The impact of an innovative reform to the South Carolina Dental Medicaid system

Health Services Research, August, 2005 by Paul J. Nietert, W. David Bradford, Linda M. Kaste

The Medicaid program was established in 1965 (Mitchell 1991), and amendments to the Medicaid program instituted in 1968 required all states to include dental care for individuals under 21 years of age as part of the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) service (U.S. Department of Health and Human Services 2000). Low levels of provider participation, by both physicians and dentists, have plagued the Medicaid program since its inception (U.S. Department of Health and Human Services 2000). This relative shortage of willing suppliers has persisted in the face of numerous reforms to the Medicaid program. Historically, low levels of reimbursement have been cited as one of the main factors that lead to low volume of aggregate supply of services, as Medicaid programs around the United States have traditionally suffered from reimbursement rates dramatically lower than those of the private market (Mitchell 1991). However, research into the effect of fee changes on provider participation has yielded somewhat equivocal results regarding the ability of fee increases to change provider behavior (Fossett and Peterson 1989; Adams 1994; Perloff et al. 1997; Coburn, Long, and Marquis 1999). To date, no dental Medicaid reform has been proven in published medical literature to dramatically improve access to dental care for children; nor has any such reform been shown to increase the likelihood that a dentist provides services to Medicaid recipients.

Given the large number of families without private insurance and/or dental health insurance coverage, lack of access for children to regular dental services is an acute public health problem. Data from the National Health and Nutritional Examination III survey indicated that 17 percent of even very young children (i.e., 2-4 year olds) have dental caries (Kaste et al. 1996). By age 17, nearly 80 percent of children will have experienced tooth decay. Caries rates are even higher among rural, low income, and minority populations, and among children of less educated parents (i.e., individuals who traditionally are most likely to be covered by Medicaid) (Evans et al. 1996; Kaste et al. 1996; Vargas, Crall, and Schneider 1998).

Only a few papers in the economics and medical literature have examined the impact of Medicaid fees on dentist participation in Medicaid and supply of services to the Medicaid population (Kushman 1978; Mayer et al. 2000; Nainar 2000). While Kushman did find a small impact of fees on dentist participation, this effect was not observed in the study by Mayer et al. However, Mayer et al. did find a small and marginally significant (p = .10) positive effect of fees on dentist Medicaid volume, conditional on the dentist treating at least 10 enrollees per month.

South Carolina has faced many challenges with its population having access to dental treatment and prevention. The state has over 4 million people (1.2 million under age 21) and approximately 1,600 licensed dentists, yielding a ratio of 750 children per licensed dentist. A state assessment showed that EPSDT screenings identified dental caries as the number one health problem among South Carolina children during the 1995-1996 school year (personal communication, Raymond Lala, State Oral Health Coordinator, March 2003). A preschool health assessment performed by the South Carolina Department of Health and Environmental Control in 1997 showed that only 13 percent of children entering targeted schools (high degree of enrolled students on the reduced-fee or free lunch program) had received at least one preventive dental service (personal communication, Raymond Lala, South Carolina Oral Health Coordinator, March 2003), despite the fact that in this state, any child enrolled in the overall Medicaid program is eligible to receive dental benefits. In 1997, the Centers for Medicare and Medicaid Services reported that only 25.5 percent (83,497 of 327,424) of children eligible for EPSDT services in South Carolina actually received a dental assessment (Centers for Medicare and Medicaid Services 2000).

As a possible solution to some of these challenges, South Carolina instituted several measures as part of a reform to the dental Medicaid system. Among other measures, the reform included increasing reimbursement rates for each type of service to the 75th percentile of S.C. dentists' charges (based upon 1998 figures). Prior to 2000, dentists were receiving, on average, approximately 35 percent of their charges billed to Medicaid (personal communication, Phil Latham, Operations Manager, South Carolina Dental Association, August 2003). Table 1 lists some selected procedures, including common ones and others which experienced significant changes in reimbursement rates from 1998 to 2000. Several other initiatives were undertaken during this time frame, including the development of a children's oral health coalition, active recruitment by the state dental association to encourage dentists to participate in Medicaid, the streamlining of the Medicaid billing process, and the addition of a dental component to Family Support Services (an agency within the State Department of Health and Environmental Control [DHEC]) to address patient compliance with appointments and treatment. All changes are described in a compendium published online by the American Dental Association (American Dental Association 2003). The oral health coalition was an organized effort involving DHEC and the S.C. Dental Association, and a variety of other public and private partners that addressed oral health problems in the state and sought to secure funding from the state's General Assembly for the increased Medicaid fees for dental providers studied here. Starting in the beginning of 2000, dentists were recruited by the state dental association via mailed information packets and one-on-one phone calls. New Medicaid enrollees were educated by health department staff about their coverage options and available dental providers. Billing Medicaid for dental procedures was made easier by a number of changes, including the introduction of electronic billing, electronic funds transfer, and the removal of a requirement that dentists first bill third-party insurance carriers prior to billing Medicaid. The purpose of this study was to evaluate the effectiveness of this reform in terms of the number of children who, as a result of the reform, received dental services covered by Medicaid as well as the number of dental services provided to those children.