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Medicaid Dental Audits: Exclusion Screening Issues

January 22, 2015 by  
Filed under Dental Audits & Compliance

Audit(January 22, 2015): Medicaid dental audits have greatly expanded over the past few years. As many (if not all) dentists and orthodontists are painfully aware, the both federal and state law enforcement agencies have doggedly pursued Medicaid dental providers in their efforts to recoup funds paid to dentists and orthodontists for the provision of medically unnecessary services and other allegedly improper services. One of the least understood mandatory obligations applicable to ALL dentists and orthodontists who accept Medicaid is the requirement that all participating providers MUST screen their employees, contractors, vendors and agents through literally dozens of federal and state exclusion databases. While there a number of important exclusion screening concerns to consider, today we will be focusing on two risk areas:

I.     Medicaid Dental Audits.  Have You Complied with Your Exclusion Screening Obligations?

Prior to the significant changes enacted under the Affordable Care Act (ACA), there were are already both mandatory and permissive bases for exclusion from participation in the Medicare and Medicaid programs. Importantly, there are bases for mandatory or permission exclusion from federal health care programs that may be pursued by the government. Moreover, each state has established its own list of infractions and/or other instances of improper conduct that can result in exclusion from Medicaid.

What is the scope of an exclusion action? Importantly, HHS-OIG has taken the position that if a dentist, orthodontist or other party is excluded from participating in the Medicare or Medicaid programs, they are effectively barred from working with most health care provider and supplier entities. As HHS-OIG writes:

“Excluded persons are prohibited from furnishing administrative and management services that are payable by the Federal health care programs. This prohibition applies even if the administrative and management services are not separately billable. For example, an excluded individual may not serve in an executive or leadership role (e.g., chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources, physician practice office manager, etc.) at a provider that furnishes items or services payable by Federal health care programs. Also, an excluded individual may not provide other types of administrative and management services, such as health information technology services and support, strategic planning, billing and accounting, staff training, and human resources, unless wholly unrelated to Federal health care programs.”

Importantly, a dental practice cannot limit its screening activities to only “new employees.” The Compliance Officer in a dental or orthodontist office should be routinely (at least every 30 days) checking both federal exclusion databases to ensure “that the HHS–OIG’s List of Excluded Individuals and Entities, and the General Services Administration’s (GSA’s) List of Parties Debarred from Federal Programs have been checked with respect to all employees, medical staff and independent contractors.” Dental and orthodontist practices are also responses for checking all state exclusion databases (at the time of this article, 36 states maintained their own databases. However, this number is constantly growing. You should therefore keep up with the status of all 50 states.

Using Texas as an example, HHSC-OIG is very aggressive in its approach towards compliance. It expects “[a]ll [Medicaid] service providers [to] check OIG’s exclusion list monthly.” First pioneered by New York State, this trend (of requiring monthly screening checks) is steadily being adopted by states around the country.  As Medicaid dental audits expand, it is essential that all dental providers take steps to comply with their mandatory obligation to perform comprehensive exclusion screening of procedures of their staff, contractors, vendors and agents.

What the penalty for improperly hiring an excluded party or for contracting with a vendor, contractor or other third party? Essentially, any Medicaid dental claims submitted for coverage and payment after an excluded party enters on board your practice would be tainted, thereby exposing the practice to potential Civil Monetary Penalties (CMPs), along with other administrative, civil and / or potentially criminal sanctions.

II.     Don’t Play Games! Sham Ownership Schemes:

As an example, in a federal criminal case out of Massachusetts, a registered dentist was convicted of fraud for submitting false claims to the government for payment. As a result, the Department of Health and Human Services, Office of Inspector General (HHS-OIG) notified the dentist that he was being excluded from participation in federal and state health care programs, including Medicare and Medicaid. As part of that notice, the convicted dentist was notified that he may not “submit claims or cause claims to be submitted” for payment from the federal and state health care programs (in this case, specifically Medicaid). Additionally, the convicted dentist was advised that Medicaid reimbursement payments could not be made to any organization in which the convicted dentist served as an “employee, administrator, operator, or in any other capacity…” After his conviction, the dentist surrendered his right to practice dentistry in states where he was licensed.

Despite the fact that this individual was no longer licensed as a dentist and was expressly excluded from participating federal and state health benefit programs, he went out and established several dental practices, which were operated by both other dentists and the excluded individual. These dental practices treated Medicaid patients and received millions of dollars in Medicaid payments from the state Medicaid program, despite the fact that the practices were effectively run by an excluded individual. The excluded dentist was found to have been involved in “reviewing patient charts, suggesting dental procedures to be performed, reviewing billing records, reviewing income reports, interviewing and hiring dentists, and providing overall management direction to the offices.”

At one point, the excluded dentist hired another licensed dentist to run one of the dental practices he had opened. The newly hired dentist later learned of the legal and regulatory sanctions (included exclusion) that had been taken against the convicted dentist. The hired dentist subsequently submitted an application with the state Medicaid agency to become a Medicaid program provider. During the Medicaid application process, the hired dentist failed to disclose that a convicted, excluded, unlicensed dentist had an ownership or control interest in the dental practice. Notably, the convicted dentist repeatedly engaged in this sham ownership / control interest scheme.

Ultimately, the government learned of the sham ownership / control interest schemes perpetrated by the convicted dentist. Both the convicted dentist and at least one of the licensed dentist he had roped into the scheme were subsequently arrested and charged with conspiring to commit health care fraud, committing health care fraud, and making false statements involving federal health care programs health care fraud.

III.     Final Conclusion.

Dentists and orthodontists around the country are under the regulatory microscope.  While most of the audits and investigations currently underway involve Medicaid claims, we have worked on several cases involving Medicare claims as well.  Most recently, we have seen a number of dental audits being undertaken by private payors.  In years past, regulatory and enforcement actions have focused almost exclusively on non-dental related health care providers and suppliers.  Those days are over.  It is imperative that you review your current medical necessity, coding, billing and documentation practices to help ensure that your practice will be prepared for an audit.  Effective exclusion screening  practices are merely a step in the right direction.  Dentists and orthodontists should develop, implement and follow an effective Compliance Program — one that has been tailored to address the specific risks they face.   Have questions?  Give us a call if we can be of assistance.  We can be reached at: 1 (800) 475-1906.

Liles Parker attorneys represent health care suppliers and providers around the country in connection with regulatory compliance reviews, Medicare prepayment reviews and postpayment audits, HIPAA Omnibus Rule risk assessments, privacy breach matters, and State Medical Board inquiries. Robert W. Liles, Esq., is a Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Call Robert for a free consultation at: 1 (800) 475-1906.

Returning a Medicaid Dental Overpayment: Part II

Returning a Medicaid Dental Overpayment(April 25, 2012): Yesterday we discussed issues surrounding returning an identified dental overpayment to Medicaid or other payors. Below is a continuation of this discussion.  Dentists, oral surgeons and their staffs may ask “What types of actions might constitute an “identified” dental overpayment?”  That’s a fair question, especially since the Affordable Care Act does not provide much direction in this regard.  Nevertheless, there are a number of situations that could signify that an overpayment is present.  Examples include:

  • A routine dental office audit discloses full payment by a beneficiary’s primary and secondary payor for the same claim.
  • A dental practice learns that one of their employees or providers has been excluded from participation in Medicare or Medicaid.
  • An anonymous employee of the dental practice alleges that orthodontic claims are being improperly billed to Medicaid.
  • A parent of a dental patient calls and states that her child never received a certain service that was paid by Medicaid and is listed on the “Explanation of Benefits” form sent by the payor to the patient.

VIII. What Must a Dentist do if a Medicaid Dental Overpayment is Identified?

Pursuant to Sec. 6402 of the Affordable Care Act, all providers (including dentist) are required to:

  • Report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and
  • Notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.

In summary, once a Medicaid dental overpayment has been identified, a dentist must report and refund that dental overpayment to the government, within 60 days of the date on which the dental overpayment was identified.

Additionally, once any Medicaid overpayments have been returned to the government, any associated co-payments paid by beneficiaries must also be returned.  See 42 C.F.R. § 489.41

Importantly, you need to assess the nature of the mistake and determine whether this “error” or other action which resulted in the dental overpayment was an isolated event.  If not, under the government’s interpretation of the repayment rules, you likely have an obligation to repay other similar errors from prior periods. Keep in mind – your obligation to repay funds that do not belong to you extends far beyond the provisions of the Affordable Care Act.

IX.  Taking Corrective Action

In today’s enforcement environment, it is essential that you know, beyond a shadow of a doubt, whether you are fully complying with applicable coverage, documentation, medical necessity, coding and billing requirements.

As a first step, we recommend that you “Identify your weaknesses – then correct them.” If you have not already done so, engage qualified legal counsel and conduct a Gap Analysis” of both your dental business operations and your coding / billing practices. In most cases we have found that dental practices have learned of deficient practices of which they were completely unaware.  The steps to take include:

  1. As a first step, dental and orthodontic offices should review each of the regulatory and statutory provisions related to the specific services being billed to Medicaid.
  2. Next, these offices should compare their actual documentation, coding and billing practices with Medicaid’s rules.  Any “Gaps” between the applicable requirements and a dentist’s / orthodontist’s actual practices must immediately be remedied.
  3. Additionally, should these “Gaps” represent an overpayment, the Medicaid provider must repay the overpayment to the government within 60 days of identification.    
  4. Prior to conducting a “Gap” analysis, you should contact your legal counsel for advice and assistance.

Once remedial actions are taken, the next step is to design and implement an effective Compliance Plan. Despite the fact that significant strides in compliance have been made by large providers (such as hospitals and nursing homes), it has been our observation that most dental practices still do not have a tailored Compliance Plan in place.

To be clear, we recognize that many dental offices may have copied draft Compliance Plans off of the internet or purchased a sample plan from their local association.  While they may fully intended to follow through with personalization of the draft document, in most of the cases we have seen, more pressing events have taken precedence and these dentists have not had the time or expertise to complete the project.  As a result, we recommend that you engage qualified legal counsel to assist you with this project.  The benefits of an effective Compliance Plan can be significant, and could conceivably mean the difference between an aggressive investigation and a mere cursory review by the government once they learn that you have taken multiple steps to better ensure that your operations and practices fully comply with applicable Federal and State requirements.

Healthcare LawyerLiles Parker is a full-service health law firm focusing on regulatory compliance and representing providers in health law and business matters. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental practices, orthodontic practices, and other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid.  For more information on how we can assist your practice in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is a Managing Partner at the Firm and can be reached at: 1 (800) 475-1906. Call him today for a free consultation.

What are a Dentist’s Medicaid Overpayment Obligations? Part I

Medicaid Dental Overpayment

(April 24, 2012): While considerable attention has been paid to the Affordable Care Act (generally referred to as “Health Care Reform”) and its requirement that “identified overpayments” be promptly repaid to the government, it is important to keep in mind that this repayment obligation is not new – it has long been firmly in place.  Moreover, it applies to all health care providers, including dentists, orthodontists, and their outside billing companies. An identified dental overpayment must be repaid.

I.  Handling a Medicaid Dental Overpayment:

As a review of the 1998 “Third Party Billing Company” Compliance Program Guidance issued by the Department of Health and Human Services, Office of Inspector General (HHS-OIG) in the Federal Register reflects, “[f]ailure to repay overpayments within a reasonable period of time could be interpreted as an intentional attempt to conceal the overpayment from the government, thereby establishing an independent basis for a criminal violation.” (63 Fed. Reg. 70138 (Dec. 18, 1998)).

As this guidance clearly reflects, the government has long considered the failure of providers to return Medicare overpayments, Medicaid overpayments and overpayments made by other Federally-funded health plans to be a serious concern.  Unfortunately, many dental practices appear to have been unaware of this requirement.  We have seen situations where an identified dental overpayment was not actively worked, thereby placing the practice in peril.

Notably, there are also criminal prohibitions against the purposeful concealment and / or failure to disclose a Medicaid dental overpayment to the government.  As 42 U.S.C. §1320a-7b(a)(3) states, “Whoever, having knowledge of the occurrence of any event affecting his initial or continued right to any such benefit or payment . . . conceals or fails to disclose such an event with an intent fraudulently to secure such benefit or payment either in a greater amount than is due or when no such benefit or payment is authorized [is a criminal violation].”

Unfortunately, our review of dental practices has found that most dentists do not have an effective Compliance Plan in place. As a result, few dental practices conduct periodic internal billing reviews.  Moreover, even fewer dental practices have engaged outside legal counsel or consultants to examine their coding and billing practices. The dental community has been relatively quiet on this issue, to the detriment of dentists who are now finding their practices under investigation.

II.  Handling Private Party Overpayments:

In addition to Federally-funded payor plans, Texas dental practices also have an obligation to repay an identified dental overpayment made by a private payor.  Under 18 U.S.C. § 669, it is a violation to “knowingly and willfully” embezzle, steal or otherwise without authority convert or intentionally misapply the monies, funds or assets of a health benefits program. (emphasis added).

As this statutory provision reflects, this obligation covers all payor types, Federal and private.  Therefore, dental practices are obligated by Federal (and possibly State) law to return a dental overpayment or incorrect payment to a private payor.  In all likelihood, your contractual agreement with the private payor imposes repayment deadlines and other requirements.

As a final point in this section, it is essential to keep in mind that a dental overpayment does not belong to you, even if a private payor tells you to keep it.  For example, if upon receiving a dental overpayment check from you, a private payor might say, “We are returning your check — it would be an administrative nightmare for us to allocate this ‘overpayment’ properly to the dates of service in our system.” As set out below, virtually no dental overpayment belongs (or can be retained) by a dentist’s office.

III. Handling “Unclaimed” Overpayments:

As discussed, any and all overpayments made to a dental practice by Medicaid, a private insurance payor, or a patient, must be promptly returned to their rightful owner.

Nevertheless, it is quite common for some overpayments to be returned to a dental office, either because a patient has moved, died or failed to claim their mail, or a private insurance company refused to accept the check because it would take too much administrative work to allocate the funds appropriately.

In such situations, it essential to keep in mind that every State has passed laws governing the State’s right to “Unclaimed Property and Funds.”  Literally every state has “Escheat” and / or “Unclaimed Property” laws which cover such overpayments.[1] For instance, in Texas:

The [Texas] unclaimed property law requires financial institutions, businesses, and government entities to report to the state, personal property they are holding that is considered abandoned or unclaimed.

The Texas Comptroller of Public Accounts is responsible for administering the Texas Unclaimed Property Program. Property is turned over to the Comptroller’s office annually when the owner’s whereabouts are unknown and the property has been inactive on the books of the reporting company after the appropriate abandonment period has expired.

Should you fail to report and turn over overpayments held by your dental practice, you may be subject to significant penalties if you are audited.  As you can imagine, many States are aggressively audited companies in today’s poor economy in an effort to bolster their sagging treasuries.

IV. Deadlines for Returning a Medicaid Dental Overpayment – Prior to Health Care Reform:

Long before passage of the Affordable Care Act, the Centers for Medicare & Medicaid Services (CMS) had issued proposed rules in the Federal Register indicating that an overpayment must be returned to the government within 60 days of identification.  As the Federal Register noted, health care providers must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.  (emphasis added) (67 Fed. Reg. 3662 (January 25, 2002)).

In the preamble to the proposed rule, CMS has implied that failure to report overpayments in accordance with the proposed rules might be a criminal violation of Section 1128B(a)(3) of the Social Security Act.

V.  Impact of Affordable Care Act:

Among its various provisions, the Affordable Care Act legislation made it crystal clear that the knowing retention of an identified overpayment constitutes a violation of the False Claims Act.  As the revised statutory provision states:

(d) Reporting and Returning of Overpayments.

(1) If a person has received an overpayment, the person shall—(A) report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and (B) notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.

(2) … An overpayment must be reported and returned under paragraph (1) by the later of—(A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.

(3) Enforcement. Any overpayment retained by a person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31, United States Code) for purposes of section 3729 of such title. (emphasis added)(See 42 U.S.C. 1320a-7k)

Importantly, under Sec. 6402 of the Affordable Care Act, the term “overpayment” was expressly defined by its drafters to include both Medicare and Medicaid payments to which health care providers (such as a dental practice) are not entitled:

. . . any funds that a person receives or retains under title XVIII [Medicare] or XIX [Medicaid] to which the person, after applicable reconciliation, is not entitled under such title. (emphasis added).

Healthcare LawyerLiles Parker is a full-service health law firm focusing on regulatory compliance and representing providers in health law and business matters. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental practices, orthodontic practices, and other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid and disclosure and repayment of an identified dental overpayment.  For more information on how we can assist your practice in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is a Managing Partner at the Firm and can be reached at 1 (800) 475-1906. Call him today for a free consultation.

[1] For a list of all State “Unclaimed Property” websites see:

Texas Medicaid Dental Claims Are Under Audit Scrutiny

Texas Medicaid Dental Claims Audit(April 23, 2012): Texas dentists, orthodontists and oral surgeons are under considerable scrutiny by the government, and most practices don’t even realize it.  This article examines several one of the current tools being used by the government to calculate the alleged amount of “damages” (improper claims) paid to dental providers by the State under Medicaid.



I.  Texas is Auditing Medicaid Dental Claims:

Many dental and orthodontic practice who treat children covered by Medicaid have found themselves part of an ongoing, Texas Medicaid dental audit.  Essentially, the Texas Medicaid dental audit project is targeting providers who have been providing orthodontic services to the state’s most needy citizens, children covered by Medicaid.  Dental professionals currently facing Texas Medicaid dental claims audit have been hit hard by HHCS-OIG. In addition to denying orthodontic claims that had been pre-approved by a third-party contractor working for the State, many practices are now learning that the State has “extrapolated” the amount of alleged damages involved.  While extrapolated damages are quite common in Medicare cases, it is fairly unusual to see its widespread use in Texas Medicaid dental cases.

II. What Does it Mean to “Extrapolate”  Damages?

“Extrapolation” is the process of using statistical sampling in a review to calculate and project the amount of alleged overpayments made in connection with claims for care and treatment submitted by a health care provider to a payor for reimbursement.  Basically, a Federal or State agency (or in some cases, its contractor) will start by requesting the supporting documentation associated with a specific sample of claims.  It is not until much later that a health care provider learns that the “sample” of claims requested was allegedly a statistically relevant sample of the health care provider’s claims (the claims at issue can be Medicare claims, Medicaid claims, or even claims paid by a private payor).  After examining the sample of claims requested, the government agency (or its contractor) then calculates and applies the “error rate” found to the entire universe of claims covering a given period of time. This long-standing practice thereby allows them to grossly inflate the monetary demands on their audit targets while avoiding the need to actually review each individual claim in the universe for which they are seeking recoupment or offset.

III. How Did this Practice Get Started?

Although the practice of using a statistically relevant sample to estimate the number of times something may be present in the universe of items has been around since the advent of higher mathematics, the application of this methodology to estimate the number of improper claims paid over a specific period of time is relatively new.  The application of statistical sampling to health care claims for this purpose dates back about twenty years to a decision by the U.S. Secretary of Health and Human Services (HHS) to authorize the use of statistical sampling in lieu of engaging in onerous claim-by-claim reviews. In Chaves County Home Health Services v. Sullivan, 931 F.2d 914 (D.C. Cir. 1991), the Federal District Court upheld extrapolation as being within the Secretary’s discretion.  The use of statistical sampling has spread over the years.  Federal agencies (such as HHS-OIG, CMS-contracted auditors, etc.), State agencies (such as HHSC-OIG) and even private insurance payors now capitalize on the use of this damages-estimating tool, usually to the detriment of the targeted health care provider.  To be clear, everyone recognizes that an “extrapolation” is merely a substitute for conducting a claim-by-claim review of every claim submitted by thee provider and paid by a payor during the period in question.  Nevertheless, the methodology is here to stay, regardless of the adverse impact it can have on a provider’s ability to remain in business.

IV. How Can a Dental Practice or Orthodontist Practice Respond?

Unfortunately, the practice of seeking extrapolated damages can be a surefire way of destroying a dental provider’s practice. We’ve seen the use of statistical sampling, especially of Texas Medicaid dental claims, grow considerably in recent years. In fact, the Federal and State government’s passion for statistical sampling only seems to be growing. This makes it essential for dentists, orthodontists and other dental professionals to involve experienced legal counsel as soon as possible after you have received notice of an audit. Over the last decade, Liles Parker attorneys have noted a marked increase in the prevalence of extrapolated damages in Medicare audits, Medicaid audits and in audits by private payor Special Investigative Units (SIUs). Rather than assume that the government’s (or their contractor’s) calculations are correct, we have carefully analyzed the statistical methodology utilized when the auditors have extrapolated damages.  To be fair, sometimes their auditors have conducted the extrapolations properly.  Nevertheless, in many cases, the government auditors failed to properly handle this complex mathematical process, thereby rendering their extrapolation void.

Over the years, Liles Parker has worked with a number of the best statisticians in the country, challenging the extrapolation of damages and having it invalidated at various levels of the administrative appeals process. If your dental practice’s Medicaid claims are audited, we strongly recommend that you engage experienced legal counsel to represent your interests during this challenging process.

V.  Is There Anything I Can Do to Lessen the Likelihood of a Texas Medicaid Dental Claims Overpayment?

To be clear, there is no proverbial “silver bullet” that can be used by a dental practice that treats Medicaid patients to avoid the scrutiny of HHSC-OIG and / or other law enforcement agencies.  Every dental and orthodontic practice  in Texas (and in other States, for that matter) should expect to be audited at some point if you accept Medicaid or another Federal / State insurance plan.  Rather than wait for such an eventuality, dentists and orthodontists should affirmatively review their operations, coding and billing practices to ensure that their practices fall squarely within the rules.  An experienced law firm knowledgeable in dental compliance issues can assist you with these efforts.

Healthcare LawyerLiles Parker is a full-service health law firm focusing on regulatory compliance and provider representation. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental and orthodontic practices, as well as for other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid.

For more information on how we can assist you in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is Managing Partner at the Firm and can be reached at 1-800-475-1906. Call him today for a free consultation.