FQHCs Churn Patients in a Big Scam

Michael W. Davis, DDS


Federally Qualified Health Centers (FQHCs) are IRS 501c nonprofit medical, mental health, and dental clinics. The federal government requires these entities and their “lookalikes” to initially pass stringent requirements for certification, including oversight mechanisms, a board of directors, accountability with clinic directors, and inspections. 

These clinics are specifically mandated to serve underserved and disadvantaged populations. Their funding is through a combination of state, federal, and local grants, as well as money through Medicaid and Medicare programs. They also receive very significant tax exemptions. 

Most FQHC dental clinics don’t operate off Medicaid fee schedules, but from an “encounter fee” arrangement. Clinics are usually remunerated by Medicaid for each patient visit, not for each coded procedure provided. Encounter fee amounts are negotiated between each FQHC and the state government. This dollar amount per patient visit may range between $180 and $425, depending the facility, its mission, and the negotiating skills of those involved. 

The existence of encounter fees as a mechanism to fund FQHCs is an overt announcement that standard Medicaid fees are grossly inadequate for clinic viability. A 2016 study from the ADA’s Health Policy Institute demonstrated that, on average, Medicaid fee-for-service reimbursements for children were 49.4% of standard fees charged by dentists. For adults, the Medicaid fee-for-service reimbursement was only 37.2% relative to standard fees charged by dentists. 

The mean operational costs for all dental practices are approximately 75%, which signifies that accepting dental Medicaid patients generally represents a highly substantial financial loss to a dental practice on a fee-for-service basis. Regardless, many goodhearted private sector doctors take on Medicaid patients and attempt to make up for the fiscal shortfall through serving a large volume of non-Medicaid patients. Obviously, some also cheat the program

The current government price control (or price fixing) of the dental Medicaid fee schedule is a classic example of failed economic principles. Unintended consequences can be quite negative resulting from top-down government planning. 

FQHCs attempt to circumvent the inherently economically flawed, government price-controlled Medicaid fee schedule. Most elect to receive remuneration for services through encounter fee mechanisms. This payment methodology is completely unavailable to the private sector. 

Safety-Net Programs

The National Network for Oral Health Access (NNOHA) focuses on safety-net programs for the nation’s disadvantaged. It has been particularly vocal about protections for dental patients in challenged demographics. It opposes excessive numbers of patient dental visits that have the sole purpose of generating clinic income via encounter fees versus genuine service to patients.

The generation of excessive patient encounters and related encounter fees is called “patient churning.” Examples of dental patient churning include:

  • Separation of exam and imaging procedures (x-rays)
  • Separation of exam, imaging (x-rays), prophylaxis (teeth cleaning), and fluoride treatment for children
  • Lack of quadrant dentistry (fillings in a dental quadrant provided in multiple visits)
  • Separation of sealants (service of dental sealants spread out over more than one visit)
  • Lack of definitive treatment of emergencies

The NNOHA also notes that the adverse outcomes of patient churning include: 

  • Treatment plans that are never completed
  • Return emergency visits
  • Patient dissatisfaction
  • Increased clinical risk
  • Increased time burden for patients and caregivers, including transportation challenges, time out of school for children, time out of work for caregivers, and the challenges of childcare during clinic visits
  • Substandard care
  • Fraud, or violations of unfair practices acts

Ethical and Legal Issues of Patient Churning

Bob Russell, DDS, MPH, director with the Iowa Department of Public Health, is a leader in the design and oversight of FQHC dental programs. He calls patient churning a “moral hazard” to FQHCs.

“A health center could be viewed as churning if a patient was brought back four times to complete restorations in the lower right quadrant instead of opting to complete all of the fillings at one time,” he said in a recent report, “solely for the purpose of securing four times the reimbursement.”

State and federal prosecutors are aware of FQHC abuse with excessive encounter charges and the resulting negative impact to taxpayers. One nonprofit facility in Oklahoma accused of fraud settled with the Department of Justice for $850,000 in 2015.

In 2012, New York Attorney General A.G. Schneiderman alleged that one FQHC dental clinic “performed and billed for exams, x-rays, and cleanings—which Medicaid regulations require dental clinics to perform and bill during one office visit—separately over multiple visits, resulting in additional cost to the Medicaid program.” The ensuing settlement was for $1.6 million. 

Similarly, another 2015 case against a dental FQHC in Washington settled for $3.65 million. Patient churning in this case was centered on separation and excessive dedicated appointments for fluoride treatments. The Attorney General’s office alleged that fluoride treatments, which dental assistants could have performed as part of a patient’s regular six-month checkup, were billed at a higher rate as standalone appointments with a dentist or hygienist instead. 

The dollar figures for settlements of alleged FQHC patient churning are significant and reasonably imply that the money defrauded taxpayers is also significant. One doesn’t like to imagine nonprofit entities conducting scams to defraud the public and take advantage of Medicaid-eligible citizens. Unfortunately, exactly that can and does occur. 

Harm to the Dental Profession 

There exists an unfortunate stigma attached to doctors working at FQHCs. It should not exist. In her 2012 emotional commentary for the ADA News, Mary Jennings, DDS, demonstrated how doctors could be unfairly disparaged because of the problem of patient churning. Funding for programs is tight, and some FQHCs can and do cheat.  

However, one needs to examine who exactly is perpetrating the swindles. When one reviews day sheets for patient scheduling, who establishes a policy for double and triple booked encounters? Are doctors and auxiliary staff running from room to room and treating patients for only 5 to 10 minutes per visit because of the policy of the directors? Are doctors and staff burned out from a treatment day overly crammed with frustrated patients, few of whom receive complete care? Is there a staff and doctor employment turnover almost like a revolving door? Is there little or no time in the schedule for doctors and hygienists to make proper clinical record entries, complete review of health histories, and obtain complete patient informed consents?

In those situations, there exist common themes. Doctors are often attracted to FQHC employment because of a concern for and a desire to bring healthcare to the disadvantaged. They may also be attracted to programs that help repay their exorbitant student loan debt. Unscrupulous clinic directors realize the vulnerability of such concerned, but often naïve, dentists and hygienists. These charlatans at nonprofits, usually with salaries well into six figures, know the right buttons to push.

Established protocols and procedures don’t benefit patients or clinical staff. The focus is to maximize patient encounter visits and resulting remuneration from Medicaid, disregarding the welfare of patients and clinicians. Doctors and supportive staff are almost never complicit.

One will quickly recognize the dishonest clinic directors by their excessive and disproportionate exaltations of heartfelt concern for the poor and disadvantaged. They almost need violin accompaniment as they spew their silver-tongued and rehearsed spin. One may hear a saccharine sweet line such as “We’re doing God’s work” or “Without our efforts, where would the poor go?” or “With an operation our size helping the underprivileged, a few unintentional billing mistakes are bound to happen.” 

Yet these managers, and almost never clinical staff, are at the center of patient churning frauds. They’ll point fingers left and right but not at themselves. “I’m not a doctor. How should I be expected to know proper clinical protocols? I have to depend on professionals for that,” they might say. Their bogus excuses ring hollow, especially to public health clinicians, who work themselves to the bone.


“A provider would get paid for performing a standardized bundle of five preventive treatments that could be done in one visit and paid for at one price,” said Dr. William Riley, a dental professor at Arizona State University.

“For children, that would be x-rays, a dental exam, teeth cleaning, a fluoride treatment, and a treatment plan. Adults would get the same thing with the addition of an exam for gum disease,” Riley said.

“If all these services are done in one visit, the insurer agrees to pay the dentist at a higher rate, so now you’re paying for quality because evidence shows these treatments are highly effective in preventing tooth decay, but you’re paying less overall since they’re all being done in one visit,” Riley said.

Riley, a dental academic, doesn’t seem to realize that the private sector and most honest FQHCs almost always provide these dental services at the same visit as he espouses, but not at a higher rate, in the interest of maximizing efficiency. Problems enter when FQHCs are disincentivized to complete a reasonable assembly of clinical services during a single dental appointment.

It’s not particularly critical that Riley is ignorant about funding mechanisms for private sector Medicaid. As an academician, he’s apparently more focused on funding for public sector dental Medicaid. The overwhelming salient issue is that his proposals for improvements by bundling preventive services fundamentally assume the widespread patient churning that is associated with FQHCs. 

Others advocate for total elimination of encounter fees and their resulting risks for patient churning. Further, government price controls on dental Medicaid services should likewise be eliminated. Common sense free-market solutions exist. Recent expansion of the broken Medicaid program only served to exacerbate existing problems.

Dental Medicaid must meet the needs of our disadvantaged citizens to the extent possible. Patients must oversee their personal healthcare decisions with maximum transparency from providers. Also, patients must be positioned to access optimal clinical care.

Dental Medicaid no longer should be an accepted cash cow for nonprofit clinic directors. Managed care organizations, which enroll patients under a myth of quality comprehensive care, need to be diminished if not mostly eliminated. Access to enrollment under a marginal and dubious insurance plan is lightyears away from access to quality care. Medicaid patients, like all patients, must be trusted to make decisions that best serve their own interests.

Acting like a helicopter parent, the government has failed in serving the dental Medicaid public. Adult citizens must be truly viewed as adult citizens by government and enjoy the rights and responsibilities of free choice for themselves and families in a free and open healthcare marketplace. It’s long past time to end government price-controlled healthcare services such as dental Medicaid. Encounter fees have similarly failed patients and taxpayers, with resulting unlawful and unethical patient churning. 

Allow citizen beneficiaries to decide which clinics and services best meet their needs, but with an annual cap on expenditures. Allow fellow citizens to access the very best clinicians and services available, which will openly compete for these patients, by eliminating government price-fixing and encounter fees. Even though citizens may be financially poor, physically disabled, or have myriad health problems, it doesn’t mean they are incapable of making informed healthcare decisions. Our underprivileged demographic should not be viewed like a population of domesticated farm animals.

People have strong motivation to act in their own self-interest. Let this law of human nature work for patients and taxpayers, and stop enriching big business, big government, and phony self-serving nonprofits. Trust in the wisdom of the individual, even compromised persons, versus manipulation by the elites.

Dr. Davis practices general dentistry in Santa Fe, NM. He assists as an expert witness in dental fraud and malpractice legal cases. He currently chairs the Santa Fe District Dental Society Peer-Review Committee and serves as a state dental association member to its house of delegates. He extensively writes and lectures on related matters. He may be reached at mwdavisdds@comcast.net or smilesofsantafe.com.

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