontists submitted the cases, but TMHP approved the treatments. If this doesn’t work, we need to find a way to finish the cases for free by donating our services, find foundations or donors to help offset the costs, and ask the legislature to hold all those picking up these cases harmless of all litigation for their service to the state and finishing these cases.

I hope you find this information helpful.

If there are any further developments, good or bad, I’ll let you know through The Progressive Orthodontist magazine.

A final thought – If it’s happening in Texas, it’s happening in other states as well.

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