These days it’s rare for local TV stations to produce anything resembling an expose. With their steady diet of crime, weather, and canned medical news, there just isn’t room for the hard reporting. WFAA, the ABC affiliate in Dallas, has earned a reputation as a notable exception. Throughout the summer, the station and its investigative reporter Byron Harris have taken on the Texas Medicaid agency and its spending spree for braces for poor kids.
Now there’s nothing wrong with these children getting braces. Many, no doubt, will benefit in the long run. The problem, Harris reported, is that last year the state paid more than $184 million—nearly double the amount it spent in 2008—to supply braces for 120,000 kids, some of whom may not have met the state’s criteria for orthodontic work.
The money is supposed to be spent for children between ages 12 and 19, whose teeth are so crooked they could result in a handicap. Medicaid pays some $2,200
monthly per patient for each kid with so-called crisis teeth. Texas law says Medicaid funds can’t be spent for orthodontia merely to improve a child’s appearance. Harris told his viewers: “Judging by the increased payouts, the teeth of Texas children are growing more crooked each year.”
Who’s minding the public purse down there? It appears that the state may not be looking too closely at what it is paying for, or perhaps it is looking the other way. Orthodontists as well as general dentists can determine whether a child simply has crooked teeth or crisis teeth in need of the state’s help. An outside contractor processes Medicaid claims, and apparently rejects the claims only if the paperwork is incomplete—and not on the basis of a medical evaluation.
The contractor uses a score sheet for each case, and a score of twenty-six means a kid will get help. “Any way you fill out that sheet will be approved,” one orthodontist told WFAA. “Providers use that [evaluation] as an excuse to lie on that sheet because there’s no checks on that sheet.”
Because their permanent teeth may not be in yet, Medicaid dollars are not to be spent on braces for kids under age 12. Even so, last year 19,000 kids under that age got braces anyway—that’s twenty-four percent of all Texas children who received braces courtesy of Medicaid, Harris pointed out. The state does allow exceptions to its age rule, but one doctor at the Baylor College of Dentistry said it was unlikely that the state dental director reviewed and approved all 19,000 of these cases.
What makes Harris’s series so interesting is that he has used government documents to trace where the Medicaid money is going. It’s going, it seems, to clinics, some of them once owned by local dentists but now owned by hedge funds. That makes “Wall Street the ultimate destination for millions of taxpayer dollars,” Harris reported. In one segment, he told of Richard Malouf who, along with his wife, owned All Smiles Dental Centers, a chain of fifty-one clinics that raked in more than $10 million last year. According to tax records, the orthodontia business has been good for them. The Maloufs owned two Dallas mansions valued at more than $14 million. One had a pool house big enough for a family to live in. The Maloufs recently sold the clinics to a Chicago-based hedge fund, and someone who is not a dentist now manages them.
When the new manager didn’t return calls from WFAA, the reporters found a YouTube video where he revealed his management philosophy, honed while running another dental company. Here’s how he defined success: “Are they growing? Are they profitable? And are they exceeding the profitability as well as the growth of the local market?” Apparently they are, according to WFAA. Three years ago All Smiles collected $5.4 million from Medicaid for putting braces on kids’ teeth. Since then billings have doubled.