Increasing Access to Dental Care in Medicaid: C A L I FOR N I A Does Raising Provider Rates Work? H EALTH C ARE F OU NDATION Overview reimbursement rate increases, and the effect such Oral disease is the most prevalent chronic disease increases have had on service utilization and of childhood — five times more common than provider participation. Following this review, key asthma — and is concentrated disproportionately interviews were conducted with 23 stakeholders among children in low-income families who are and experts from six states that enacted dental Issue Brief likely to be eligible for Medicaid and the State reforms: Alabama, Michigan, South Carolina, Children’s Health Insurance Program.1 Tennessee, Virginia, and Washington. The findings were also compared with information on provider Dentist participation in Medicaid has been a rates and participation in California. persistent problem; fewer than one in four dentists reported seeing at least 100 Medicaid patients The research concludes that reimbursement rate in a year.2 Dentists typically cite several reasons increases were a necessary, but not sufficient, for their low rate of participation in Medicaid. part of making Medicaid dental reforms succeed. Chief among them is inadequate reimbursement, Experts in each state indicated that simply paying accompanied by concerns about burdensome higher rates was not enough to substantially administrative requirements and poor compliance improve the program. Medicaid agencies must among Medicaid patients in keeping appointments also revamp program administration and build and following treatment regimens. partnerships with dental societies. Success in these areas can help promote gains in utilization and Beginning in the late 1990s, there was a national provider participation, even when rate increases push to address the gaping disparities in oral are modest. Administrative improvements and health access for low-income children. Several building partnerships are also vital to sustaining states greatly increased the rates paid to dentists this progress during fiscal downturns. The full to bring them more closely in line with dentists’ NASHP report is available at www.nashp.org/ usual fees, and at the same time streamlined _docdisp_page.cfm?LID=C1D52AEC-0239- administrative processes and sought to build strong 4DCC-8B4C3232F278FC47. relationships with the dental community. This issue brief examines how the reforms unfolded, The Importance of Reimbursement what happened as a result of these state actions, Dentists’ higher overhead costs mean that their and whether advances in program administration willingness to participate in Medicaid is greatly and outreach mattered as much or more than the influenced by rate levels. While most physicians rate increases in improving access to Medicaid practice in hospitals or corporate entities, more dental care. than 92 percent of dentists are in private practice, and 79 percent are sole proprietors.3 Dental The National Academy for State Health Policy overhead costs have been estimated at 60 percent conducted a review of all published literature to 65 percent of providers’ income, depending M arch on the experience of states regarding dental on state taxes. Medicaid reimbursement rates 2008 Key Findings in many states are below 50 percent of a dentist’s usual • Oral disease disproportionately affects children in and customary charge. This fails to meet the providers’ families with low income. Medicaid programs are overhead costs of providing care and means that dentists required by federal law to provide dental services to lose money on every Medicaid patient they see. Organized children; however, beneficiaries’ access to dental care is poor. dental groups and oral health coalitions advocate for • Dentists cite three primary reasons for their low Medicaid reimbursement rates that are competitive so participation in state Medicaid programs: inadequate that the program will be attractive to dental providers.4 reimbursement, burdensome administrative Specifically, the American Dental Association (ADA) has requirements, and problematic patient behaviors. advanced the idea that fees set at the 75th percentile of • Beginning in the late 1990s, a number of states took regional dentists’ fees (that is, rates equal to or greater dramatic steps to address these concerns, including than the usual charges of 75 percent of dentists in an reimbursement rate increases that brought Medicaid payments for children’s dental services closer to area) should attract sufficient participation from dentists dentists’ usual charges. States such as Tennessee and to provide access to care for program beneficiaries. This Alabama roughly doubled Medicaid payment rates; is especially true if these increases are coupled with other states made smaller or more narrowly targeted improvements in program administration and patient rate increases, such as those aimed at care for rural residents or young children. The experience of these education. six states indicates that reimbursement rates must at least meet dentists’ overhead expenses. Each state studied made significant new investments • Rate increases are not sufficient on their own. in Medicaid dental reimbursement rates for children; Easing administrative processes and involving state some using the 75th percentile methodology, and others dental societies and individual dentists as active partners in program improvement are also essential. basing rate increases on other benchmarks. In Tennessee Administrative improvements and involving dentists and Alabama, this meant that historically low fees were can help maximize the benefit of smaller rate roughly doubled. Other states made smaller or more increases, and lessen the potential damage when targeted increases. Virginia invested in a 28 percent state budgets contract. rate increase across all procedures, but worked with an • California’s Denti-Cal program, which is administered advisory committee of dentists to add a supplemental by Delta Dental, has reimbursement rates for dental procedures that are one-half to one-third of dentists’ 2 percent rate increase for oral surgery, a crucial area of usual fees, similar to the initial experience of the specialty care. Washington’s Access to Baby and Child states studied. Unlike most of the six states profiled Dentistry initiative was even more narrowly focused here, California provides a full dental benefit for adults on improving access to care for very young children. as well as children. Michigan’s Healthy Kids Dental program is aimed at • In the six states examined, provider participation increased by at least one-third, and sometimes more children in 59 nonurban counties (of 83 total counties). than doubled, following rate increases. Not only did This reform enrolls children in a dental benefit plan the number of enrolled providers rise, so did the administered by a large dental insurer. number of patients treated. Patients’ access to care, as measured by the number of beneficiaries using dental services, also increased after rates rose. At the same time, the six states enacted dental administrative reforms to encourage dentists’ participation in the program in several ways. Alabama and South Carolina worked within the existing framework of their Medicaid program, and maintained the state’s direct control. Alabama simplified claims processing procedures, 2  |  California HealthCare Foundation added dental claims processing and provider relations As Table 1 shows, in each state, the number of providers staff, and engaged in intensive dentist recruitment and who participate in Medicaid or the State Children’s education efforts, including training sessions in dentists’ Health Insurance Program (SCHIP) increased by at least offices to help staff bill properly for services. Tennessee one-third, and sometimes more than doubled, following and Virginia carved out dental benefits from their the reimbursement rate increases. Not only did provider Medicaid programs and contracted with a specialized participation rise, but states also began seeing an increase dental benefits vendor. These states used “administrative in the number of patients treated. Patients’ access to care, services only” contracts to purchase the vendor’s call as measured by the number of beneficiaries using dental centers, expertise in working with dentists and dental services, also increased after new rates were implemented. office staff, and processes for resolving common claims Although the gains in the percentage of beneficiaries errors. Under each of these systems, states worked to using services are relatively modest (especially compared improve provider enrollment processes, outreach, and to children with private dental insurance, where education; reduce the number of procedures that require utilization was 57.5 percent in 2004), it is important to pre-authorization; and adopt claims processes that were note that this happened in an environment of expanding similar to the systems that dental offices use for their Medicaid enrollment.5 privately insured patients. These measures help to build dentists’ confidence that the program is responsive to As Table 2 shows, the increases in utilization of services their needs, and can help to offset the negative effects of are generally in proportion to the percentage increases in stagnating or falling reimbursement rates. state spending — that is, in states such as Tennessee and Table 1. State Dental Reforms in Medicaid and Their Effects on Service Use and Provider Participation P erce n ta g e of E n ro l l ed C h i l dre n usi n g S er v ices E n ro l l ed P ro v iders Initial Year of Two Years Fi s c a l Y e a r Percent Prior to Two Years Most Recent Percent S tate Reform (Year) After Reform 2006 Increase Reform (Year) After Reform (Year) Increase Alabama 21% (2000) 28% 37% 76% 441 (2000) 586 778 (2007) 76% Michigan 21% (2000) 29% 30% 43% 769 (2000) 1624 1926 (2005) 150% South Carolina 28% (2000) 35% 43% 54% 619 (2000) 886 1197 (2006) 93% Tennessee 26% (2002) 36% 36% 38% 386 (2002) 700 817 (2005) 112% Virginia 24% (2005) — 32% 33% 620 (2005) — 1007 (2007) 62% Sources: Utilization data – Annual EPSDT Participation Report (CMS-416). Provider data – various state sources. See full report for a complete listing of sources. Brief description of dental reforms/basis for reimbursement rate increases: Alabama: Reimbursement rates were based on the Blue Cross/Blue Shield dental fee schedule. The state also received $1 million in private funding for outreach. Michigan: Data are based only on the Healthy Kids Dental (HKD) program, a capitated contract with Delta Dental for children in certain nonurban counties. Providers in HKD initially received payments equal to those of the Delta Premier product, but this has recently been changed to the lower Delta Preferred Option PPO fee structure. Note that information presented here is for the entire state, including the fee-for-service population in urban counties, and not only HKD counties. South Carolina: Reimbursement rates were based on the 75th percentile of a commercially available fee survey (called Medicode). The state also received private funding for outreach, especially to rural areas. Tennessee: Reimbursement rates were based on the 75th percentile of the 1999 ADA Survey of Fees for the East South Central region of states. The state also contracts with Doral Dental for administrative services, which cost roughly $4.5 million per year. Virginia: Prior to Virginia’s rate increase, the state’s reimbursement rates were less than 50 percent of usual, customary, and reasonable charges. The state legislature approved a 28 percent increase that was applied to all dental codes in 2005. An additional 2 percent increase, targeted to oral surgery procedures, followed in 2006. Virginia also has an administrative services contract with Doral Dental. Note that Washington is not included, due to a lack of accessible data on utilization and provider participation prior to the institution of the Access to Baby and Child Dentistry program in 1995. Increasing Access to Dental Care in Medicaid: Does Raising Provider Rates Work?  |  3 Alabama, the state roughly doubles its expenditures per Even though states may increase their reimbursement child, and provides services to twice as many children. rates and program spending, the gains in utilization and However, because the state is spending more for the provider participation may level off or reverse if inflation previous level of utilization, as well as the larger number overtakes the effect of the rate increase. Interviewees of procedures, this can result in relatively large increases in each study state noted that regular rate increases are in total expenditures. Despite this, Medicaid dental ideal. However, without them, close collaboration with spending is still small — under 2 percent of total program dental societies and advisory groups has helped to avoid expenditures — relative to other types of Medicaid- downturns in provider participation. covered services such as prescription drugs or nursing home care, and relative to national health expenditures, Setting the Stage for Reform where dental represents 5 percent of total spending.6,7 In each state studied for this analysis, the impetus for reforms to the Medicaid dental program can be traced to a trigger event, such as the enactment of the State Table 2. hanges in Medicaid Dental Payments and C Children’s Health Insurance Program (Michigan), a court Utilization in Selected States order to improve screening rates under the Early and S out h   A l a b ama C aro l i n a T e n n essee Periodic Screening, Diagnosis, and Treatment benefit Initial Year of Reform (Tennessee), new leadership in key positions (Alabama, Year 2000 2000 2002 Virginia), or policy academies sponsored by the National Number of 72,287 162,567 131,899 Governors Association (Alabama, Tennessee, Virginia).8 Beneficiaries Using Services State dental societies were influential voices in states Total Dental $11,465,011 $48,151,459 $28,660,471 Payments considering reform. They typically represent a high Payment per User $159 $296 $217 percentage of a state’s practicing dentists, so their FFY 2004 involvement and support is important in achieving the Number of 155,541 256,782 286,314 state’s goals. Particularly crucial is the cultivation of strong Beneficiaries Using Services relationships between the dental society and Medicaid officials. Open communication and collaboration toward Total Dental $44,449,030 $89,304,420 $130,284,595 Payments a shared goal, even in times of disagreement, can convince Payment per User $286 $348 $455 legislators that proposed reforms have wide support and Percent Change in… persuade individual dentists to set aside antipathy toward Beneficiaries 115% 58% 117% the Medicaid program. Using Services Total Payments 288% 85% 355% State oral health coalitions were also very important Payment per User 80% 17% 109% contributors to most states’ reforms. These coalitions Source: CMS Medicaid Statistical Information System: www.cms.hhs.gov/MedicaidData provided broad-based support, including partners such SourcesGenInfo/02_MSISData.asp, October, 2007. as pediatricians, community health centers, children’s advocates, and departments of education. Coalitions helped frame the reimbursement issue throughout the legislative process as mainly benefiting low-income patients, rather than dentists. 4  |  California HealthCare Foundation The California Landscape In California, 40 percent of dentists in private practice Reimbursement rates for providers in California’s Denti- do not treat Denti-Cal beneficiaries. The great majority Cal program are well below dentists’ usual fees in the of these are general practitioners. While California’s state. Denti-Cal rates for many commonly performed participation rate is relatively high, the state’s size and pediatric procedures are only one-half to one-third of diversity mean that access challenges remain. A previous dentists’ fees. Figure 1 below compares California’s fee-for- CHCF study found that only 26 percent of beneficiaries service reimbursement rates for a dental examination to (which in California includes adults as well as children, the six states that implemented reforms, and also to the unlike most of the study states) received dental services in national 75th percentile of fees in 2005, as measured by an 2004.9 Like some study states, Denti-Cal contracts with ADA survey of dentists. When compared to the states in a specialized vendor for program administration, provider this study, only Michigan’s fee-for-service rates are lower services, and claims processing. Yet California dentists than California’s reimbursement rates, although many view certain additional administrative requirements (such Michigan counties use Delta Dental’s higher fee schedule as extensive pre-authorization and provider enrollment and not the lower fee-for-service rates. processes) as a barrier to participation. Figure 1. omparison of Medicaid Fee-for-Service C In the wake of the 1990 Clark v. Kizer decision, Reimbursement Rates for Dental Examinations California was to increase its provider rates for many procedures to 80 percent of average amount billed (with National regular cost of living increases), and also to conduct 75th Percentile $40 enrollee outreach to increase Medicaid dental utilization. Tennessee $24 While California initially began to move toward rate increases, later actions of the state legislature in the 1990s Washington $22 prohibited their full implementation. Beginning in 2000, South Carolina $22 the legislature periodically enacted further restrictions on the Denti-Cal program in response to budget pressures. Virginia $20 As of this writing, Governor Schwarzenegger’s plan to Alabama $18 address California’s budget deficit includes the elimination of adult dental benefits and a possible $1,000 annual California $15 cap on dental benefits for children enrolled in the state’s Michigan $15 SCHIP program.10 The legislature has already passed a 10 percent reduction in reimbursement rates for FY 2007 – 2008. Note: Data is for Current Dental Terminology procedure code D0120, “periodic oral evaluation.” Sources: American Dental Association. State Innovations to Improve Access to Oral Health Care for Low Income Children: A Compendium Update. Chicago: American Dental Conclusion Association: 2005. American Dental Association. Survey of Dental Fees. Chicago: American Survey research, academic literature, and interviews Dental Association Survey Center: 2005. Virginia Department of Medical Assistance Services. Smiles For Children Current Dental Rates. www.dmas.virginia.gov/downloads/ with key stakeholders in six states indicate that higher pdfs/dental-feeSched_501-06.pdf. Washington Health Recovery Services Administration. Dental Program Fee Schedule. fortress.wa.gov/dshs/maa/RBRVS/2007_Fee_Schedules/ fees positively influence both dentists’ willingness to HRSA_August_1_2007_Dental_Fee_Schedule.xls. participate in state Medicaid programs and Medicaid patients’ access to oral health care. However, a majority of experts interviewed felt that while adequate reimbursement rates were necessary for improving access Increasing Access to Dental Care in Medicaid: Does Raising Provider Rates Work?  |  5 to Medicaid dental services, they were not sufficient on 2. Government Accountability Office. Oral Health: Factors their own. Higher rates must be combined with efforts to Contributing to Low Use of Dental Services by Low-Income address administrative concerns and strengthen the state’s Populations. Washington, DC: 2000. (U.S. Government relationships with community dentists. Accountability Office). 3. Gehshan, S., and M. Wyatt. Improving Oral Health Care As in most state Medicaid dental programs, California’s for Young Children. Portland, ME: April 2007.(National patient utilization and provider participation rates are low. Academy for State Health Policy). However, a number of states have succeeded in improving 4. See, for example, American Dental Association, Medicaid these measures by investing in provider reimbursement Reimbursement for New England Region — Using rates, building strong relationships with dental societies, Marketplace Principles to Increase Access to Dental Services. working with oral health coalitions, and improving Chicago, IL: 2004. ( www.ada.org/prof/advocacy/issues/ Medicaid program administration. Recent experience in medicaid_newengland.pdf ) . Virginia has shown that budget increases that are more 5. Manski, R.J., and E. Brown. Dental Use, Expenses, Private modest in scope can be successful if they are coupled with Dental Coverage, and Changes, 1996 and 2004. Rockville, intensive efforts to partner with dentists and respond MD:2007. Agency for Healthcare Research and Quality. to their concerns. California can also consider smaller, MEPS Chartbook No. 17 (www.meps.ahrq.gov/mepsweb/ targeted rate increases for selected services or special data_files/publications/cb17/cb17.pdf ). populations, as Virginia and Washington have done. 6. Centers for Medicare and Medicaid Services. MSIS State Summary, FY 2004: Table 17, FY 2004 Medicaid Medical Authors Vendor Payments by Service Category. CMS, June 2007 (www.cms.hhs.gov/MedicaidDataSourcesGenInfo/ Alison Borchgrevink, presidential management fellow Downloads/msistables2004.pdf ). Andrew Snyder, policy specialist Shelly Gehshan, senior program director 7. Centers for Medicare and Medicaid Services, Office of the National Academy for State Health Policy Actuary, National Health Statistics Group. Total Personal Health Care Spending, By Age Group, Calendar Years 1987, 1996, 1999, 2002, 2004. CMS, 2004, National About the F o u n d at i o n Health Expenditure Accounts The California HealthCare Foundation, based in Oakland, (www.cms.hhs.gov/NationalHealthExpendData/ is an independent philanthropy committed to improving downloads/2004-age-tables.pdf ). California’s health care delivery and financing systems. 8. National Health Law Program: Docket of Medicaid Cases Formed in 1996, our goal is to ensure that all Californians to Improve Dental Access. August 2007. have access to affordable, quality health care. For more information about the foundation, visit us online at 9. California Health Care Foundation, Denti-Cal Facts and www.chcf.org. Figures: A Look at California’s Medicaid Dental Program. Oakland, CA: 2007. Endnotes 1 0. California Health and Human Services Agency, 1. National Institute of Dental and Craniofacial Research, 2008 – 2009 Budget Facts. January 2008. National Institutes of Health. Oral Health in America: A Report of the Surgeon General. Rockville, MD: 2000. (U.S. Department of Health and Human Services). 6  |  California HealthCare Foundation