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Firm That Manages Dental Clinics for Kids Excluded From Medicaid

A Small Smiles clinic TODAY

A company that manages a chain of dental clinics once accused of subjecting children to painful and unnecessary procedures and bilking the government for millions of dollars has been notified it will no longer be eligible for reimbursement from federal health care programs like Medicaid, its principal source of revenue.

The company, CSHM, manages 53 clinics nationwide, most of which operate under the name Small Smiles. The clinics treat mostly low-income children in areas where access to dental care is limited.

The Office of the Inspector General of the Department Health and Human Services sent a letter to CSHM on Friday citing multiple breaches to a compliance agreement, which mandates quality of care measures. The breaches included failing to report incidents involving patients at Small Smiles clinics in Tulsa, Okla., and Mattapan, Mass.

The OIG declined to provide further detail on the specific breaches that led to the exclusion.

Sen. Chuck Grassley, R-Iowa, who last year published a report on corporate dental management companies along with former Sen. Max Baucus, D-Mont., said Monday that the CSHM exclusion notice "will protect both taxpayers and vulnerable children receiving dental care in the Medicaid program."

Following allegations that it was bilking taxpayers by doing unnecessary and substandard procedures, the company reached a 2010 settlement with the Department of Justice. Without admitting wrongdoing, the management company agreed to pay $24 million to the federal government and several states and to significantly change its practices.

But its problems didn't end there. An NBC News investigation of Small Smiles in 2012 found persistent allegations of abuse, including unnecessary root canals, shoddy work and insufficient anesthesia, from families of patients, former employees and government investigators.

And the company received a series of warnings and penalties as government and independent investigators monitored the company's activities as part of the five-year agreement.

However, the HHS Inspector General's Office noted in the 2012 NBC News report that the quality of care had improved since the company got new owners and installed a new CEO.

"Dentists have been fired, clinics have been closed, and this is not the same company," Lisa Re, a branch chief and attorney with the agency, said at the time.

Re added that excluding the clinics could leave half a million children without dental care. CSHM's dental centers see between 750,000 and 800,000 children annually.

But the Inspector General's Office said last week it issued the exclusion because CSHM failed to satisfactorily remedy issues it raised in December 2013 and January of this year, including failure to report incidents related to patient care. While government monitors perform onsite visits, CSHM is also required to notify the agency of any breaches of its compliance agreement.

In a statement to NBC News, the company disputed the decision to exclude it from billing Medicaid.

"Absolutely and without question the dental centers working with CSHM maintain a standard of care that merits being allowed to participate in Medicaid and other federal health care programs," it read.

The company also said the penalty was too severe for a relatively minor infraction.

"Excluding CSHM from federal programs because of the few reporting omissions noted by the OIG is unduly harsh and inconsistent with how the government has handled breaches of (corporate integrity agreements) … in other circumstances."

The exclusion will take effect in 30 days from the date of the letter unless CSHM requests a hearing to appeal within 25 days. According to the company, "CSHM intends to consider all legal remedies including an appeal."