By: Michael W. Davis, DDS
Dr. Michael W. Davis practices in Santa Fe, NM. He currently chairs the district dental society peer-review committee, and is active as an expert witness on dental legal cases. He has authored numbers of articles relating to clinical dentistry, dental ethics, and protections for the public.
The recent legal settlement between Sea Mar Community Health Centers, which provides dental services to low-income residents in 10 Washington state counties, and the Washington state attorney general’s office, for $3.65 million highlighted this growing problem. These scams don’t generally benefit the professional staff, patients, contributors, and certainly not taxpayers. These swindles are designed to elevate overall clinic revenues, to enhance salaries and benefit packages of clinic directors. These nonprofit clinic directors often have compensation packages comparable with those working for Fortune 500 companies. Most other employees are not tapping in on the dishonest largesse. Here’s how this particular hustle is played.
These clinics have favorable tax status not enjoyed by private sector companies. They are exempt from most taxes. Clinic “profits” are not taxable. However, these profits are rolled-over in the dishonest clinics, into increased personal revenue for the clinic directors. Dishonest clinic directors may also generate a kickback fee from vendors providing dental equipment and/or supplies, especially if unaudited.
Unlike private sector dental clinics serving the disadvantaged Medicaid population, nonprofit clinics may access federal, state, county, & charitable grant moneys. This can be a huge income generator, especially important since Medicaid fees are often set at a level below the cost to provide that service, to standard of care. Grant moneys provide the nonprofit clinic with a per patient served, “encounter fee”. Patient encounter fees are paid to Federally Qualified Health Centers (FQHC) as a set amount, per patient visit. The patient must lawfully visit with a duly licensed healthcare professional of that nonprofit healthcare clinic, for the FQHC encounter fee to be paid. This nonprofit encounter fee often ranges in the $200 per patient visit range.
