Texas had an unusually high Medicaid orthodontics bill in 2010. At $185 million, the state was reportedly spending more than the other 49 states combined. Claims data showed that it had led the nation for three consecutive years in total dollars spent to help children with crooked teeth. Or at least that’s what state and federal regulators thought.
As it turns out, Texas did not have a higher percentage of children with orthodontic needs. Nor was the Medicaid program doing a better than average job of providing dental care for the poor. Instead, a handful of orthodontists were bilking Medicaid by putting braces on thousands of children who did not require them. They were also tweaking the braces more often than recommended and keeping them on much longer than was normal.
In fact, a small number of fraudulent orthodontic practices in the Dallas area had been operating in plain sight for years. Road signs advertised “free braces,” and dental workers solicited parents in pizza parlors and parking lots outside of social service agencies. The fraudsters’ offices were so crowded that parents had to wait outside.
Overall, the gambits of these few orthodontic practices proved wildly fruitful. One firm, All Smiles Dental Center, racked up as much in Medicaid payments in one year as the entire state of Illinois spent on orthodontics for low-income children over the same period.
A Dallas-Fort Worth television station, WFAA, uncovered the massive scam last year, although federal and state agencies had already begun investigating the cases, according to Stephanie Goodman, spokeswoman for the Texas Health and Human Services Commission. Now the state is attempting to recover a portion of the lost millions and the Medicaid agency has changed some of the policies that made the fraudulent practices possible in the first place.
Crooked orthodontists are not the first health providers to prey on the state’s $27 billion Medicaid program, nor will they be the last. The total amount of money lost to fraudulent orthodontics in Texas over the last three years, though estimated in the hundreds of millions, is only a portion of the money Texas Medicaid loses to waste, fraud and abuse each year, despite increasingly sophisticated efforts to prevent it.
And Texas is far from the only state plagued by unscrupulous health-care providers. Nationwide, the federal government estimates that it lost $22 billion of its share of Medicaid funding last year to what it calls “improper payments,” according to its payment accuracy survey. This suggests that the loss to state treasuries was also in the tens of billions.
How do flagrant violations of Medicaid procedure go unnoticed by federal and state regulators for so long? The answers are not simple.
Medicaid is a huge, administratively complex federal-state health-care program that covers 60 million low-income people and costs more than $400 billion a year. And it’s been growing faster than any other item on states’ budgets. No two state Medicaid programs are alike, making a single solution to the problem of waste, fraud and abuse impossible.
While only a fraction of the health-care providers who participate in Medicaid knowingly break or bend the rules for financial gain, the result is a substantial fiscal drain on the federal-state program. As fraudsters’ schemes grow bigger and more elaborate, state Medicaid agencies are forced to create equally elaborate schemes to thwart them.
But the more paperwork and audits they require from doctors, dentists, pharmacists and other health-care providers who serve the needy, the more Medicaid officials worry that they will have trouble attracting enough providers willing to accept Medicaid’s low fees.
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