The U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) issued a notice of exclusion on March 7 that Church Street Health Management (CSHM), which operates 70 Small Smiles dental clinics in 22 states and the District of Columbia, would be excluded from participation in the Medicare and Medicaid programs for a minimum of five years. The exclusion will be effective September 30, 2014. The OIG cited various violations including, among other things, failures to: (i) report serious quality-of-care reportable events; (ii) maintain disclosure logs whereby individuals could identify issues or questions associated with CSHM’s policies or practices that may be a potential violation of law; (iii) implement policies to inform patients, parents and guardians when a substantiated incident of patient harm occurs; and (iv) have the chief dental officer, regional dentist or chief compliance officer participate in compliance review. CSHM agreed to the exclusion and waived its right to appeal or challenge the exclusion in its Exclusion Agreement signed with the OIG on April 1.

This exclusion comes on the heels of a February 13 letter from Reps. Michael C. Burgess, MD (R-TX), and Diane DeGette (D-CO) urging the OIG to use its authority to exclude any individual or entity that has engaged in Medicare, Medicaid or other federal healthcare programs fraud or abuse. The letter faulted the OIG for not acting in response to the two-year investigation by a U.S. Senate committee led by Senators Charles Grassley (R-IA) and Max Baucus (D-MT) of Medicaid-funded corporate dental chains owned by nonlicensed physicians. The investigation found that the Small Smiles dental chain encouraged dentists to perform unnecessary treatments to boost profits.

The Senate investigated five dental chains - (i) CSHM, (ii) NCDR, which owns 130 Kool Smiles clinics in 15 states and the District of Columbia, (iii) ReachOut Healthcare America, which operates mobile clinics that treat children at schools in several states; (iv) Heartland Dental Care, which operates more than 300 clinics in 18 states; and (v) Aspen Dental Management, which operates more than 300 Aspen Dental clinics in 22 states. The report focused on CSHM and ReachOut because those chains treat Medicaid children almost exclusively. The investigative report released in July 2013 recommended that any corporate-owned chain that uses similar deceptive business practices, as they found in their investigation of CSHM, should be ousted from federal programs as well.

Dental practice management participants should be wary of the continued focus on dental practice management structures and the heightened perception of fraud and abuse in the industry. In 2013, the OIG exclusionary database listed 74 dentists or dental practices that had been excluded from participation by the OIG. Typically, and in the case of Small Smiles, exclusion from participation in Medicare and Medicaid is not the OIG’s first response to reported abuses. Small Smiles’ former owner, Forba Holdings, agreed to a $24 million settlement over allegations of Medicaid fraud brought by the U.S. Department of Justice. The settlement included a Corporate Integrity Agreement (CIA) whereby the company would adhere to quality and compliance standards and undergo extensive audits by an independent monitor. The OIG used its exclusionary remedy because CSHM failed to satisfactorily remedy issues the OIG had raised in December of 2013 and January of this year, including failure to notify HHS of any breaches of the CIA. However, the OIG excluded only CSHM, LLC from participation in Medicare, Medicaid or all federal healthcare programs; it did not exclude any individual employee or the dental clinics. CSHM, LLC is the management entity that provides management and administrative services for the Small Smiles dental clinics.