Department of Health and Human Services
 
OFFICE OF 

  
INSPECTOR GENERAL 

 
 
 
 
 
 
 
 
IMPR  OPER PAYMENTS FOR 

 
M P D
EDICAID  EDIATRIC  ENTAL 

 
 
S  
ERVICES 

 
 
 
 
 
 
Daniel R. Levinson 
  
Inspector General 

 
September 2007 
 
OEI-04-04-00210 
   
 
 
Office of Inspector General 

 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452,  
as amended, is to  protect the integrity of  the Department of Health and Human Services 
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components:  
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services  for HHS, either by  
conducting audits with its  own audit resources or by overseeing audit work done by others.   
Audits examine the performance of HHS programs and/or its grantees and  contractors  
in carrying out  their respective responsibilities and are intended  to provide independent  
assessments of  HHS programs and operations.  These assessments help reduce waste, 
abuse, and mismanagement  and  promote economy and  efficiency throughout HHS. 
Office of Evaluation and Inspections  
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  Specifically, these evaluations focus on preventing fraud,  waste,  or  
abuse and promoting  economy, efficiency, and effectiveness  in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative  
investigations  of  allegations of wrongdoing  in HHS  programs or to HHS  beneficiaries  
and of unjust enrichment by  providers.  The investigative  efforts  of OI lead to  criminal  
convictions, administrative sanctions,  or  civil monetary penalties.  
Office of Counsel to the Inspector General 
The  Office of Counsel to the Inspector General (OCIG)  provides  general legal services  to  
OIG, rendering  advice and opinions on HHS programs  and operations and providing all 
legal support in OIG's internal operations.   OCIG imposes program exclusions and civil 
monetary penalties  on health care providers and litigates  those actions  within HHS.   
OCIG also  represents OIG in the global settlement of  cases  arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to  the health care  
community,  and issues fraud alerts  and other industry  guidance.  
   
   
  E X E C U T I V E   S U M M A R Y
OBJECTIVE 
To assess the appropriateness of Medicaid payments for pediatric dental 
services during calendar year 2003 in five States. 
BACKGROUND 
Improper Medicaid payments for dental services have been identified  
periodically by State Medicaid Fraud Control Units (MFCU).  In 2004,  
a MFCU investigation determined that dentists were reimbursed  
$4.5 million for unnecessary dental services.  In 2000, another MFCU 
identified a widespread fraud scheme  by dentists who recruited children 
to receive Medicaid-reimbursable services, many of which were 
unnecessary or were not provided.     
In 1967, Congress established the Early and Periodic Screening, 
Diagnostic, and Treatment (EPSDT) program under Medicaid to ensure 
that children and youth receive routine and preventive health care 
services.  To meet the EPSDT requirements, States must provide 
routine services to children and youth, even if these services are not 
available to other needy populations in the States Medicaid program.    
Federal regulations require State Medicaid programs to ensure that 
claims for EPSDT services are accurate, supported by documentation, 
and provided as medically necessary.  The Medicaid policies established 
in each of the five States we reviewed also included these requirements.    
In this report, we examined a stratified random sample of Medicaid  
pediatric dental services provided in five States during 2003 to 
determine whether the services met requirements for proper 
documentation, billing, and medical necessity.   
FINDINGS 
Thirty-one percent of  Medicaid pediatric dental services  in the five  
States resulted in improper payments.  In the five States we reviewed, 
improper payments for pediatric dental services  provided during 
calendar year 2003 totaled an estimated $155 million, of which the 
Federal share was approximately $96 million.     
An estimated 24 percent of services  had documentation errors that 
prevented  medical record reviewers from determining whether the 
services were medically necessary and/or billed appropriately.  
  OEI-04-04-00210   IMPROPER  PAYMENTS  FOR  MEDICAID  PEDIATRIC  DENTAL  SERVICES   i   
   
E X E C U T I V E   S U M M A R Y
   
Documentation errors accounted for $138 million (89 percent) of the 
total improper payments we identified. 
In addition, 7 percent of services did not meet billing requirements and 
2 percent were medically unnecessary.  The total percentage of errors 
exceeds 31 percent because some services had more than one type of 
error.          
Documentation errors  accounted for the largest amount of improper 
payments in all five States.  Improper Medicaid payments for pediatric 
dental services ranged from an estimated $3 million to $78 million in 
the five States we reviewed.  Despite this variation among the States,  
the majority of improper payments in each State were due to  
documentation errors.  Payments for services with documentation errors  
ranged from 75 percent to 94 percent of a States total improper 
payments for pediatric dental services.     
RECOMMENDATIONS 
We found that 31 percent of the Medicaid pediatric dental services  
provided in calendar year 2003 in the five States we reviewed resulted 
in estimated improper payments of  $155 million.  Documentation errors 
were the most common, resulting in  $138 million of the total improper 
payments (89 percent).  
Without the required documentation, State Medicaid agencies, medical 
record  reviewers, or  other oversight authorities cannot determine the 
appropriateness of services.  Accordingly, we recommend that the 
Centers for Medicare &  Medicaid Services (CMS) take the following 
actions to reduce documentation errors for Medicaid pediatric dental 
services: 
Increase Efforts to Ensure That States Enforce Existing Policies Relating 
to the Proper Documentation of Pediatric Dental Services                                    
For example, CMS can assist States in targeting medical reviews and or 
developing prepayment edits to ensure appropriate documentation of  
certain pediatric dental services. 
Provide Assistance to States to Promote Provider Awareness and Ensure 
Compliance with Documentation Requirements                                            
For example, CMS can assist States with developing educational 
brochures for Medicaid pediatric dental providers that emphasize the 
importance of documentation. 
 
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E X E C U T I V E   S U M M A R Y
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
CMS did not indicate whether it concurred with our recommendations.  
Rather, CMS stated that it does not disagree with our 
recommendations and that our recommendations dovetail into the 
Medicaid Integrity Group's charge to provide  effective support and 
assistance to States.  Where appropriate, we made changes to the report 
in response  to CMSs technical comments. 
  OEI-04-04-00210   IMPROPER  PAYMENTS  FOR  MEDICAID  PEDIATRIC  DENTAL  SERVICES   iii   
 
 
  T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
  
 
 
I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1 
  
 
 
F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7 
  
  Thirty-one percent of services resulted in improper payments. . . .  7 
  
Documentation errors accounted for the largest 
                         
amount of improper payments . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10 
  
 
R E C O MMEN D A T ION S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12 
  
Agency Comments and Office of Inspector General Response . . .  12 

 
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14 
  
  A:	  Detailed Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14 
  
  B:	  Point Estimates and Confidence Intervals. . . . . . . . . . . . . . . .  20 
  
C:	  Detailed Error Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23 
  
D: 	Comparison of Documentation and Total Error Rates  
                      
  by State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25 
  
E:	  Agency Comments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26 
  
 
         
 
A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29 
    
   
  I N T R O D U C T I O N
OBJECTIVE 
To assess the appropriateness of Medicaid payments for pediatric dental 
services during calendar year 2003 in five States. 
BACKGROUND 
Title XIX of the Social Security Act established Medicaid in 1965 as a 
Federal-State partnership to provide certain basic services to 
categorically and medically needy populations.1   The program currently  
serves approximately 58 million people, including children, the aged, 
the blind, the disabled, and people who are eligible to receive 
Supplemental Security Income.2      
States have flexibility in designing their Medicaid programs; however, 
they must meet certain minimum requirements to receive Federal 
matching funds.  Within these broad Federal requirements, each State 
decides eligible groups, types and range  of services, payment levels for 
services, and administrative and operating procedures for its Medicaid  
program.3    
Improper Medicaid Payments for Dental Services  
Improper Medicaid payments for dental services have been identified  
periodically by State Medicaid Fraud Control Units (MFCU).4  Improper  
payments include any payment that should not  have been made or was 
made in an incorrect amount under statutory, contractual, 
administrative or other legally applicable requirement.5  
In 2004 an investigation by Californias MFCU led the State Attorney 
General to file charges against 20 dentists for defrauding Californias 
 
1  42 U.S.C.  1396-1396v; sections 1901-1936 of the Social Security Act. 
2 Medicaid Statistical Information System State Summary Datamart, based on 2004 
data. Available online at http://msis.cms.hhs.gov. Accessed on January 2007. 
3 Program description of Grants to States for Medical Assistance Programs:  42 CFR        
 430.0. 
4 Under section 1902(a)(61) of the Social Security Act, each State is responsible for 
operating a MFCU unless it would not be cost effective.  MFCUs investigate and prosecute 
violations of State Medicaid provisions and  review complaints of abuse or neglect.  Section  
1903(q) of the Social Security Act describes State requirements for fraud control.  
5 Implementation Guidance for the Improper Payments Information Act of 2002, Public 
Law 107-300, Chief Financial Officers Council-Presidents Council on Integrity and 
Efficiency Erroneous and Improper Payments Work Group. 
 
  OEI-04-04-00210   IMPROPER  PAYMENTS  FOR  MEDICAID  PEDIATRIC  DENTAL  SERVICES   1   
   
I N T R O D U C T I O N   
Medicaid Program, abusing children and elders, and intentionally 
inflicting bodily injury.6  The dentists unnecessarily performed root  
canals, drilled into patients healthy teeth, and completed as many as  
20 medically unnecessary filling procedures on the same patient, 
defrauding the Medicaid program of $4.5 million.   
In 2000, Floridas MFCU investigated a widespread Medicaid fraud 
scheme by dentists who recruited children to receive Medicaid-
reimbursable services.  Many of the services were found to be  
unnecessary or not provided.7    
In fiscal year 2006, the Centers for Medicare & Medicaid Services 
(CMS) implemented a program designed to  estimate and monitor State  
and national improper payment rates in the Medicaid program.8   
However, CMS does not estimate improper payment error rates for 
specific services (e.g., dental services) at the State or national levels. 
Medicaid Coverage of Pediatric Dental Services   
In 1967, Congress established the Early and Periodic Screening, 
Diagnostic, and Treatment (EPSDT) program under Medicaid.  The  
EPSDT program requires States to provide children and youth with 
routine and preventive health care services that normally may not have 
been provided through the Medicaid program.   To meet the EPSDT 
requirements, States must provide dental screenings and all medically 
necessary diagnostic, preventive, and treatment  services to children and  
youth, even  if these services are not available to other needy 
populations in the States Medicaid programs.9      
 
 
6 Dentists Accused of Fraud, Assault, San Francisco Chronicle.  September 23, 2004.  
Available online at http://www.sfgate.com/cgi-
bin/article.cgi?f=/c/a/2004/09/23/MNGQK8TI8U1.DTL&hw=Medi+cal+dental&sn=012&sc=2 
24 . Accessed on November 9, 2006. 
7 13 Arrested For Medicaid Fraud at South Florida Dental Clinics, Office of the 
Attorney General of Florida.  December 7, 2000.  Available online at  
http://myfloridalegal.com/newsrel.nsf/newsreleases/634AAC1241EADF5B852569AE004F64 
B7 . Accessed on October 5, 2006. 
8 CMS implemented the Payment Error Rate Measurement program in fiscal year 2006 
to comply with Public Law 107-300.  Available online at www.amchp.org/policy/PERM1.pdf.  
Accessed on March 9, 2006. 
9 The Federal EPSDT requirements are described in 42 CFR  441.56.   States must offer 
these services to children and youth under 18 years of age but may choose to extend  
eligibility through age 21.  All five States examined in our study offered EPSDT coverage to 
beneficiaries up to age 21 in 2003.    
  OEI-04-04-00210   IMPROPER  PAYMENTS  FOR  MEDICAID  PEDIATRIC  DENTAL  SERVICES   2   
   
I N T R O D U C T I O N   
In 2003, Federal and State spending on all Medicaid dental services 
totaled $3 billion.10  In this report, we  analyzed Medicaid pediatric 
dental services provided during calendar year 2003 in five States 
(Idaho, Indiana, Massachusetts, North Carolina, and Texas), hereafter 
referred to as States A-E.11  In the five States, pediatric dental services 
cost $555 million in 2003.12  This amount represented over 90 percent of 
Medicaid payments for all (adult and pediatric) dental services in the  
five States.13  Furthermore, pediatric dental services in the five States 
accounted for over 18 percent of the national Medicaid expenditures for  
pediatric dental services provided in 2003.   
Federal and State Medicaid Requirements for Claims Payments  
Federal regulations require State Medicaid programs to ensure that 
claims are supported by documentation and accurately billed.  
Specifically, to ensure that claims are supported by documentation, 
States must require providers to [k]eep any records necessary to  
disclose the extent of services the provider furnishes.14  To ensure 
accurate billing, States are required to include a statement on the claim 
forms that,  when signed by the provider, certifies the accuracy and  
completeness of information submitted for reimbursement of services.15   
Finally, Federal law requires States to ensure that services are provided  
to the EPSDT population as medically necessary.  In addition, the 
EPSDT benefit requires States to provide [s]uch other necessary health  
care to . . . correct or ameliorate defects, or conditions.16    
Federal regulations permit States to set billing and documentation 
requirements for specific services  offered under their EPSDT program.17   
Examples of service-specific requirements include restrictions on the 
 
10 Medicaid Budget and Expenditure System dental claims for fiscal year 2003.   
11 In this report, the letters A-E refer to the same States throughout the report but do  
not correspond to the order of States as they are listed here. 
12 The Federal share of this total was approximately $344 million.  Pediatric dental  
claims data were obtained directly from the States.   
13 Payments for all Medicaid dental services (both adult and pediatric) in the  five  States  
totaled $610 million in fiscal year 2003 (Federal share of approximately $376 million).  
Medicaid Budget and Expenditure System dental claims for fiscal year 2003.   
14 Required provider agreement, 42 CFR  431.107(b)(1). 
15 Providers statements on claims forms, 42 CFR   455.18(a)(1).   
16 Social Security Act  1905(r)(5).  This requirement applies specifically to EPSDT 
services. 
17 42 CFR  441.58(a) and 441.56(b)(2) allow States to use reasonable standards of 
medical and dental practice to determine the frequency of services.  42 CFR 440.230(d) 
allows States to place appropriate limits on a service.       
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I N T R O D U C T I O N   
frequency of services that can be provided within a specific timeframe, 
such as the  number of cleanings per year, and limitations based on the 
patients age. 
METHODOLOGY 
We used peer medical record review  to evaluate a sample of Medicaid 
pediatric dental services provided during calendar year 2003 in States 
A-E.  See Appendix A for additional information  about our methodology.    
Sample Selection 
Our sampling universe was limited to fee-for-service Medicaid pediatric 
dental services that were provided during calendar year 2003 in States 
A-E. To select the five States, we ranked all 50 States by Medicaid 
dental spending in fiscal year 2002 and eliminated States that used 
managed care to pay for any portion of their dental services. We also 
selected States based on the availability of the States data in the 
Medicaid Statistical Information System database at the time of data 
collection, the percent of Medicaid spending on  pediatric dental services, 
and the regional and economic diversity of the States.     
Using information from each States Medicaid Management Information 
System (MMIS) database, we constructed a stratified sample of  
2,000 pediatric dental services.  To improve our estimates, we stratified 
our population based on  Medicaid allowed payments.  Each States 
population was divided into 3 strata, for a total of 15 strata.  We 
excluded services rendered by providers that were under investigation 
at the time of our study, reducing our sample size to 1,824 services.18    
Medical Record Review    
We requested medical records from the providers in our sample of  
1,824 services and received records for 96 percent of the services  
(1,744 services). The remaining 4 percent of services with medical 
records that were not provided (80 services) are included as 
undocumented errors in our results.19  We contacted nonresponding 
providers at least three times to obtain the medical records.   To ensure  
that they had received our requests,  we telephoned providers that failed  
to respond to our original and follow-up written requests.     
 
18 See Table 3 of Appendix A for population  and sample information, before and after 
excluding providers under investigation.   
19 An error is defined as a violation of one or more State requirement.      
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I N T R O D U C T I O N
   
Certified professional coders and licensed dentists reviewed  the records 
obtained from providers.  All coders had experience in performing 
medical record reviews,  and the dentists were all licensed to  practice in 
at least one State.  These medical record reviewers used 2003 State 
Medicaid policies that included requirements specific to the EPSDT 
services to identify documentation and billing errors.  Each States 
policies were used to identify errors in the services from that State.  For  
example, the medical record reviewers used 2003 Texas Medicaid 
policies to examine services in our sample provided in Texas.20   To 
determine whether services were  medically necessary, the medical 
record reviewers used State and Federal standards of medical necessity  
for services provided to the EPSDT population.21      
Error Categorization 
We grouped  the services  that had errors into three categories 
documentation errors, billing errors, and medical necessity errors.  To 
provide more detailed information regarding the type of errors we 
identified, we categorized the primary error categories into 
subcategories where appropriate.   
For example, we further categorized documentation errors as those that 
were insufficiently documented and  those that were undocumented.  We  
further categorized billing errors as services that had incorrect 
procedure codes (upcoded and downcoded), were  not billable,  were 
unbundled, and were billed with an incorrect number of units.  
Appendix A contains a more detailed description of these  categories and 
subcategories. 
Data Analysis 
We analyzed the medical record review results in SAS, a software 
program used for statistical analysis.  Specifically, for each of the three  
error types,  we statistically projected the error percentages and the 
improper payments for Medicaid pediatric dental services provided  
during 2003 in the five States.  We calculated the improper payments 
based on the amount paid for the services as specified in each States 
MMIS database.      
 
20 Quality assurance steps, such  as interrater reliability testing to ensure consistency 
among the reviewers, were used  throughout the review process.  See Quality Assurance in  
Appendix A for more information. 
21 Social Security Act  1905(r)(3) and (5).  
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I N T R O D U C T I O N
   
For services  that were upcoded, downcoded or unbundled or had the  
incorrect number of units, we considered  only a portion of the payment 
for the service to be improper.  We determined the improper amount for 
each of these services by calculating the difference between the 
Medicaid payment made to the provider and the payment that should  
have been made based on our medical record review.  For all other  
services (i.e., services with documentation errors, medically unnecessary 
services, and services that were not billable), we considered the entire 
amount paid to the provider to be improper.   
Limitations 
Our results cannot be extrapolated nationally, to other States, or  
beyond the timeframe of our evaluation.  Accordingly, we make no  
inferences about improper payments outside our evaluation scope.    
Standards   
This evaluation was conducted in accordance with the Quality 
Standards for Inspections issued by the Presidents Council on 
Integrity and Efficiency and the Executive Council on Integrity and 
Efficiency. 
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  F I N D I N G S  
 
Thirty-one percent of Medicaid pediatric dental  In the five States we reviewed,     
services in the five States resulted in improper  31 percent of Medicaid pediatric 
dental services provided during 
payments  
calendar year 2003 did not meet 
documentation, billing, and medical necessity requirements (see  
Table 1). Improper payments for these services totaled an estimated  
$155 million, of which the Federal share was approximately  
$96 million.22    
Table 1: Error Rates for Medicaid Pediatric Dental Services Provided in 
Five States, 2003  
 
Services   Amount Paid 
Type of Error  (Percentage)  (Millions) 
Documentation   24%  $138 
Billing   7%  $12 
Medically Unnecessary   2%  $12* 
(Overlapping errors)**  (2%)  ($7)* 
Total Errors   31%  $155 
* Relative precision is too large to confidently project.  
 
** Overlapping errors are subtracted to obtain the categorys total. 
   
Source:  Office of  Inspector General  medical record review of Medicaid pediatric dental  services.   
         
Appendix B (Tables 5-10) gives the point estimates and confidence 
intervals for the errors and improper payments listed in Table 1 and  
Appendix C  (Tables 11-13) provides further detail on the errors and  
improper payments we found.  
Twenty-four percent of services had documentation errors  
Documentation errors were the most common type of error.23   An 
estimated 24 percent of  pediatric dental services provided during 
calendar year 2003 in the five States did not meet documentation 
requirements.  Specifically, 18 percent were insufficiently documented 
and 6 percent were undocumented.24  In total, these services  
 
22 This estimate is calculated based on a 62-percent Federal share of Medicaid  dental 
expenditures in 2003.    
23  The documentation error rate was statistically different from  both the billing error 
rate and the medically unnecessary error rate at the 95-percent confidence level.   
24 See Appendix B for the point estimates and confidence intervals for insufficiently 
documented and undocumented  subcategories. 
  OEI-04-04-00210   IMPROPER  PAYMENTS  FOR  MEDICAID  PEDIATRIC  DENTAL  SERVICES   7   
   
FF II NN DD II NN GG SS  

represented an estimated $138 million of the improper payments we  
identified (see Appendix C, Table 11). Without the required  
documentation, medical record reviewers could not determine whether  
these services were medically necessary and/or billed appropriately.   
Insufficiently Documented Services    
Of those services that had documentation errors, almost three-fourths  
were insufficiently documented.   Therefore, the medical record  
reviewers were unable to determine whether these services  were  
medically necessary, billed correctly, or both. 
An estimated 18 percent of pediatric dental services had insufficient 
documentation. Specifically, 13 percent were insufficiently documented 
to determine if the services were medically necessary and 9 percent  
were insufficiently documented to determine if the services were billed 
correctly. An additional 4 percent of services had insufficient 
documentation to determine whether the services were both medically 
necessary and billed correctly and were, therefore, subtracted from the 
total to prevent double counting.  In total, insufficiently documented 
services accounted for an estimated $103 million of the improper 
payments.    
Examples of services that were insufficiently documented to determine  
medical necessity included (1) a procedure that was supported by an 
inconclusive (unreadable) x-ray and (2) a crown placement that was 
supported by a record that did not include an x-ray of the tooth. 
Examples of services that were insufficiently documented to determine  
correct billing included medical records that indicated that the provider 
(1) performed a restoration on particular teeth but did not identify the  
tooth surfaces that were restored and (2) removed an impacted tooth but 
failed to indicate the type of removal (information that affects 
reimbursement of the service).25     
Undocumented Services   
Of those services that had documentation errors, over one-fourth were 
undocumented.   Undocumented services  either had no documentation or 
were unsubstantiated by the documentation submitted. 
An estimated 6 percent of pediatric dental services were undocumented. 
Specifically, we did not receive documentation for 4 percent of services  
 
25 Partially and completely bony removals are reimbursed  different amounts. 
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F I N D I N G S  
in our sample, and 2 percent of services were unsubstantiated by the 
documentation submitted.  Undocumented services accounted for an  
estimated $34 million of the total improper payments.26  
Examples of unsubstantiated services included those for which the  
records submitted by the providers  contained only the account ledger (a 
financial document used by the providers to claim reimbursement)  and 
records that lacked clinical treatment notes describing the medical 
aspect of the services.   
Seven percent of services had billing errors 
An estimated 7 percent of pediatric dental services provided during 
calendar year 2003 in the five States had billing errors. Billing errors 
included services billed with incorrect procedure codes, services that 
were not billable because they violated a Federal or State requirement 
for reimbursement, unbundled services, and services billed with the 
incorrect number of units.27  In total, billing errors accounted for an 
estimated $12 million of the improper payments (see Appendix C,  
Table 12). 28   
Examples of services with incorrect procedure codes included  upcoded  
and downcoded services. Specifically, a limited oral exam was billed as 
a service that had a higher reimbursement rate  (upcoded service), and a 
tooth extraction was billed as a service that had a lower reimbursement 
rate (downcoded service).   
Examples of services that were not billable included two orthodontic 
adjustments billed in the same month, violating the States limitation 
on the frequency for that service.  Also, an anesthesia was billed 
separately from a restorative procedure performed on the same day.  
However, according to the States policy, restorations include payment 
for anesthesia.   
 
26 The estimated improper payments for insufficiently documented and undocumented  
services are rounded and, therefore, do not equal the improper payments for all 
documentation errors when summed. 
27 Unbundled services are billed using multiple individual codes rather than a single  
appropriate code for the combination of services described in the dental record. 
28 For services that were upcoded, downcoded or unbundled or  had the incorrect number  
of units, we  did  not consider the entire payment for the service to be improper.  We  
calculated the improper amount as the difference between the payment made  by Medicaid  
and the appropriate payments that should  have been made for each of the services.   
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F I N D I N G S  
Two percent of services were medically unnecessary   
An estimated 2 percent of pediatric dental services provided during 
calendar year 2003 in the five States were medically unnecessary.    
These services represented an estimated $12 million of the total 
improper payments.29    
Examples of medically unnecessary services included a root  canal 
performed on a primary tooth that was ready to fall out, crowns placed  
on teeth that did not have large areas of decay warranting that level of 
restoration, and sealants inappropriately applied to primary teeth.  
 
In the five States we reviewed, 
Documentation errors accounted for the largest amount 
improper Medicaid payments for 
of improper payments in each of the five States 
pediatric dental services ranged 
 
from an estimated $3 million to 
$78 million.  Despite this wide variation among the States, the majority 
of improper  payments in each State  were due to  documentation errors.30    
As illustrated in Table 2, documentation errors represented between  
75 percent and 94 percent of a States estimated improper payments.  In 
three of the five States, documentation errors accounted for at least  
90 percent of total improper payments.   
Table 2: Improper Payments for Services With Documentation Errors 
in the Five  States 
Projected Improper Payments (Millions) 
State  Documentation Errors  All Errors*  Percentage
A  $3.19  $3.38  94% 
B  $25.32   $28.56   89% 
C  $71.78   $77.91   92% 
D  $24.18   $26.98   90% 
E  $13.42   $17.88   75% 
Total  $137.88  $154.72  89%  
* Estimated improper payments do not include improper  payments for services with overlapping  errors. 
Source:  Office of  Inspector General  medical review of Medicaid pediatric dental services. 
 
29 The relative precision equals 56 percent.  See Appendix B for point estimates and  
confidence intervals.  
30 For each State we reviewed, the improper payments for services with documentation  
errors were statistically different from the improper payments for all other errors (billing 
and medical necessity) in that State at the 95-percent confidence level.   
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F I N D I N G S  

Furthermore, in four of the five States (States A, B, C, and D), 
documentation errors were more prevalent than billing and medical 
necessity errors combined.31  The horizontal bars in Figure 1 (A-E) 
represent the overall error rate in each of the corresponding States.  The 
overall error rate in each State is divided into documentation errors and  
other errors (billing and medical necessity errors, which are combined).   
 
Figure 1.   Documentation Errors 
A 
Comparison of   Other Errors 
Documentation 
B
and All Other  
Errors  in the Five 
C
States  
D 
E 
0%  5%  10%  15%  20%  25%  30%  35%  40% 
Total Errors (By State) 
Note that estimated total error rates do  not include overlapping errors. 

Source:  Office of  Inspector General  medical record  review of Medicaid pediatric dental  services.   

   
For example, the overall error rate (total of documentation, billing, 
and/or medical necessity errors) in State A was approximately  
19 percent.   The documentation error rate in State A was 18 percent  
and less than 1 percent of services in State A were medically 
unnecessary or billed inappropriately.  See Appendix D for the specific 
documentation error rates and overall error rates in each State.  
 
31  There is a statistical difference between the documentation error rate and all other 
errors in these four States.    
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  R E C O M M E N D A T I O N S
 
We found that 31 percent of the Medicaid pediatric dental services  
provided in calendar year 2003 in the five States resulted in estimated 
improper payments of $155 million.  These services did not meet 
Federal and State requirements for documentation, billing, and medical 
necessity of EPSDT services.   
Documentation errors were the most common type of error.   We 
estimate that documentation errors resulted in $138 million of the total 
$155 million in improper payments (89 percent).  
Without the required documentation, State Medicaid agencies, medical 
record  reviewers, or  other oversight authorities cannot determine the 
appropriateness of services based on their medical necessity  and/or their 
billing. Federal regulations and State Medicaid policies already specify 
requirements for the proper documentation of services.  Accordingly,  we  
recommend that CMS take the following actions to reduce 
documentation errors for Medicaid pediatric dental services:  
Increase Efforts to Ensure that States Enforce Existing Policies Relating 
to the Proper Documentation of Pediatric Dental Services                                  
For example, CMS can assist States in targeting medical reviews and or 
developing prepayment edits to ensure appropriate documentation of  
certain pediatric dental services. 
Provide Assistance to States to Promote Provider Awareness and Ensure 
Compliance with Documentation Requirements                                          
For example, CMS can assist States with developing educational 
brochures for Medicaid pediatric dental providers that emphasize the 
importance of documentation.      
In addition to these recommendations, we will forward information on 
the miscoded, insufficiently documented, and medically unnecessary  
services in our sample to CMS for appropriate action.   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
CMS did not indicate whether it concurred with our recommendations.  
Rather, CMS stated that it does not disagree with our 
recommendations and that our recommendations dovetail into the 
Medicaid Integrity Groups charge to provide  effective support and 
assistance to States.    
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R E C O M M E N D A T I O N S  
CMS noted that this study was conducted in only five States and that 
the results cannot be extrapolated nationally, to other States, or beyond  
the timeframe under review.  CMS questioned  whether missing or  
incomplete  documentation may have been stored electronically and not 
included in provider responses.  While this is possible, providers are  
required, upon request, to provide legible and complete documentation 
to support claims.  CMS also expressed concerns about childrens access 
to Medicaid dental services.  The objective of this report is to assess the 
appropriateness of Medicaid payments for pediatric dental services  
during calendar year 2003 in five States. 
Where appropriate, we  made changes to the report in response to CMSs 
technical comments.   The full text of CMSs comments is provided in 
Appendix E.  
          
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  A P P E N D I X   A
DETAILED METHODOLOGY 
Below, we elaborate on the methodology used to accomplish our 
objective.   
Scope 
Services in our universe were restricted to fee-for-service Medicaid 
dental services provided to children and youth under the age of  
21 during calendar year 2003 in five States (Idaho, Indiana, 
Massachusetts, North Carolina, and Texas).  These five States are  
referred to as States A-E.32  We focused this evaluation on Medicaid  
pediatric dental services because, as required by the EPSDT program, 
States must provide Medicaid-eligible children and youth with initial 
and periodic examinations and medically necessary follow-up care, 
including dental care.    
State Selection  
We focused  our evaluation on five States, which  we selected  based on 
the following characteristics: 
  high total Medicaid dental expenditures; 
  no managed care for Medicaid dental services; 
  complete submission of Medicaid Statistical Information System 
data for 2002;  
  percentage of Medicaid spending on  pediatric dental services; 
  variation in demographic characteristics (e.g., geographic 
distribution and economic characteristics); and  
  overall Medicaid spending.   
Sample Selection 
Based on information from each States MMIS database, we constructed 
a clustered sample of 2,000 pediatric dental services.  To improve our 
estimates, we stratified our population based on Medicaid allowed  
payments.  Each States population was divided into 3 strata, for a total 
of 15 strata. 
   
 
32 In this report, the letters A-E refer to the same States throughout the report but do  
not correspond to the order of States as they are listed here.   
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A P P E N D I X   A  

We cross-checked the provider information for the services in our  
sample with the Office of Inspector Generals Office of Investigations 
and the lists of active investigations compiled by each States Medicaid 
Fraud Control Unit.   We excluded services rendered by providers under  
active investigations.  The excluded services reduced the expenditures 
for services in our sample from $202,650 to $188,298 and reduced our 
sample size to 1,824 services.  Table 3 provides information about the 
sample size  and population, before and after excluding services 
rendered by providers that were under investigation.   
Table 3: Strata Definitions and Sizes for Sample and Population 
Sample Excluding 
Providers Under  Population Excluding Providers  
Stratum Definition   Sample  Investigation  Population  Under Investigation 
(Range of   Services   Services  
Amounts Paid in   (Stratum  Amount   (Records  Amount  
Stratum)   Size)  Paid*  Requested)  Paid*  Services  Amount  Paid*  Services  Amount  Paid* 
$0.01 - $59.99  750  $21,345  687  $19,517  11,351,211  $302,959,310   11,128,821  $295,165,087  
$60.00 - $129.99   750  $59,380  674  $53,458  1,996,044  $158,308,629   1,876,648  $148,457,863  
$130.00 or more   500  $121,924   463  $115,322  414,797  $94,117,690  396,087  $90,908,971 
Total  2,000  $202,650   1,824  $188,298  13,762,052  $555,385,630   13,401,556  $534,531,922  
* Sample and population paid amounts are rounded to the nearest whole dollar figure.   
Lines may  not sum to totals due to rounding. 
Source:  Office of  Inspector General analysis of  calendar year 2003 Medicaid pediatric dental  claims data in selected States.  
Medical Record Review  
We contracted with a medical record  review company to collect medical 
records from providers.   The contractor mailed initial record requests to 
the providers for the services in our  sample.  If necessary, follow-up  
requests were mailed 15 days later to those providers that had not yet 
responded and second follow-up requests were  made by fax or telephone 
15 days after the first followup.  In addition, the contractor made 
further attempts to collect medical records from the remaining 
nonrespondents.  
We categorized the services for which these attempts were unsuccessful 
as undocumented.  We spoke on the telephone with the staff of these 
providers to  ensure that they received our original and follow-up written 
requests.  Table 4, on the next page, lists each States response rate and  
the response rate for the entire sample.   
We did not conduct onsite visits to the providers that did not submit the 
requested medical records to follow up on the status of the records.  
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A P P E N D I X   A  
Further, we  did not compare the information submitted with 
information that may have been saved electronically onsite (e.g., records 
with handwritten incorrect dates of service were not compared to the 
electronic records of the  patients appointments).     
     
 
Table 4: Response Rates in States A-E 
Records  Records  Response 
State  Requested   Received  Rate 
A  386  373  96.6% 
B  400  380  95.0% 
C  351  328  93.4% 
D  308  298  96.8% 
E  379  365  96.3% 
Total  1,824  1,744  95.6%  
Source:  Office of  Inspector General analysis of Medicaid  pediatric dental 
claims data.  
The medical record review was conducted in two stages:   
  Stage 1Certified Professional Coder Review:  Coders reviewed  
records for compliance with documentation and billing 
requirements.  They determined whether each service was 
documented and billed correctly and noted when the documentation 
was insufficient to make these determinations.  
  Stage 2Licensed Dentist Review:  Dentists reviewed records of 
services that were documented to determine whether they were 
medically necessary and noted when the documentation was 
insufficient to make determinations of medical necessity.    
Quality Assurance.  Prior to initiating the medical record review, all 
coders and dentists were asked to review 100 services (20 services per 
State) outside of our sample for quality assurance purposes. This 
interrater reliability testing ensured that the reviewers were completing 
the review instrument and interpreting the applicable regulations 
consistently.  In addition, the contractors project manager randomly 
checked coder and dentist review results throughout the review process,  
examined all results to  ensure that they were completed correctly and 
consistently, and verified data entry.   
 
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A P P E N D I X   A  

Error Categorization 
We grouped  the services  that had errors into three categories 
documentation errors, billing errors, and medical necessity errors.33   
The criteria used to identify these errors included State Medicaid  
policies and Federal EPSDT regulations for documentation, billing, and 
medical necessity of the services.   
Documentation errors:  Federal regulations and State Medicaid policies 
from the five States we  reviewed required providers to maintain and  
furnish documentation that substantiates the nature and extent of all 
services provided to the recipients.   Therefore, payments for services 
that did not meet State documentation requirements were considered  
improper although the services may have been appropriate in terms of 
medical necessity and billing. 
We categorized services that did not meet documentation requirements 
as either insufficiently documented  or undocumented.    
Insufficiently documented services lacked sufficient information to 
determine whether the services were medically necessary or correctly  
billed. These services were often missing a crucial piece of evidence, 
such as a test result, an x-ray, or a narrative to explain or support the 
billed service.  We also included services supported by illegible 
documentation in this category.   
Undocumented services consisted of services for which no 
documentation was provided and services that were unsubstantiated by 
their documentation.  Records for  unsubstantiated services  did not 
support that any service had been provided on the date claimed or  
described a service that had already been claimed and paid.    
Billing errors:  This category includes a variety of errors for which the 
claim submitted for reimbursement contained information that was 
inconsistent with the documentation in the patients dental record.   
Billing errors included services that  were billed by the provider using 
the incorrect procedure codes (i.e.,  miscoded services).  Miscoded  
services were categorized as upcoded when the provider submitted a 
procedure code that had a higher reimbursement than the procedure  
code for the service described in the dental record.  Miscoded services 
were categorized as downcoded when the submitted procedure  code  
 
33 These three categories were based on the information obtained from the five State 
Medicaid policies.  
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A P P E N D I X   A  
resulted in a lower reimbursement than the procedure code for the 
service described in the dental record.   
In addition, billing errors included services that were not billable 
because they violated a Federal or State guideline required  for 
reimbursement.  State guidelines that pertained to specific services 
included, for example, limitations on the frequency of services or the 
patients age.  Because  States establish these guidelines, they 
sometimes varied by State.  
We also included unbundled services in the billing error category.  
Unbundling occurs when the provider bills for the service using multiple 
individual procedure codes rather than a single appropriate code for the 
combination of services described in the dental record.  
Finally, billing errors included services that had records with incorrect 
information, such as the wrong number of units (i.e., teeth and tooth 
surface) as compared to the claim.   
Medical necessity errors:   This category included services that did not 
meet the EPSDT medical necessity requirement and violated  
established criteria prescribing the appropriate conditions under which 
the service should be provided. 
Errors  with no payment effect:  We identified 114 services that did not 
affect the payment of the services; thus, these services were not 
included in our error calculations.  These services had the following 
errors:  incorrect procedure code (but the same reimbursement rate as 
the code submitted), incorrect tooth number, incorrect tooth surface, and  
incorrect date. 
Data Analysis 
We analyzed the medical record review results in SAS, a software 
program used for statistical analysis.  For each of the three error  
categories, we statistically projected the error percentages and the 
improper payments that were allowed by Medicaid for pediatric dental 
services provided during 2003 in the five States.  We also calculated the 
improper payments based on the amount paid for the services as 
specified in each States MMIS database.   
For services  that were upcoded, downcoded or unbundled or had the  
incorrect number of units, we considered  only a portion of the payment 
for the service to be improper.  We determined the improper amount for 
each of these services by calculating the difference between the payment 
made by Medicaid to the provider and the payment that should have  
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A P P E N D I X   A  
been made according to the results of the medical record review.  For all 
other services (i.e., services with documentation errors, medically 
unnecessary services, and services that were not billable), we considered 
the entire amount paid to the provider to be improper.  
See Appendix B for the point estimates and confidence intervals of the 
errors and improper payments in the three error categories.  Also, see 
Appendix C for a detailed list of the  different errors and improper  
payments associated with the error subcategories.      
 
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  A P P E N D I X   B
Point Estimates and Confidence Intervals for Errors and Improper Payments, Medicaid 
Pediatric Dental Services Provided During 2003 in States A-E 
Table 5: Estimates of Errors 
Error   Point Estimate    95-Percent Confidence Interval 
Insufficiently documented services  17.6%  13.8% - 21.4%  
Undocumented services*  6.5%*  4.3% - 8.6% 
Total documentation errors  24.1%  20.0% - 28.2%  
Billing errors  7.3%  4.9% - 9.8% 
Medically unnecessary  errors   1.8%  0.6% - 3.1% 
Overlapping errors  (2.3%)  0.5% - 4.1% 
Total percentage of services that did not meet  
30.9%   26.5% - 35.3%  
Medicaid requirements  
Shaded regions represent error subcategories.  
* Estimate rounded up from 6.46 percent.  

Source:  Office of  Inspector General  medical record review results, 2006. 

 
Table 6: Estimates of Improper Payments 
Error         Point Estimate   95-Percent Confidence Interval  
Insufficiently documented services  $103,395,993  $65,219,781 - $92,376,038 
Undocumented services  $34,488,689  $27,627,518 - $41,349,861 
Total documentation errors  $137,884,683  $120,880,396 -$154,888,969 
Billing errors  $12,113,796  $7,248,004 - $16,979,587 
Medically unnecessary  errors*  $11,777,685  $5,197,559 - $18,357,811  
Overlapping errors**  ($7,060,484)  $480,471 - $13,640,497 
Total amount  improperly paid (paid for services  
$154,715,679  $137,378,140 - $172,053,218  
that did not meet Medicaid requirements)  
Shaded regions represent error subcategories.   
* Relative precision for  this estimate equals 56 percent.  
 
** Relative precision is too large to  confidently project.  
 
Source:  Office of  Inspector General  medical record review results, 2006. 

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A P P E N D I X   B  

 
Table 7: Estimates of Improper Payments for Documentation Errors 
  
by State 
   
 
State  Point Estimate  95-Percent Confidence Interval  
 
A  $3,194,156    $2,390,295 - $3,998,018 
 
B   $25,317,124   $20,996,594 - $29,637,655 
 
C   $71,781,397   $56,291,098 - $87,271,696 
 
D   $24,175,769   $19,516,426 - $28,835,113 
 
E   $13,416,235   $10,557,261 - $16,275,210 
 
Source:  Office of  Inspector General  medical record review results, 2006. 
 
 
 
 
Table 8: Estimates of Improper Payments for All Errors by State   
 
State         Point Estimate            95-Percent Confidence Interval 
 
A  $3,383,541   $2,571,454 - $4,195,628   
B   $28,562,425   $24,176,361 - $32,948,489   
 
C   $77,911,242   $62,201,055 - $93,621,428 
 
D   $26,980,293   $22,154,415 - $31,806,170 
 
E   $17,878,178   $14,623,313 - $21,133,044 
 
Source:  Office of  Inspector General  medical record review results, 2006.  
 
 
 
 
 
 
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A P P E N D I X   B  

 
 
Table 9: Estimates of Documentation Error Rates by State         
 
 
State  Point Estimate  95-Percent Confidence Interval 
 
A  18.3%  12.8% - 23.7%  
 
B  24.3%  19.2% - 29.4%  
 
C  26.1%  19.4% - 32.8%  
 
D  21.7%  16.6% - 26.9%    
 
E  17.1%  12.9% - 21.3%  
 
Source:  Office of  Inspector General  medical record review results, 2006. 
 
 
 
Table 10:  Estimates of Error Rates by  State    
 
State  Point Estimate  95-Percent Confidence Interval 
 
A  18.9%  13.5% - 24.3%    
 
B  31.7%  26.2% - 37.3%  
 
C  30.9%  24.0% - 38.0%  
 
D  31.2%  25.0% - 37.4%    
 
E  33.4%  27.4% - 39.4%  
 
Source:  Office of  Inspector General  medical record review results, 2006. 
 
 
 
 
 
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  A P P E N D I X   C
 
DETAILED ERROR SUMMARY  
Tables 11-13 provide a detailed summary of the errors identified in the 
medical record review, accompanied by the error rates and improper 
payments, as projected to the population.   
Table 11 lists the errors  and improper payments associated with 
documentation errors; Table 12 lists the errors and improper payments 
associated with billing errors; and Table 13 lists the errors and 
improper payments associated with all three error categories 
(documentation, billing, and medical necessity) and gives the totals.    
Table 11:  Medicaid Pediatric Dental Services - Documentation Errors in  Five States, 2003 
Sample     Population 
Services  Amount Paid  
Type of Documentation Error  Services   Amount Paid  (Percentage)  (Millions) 
  Insufficient documentation to  
determine whether medically  292   $36,018   13.2%  $78,797,909  
necessary 
  Insufficient documentation to  
131   $15,701   8.7%  $46,190,060  
determine whether correctly billed 
Both*  (64)  ( $6,952)  (4.3%)  ($21,591,976)  
Total insufficient documentation  359  $44,766  17.6%  $103,395,993 
  No documentation provided   80  $9,768  4.1%   $20,921,415  
  Unsubstantiated services (services 
58  $6,023  2.3%  $13,567,274 
not documented) 
Total undocumented   138   $15,791  6.5%**   $34,488,689 
Total Documentation Errors   497   $60,557  24.1%   $137,884,683  
Shaded regions represent error subcategories.   
* Overlapping  errors  are subtracted to obtain  the categorys total.  
 
** Estimate rounded up from 6.46 percent.  

Lines may not sum to totals because of rounding.   

Source:  Office of  Inspector General  medical record review of Medicaid pediatric dental  services. 
   
 
 
 
 
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A P P E N D I X   C  

Table 12: Medicaid Pediatric Dental Services - Billing Errors in Five  States, 2003 
Sample     Population 
Services  Amount Paid 
Type of Billing Error  Services   Amount Paid  (Percentage)  (Millions) 
Upcoded  33  $1,529   1.8%  $2,924,005* 
Downcoded  12  ($211)  0.7%  ($854,265)* 
Total incorrect procedure code   45  $1,318  2.4%  $2,069,740*  
No billable service   32   $1,184  3.0%  $8,365,999  
Unbundled services  17  $200  1.8%  $1,148,501*  
Incorrect number of units  6  $776  0.1%  $529,555*  
Total Billing Errors   100  $3,478  7.3%   $12,113,796 
Shaded regions represent error subcategories.   
* Relative precision is too large to confidently project.  
 
Lines may not sum to totals because of rounding.   

Source:  Office of  Inspector General  medical record review of Medicaid pediatric dental  services.   
         
 
Table 13:  Medicaid Pediatric Dental Services - Total Errors in Five States, 2003 
Sample     Population 
Services  Amount Paid 
Type of Error  All Categories  Services   Amount Paid  (Percentage)  (Millions) 
Total documentation errors   497   $60,557  24.1%   $137,884,683  
Total billing errors  100  $3,478  7.3%  $12,113,796 
Total medically unnecessary   39  $4,559  1.8%  $11,777,685* 
(Overlapping errors)**  (18)  ($835)  (2.3%)  ($7,060,484) 
Total Errors  618   $67,760  30.9%   $ 154,715,679  
* Relative precision is too large to confidently project.  
  
** Overlapping errors are subtracted to obtain the categorys total. 
   
Lines may not sum to totals because of rounding.   

Source:  Office of  Inspector General  medical record review of Medicaid pediatric dental  services.   
         
 
 
 
 
 
 
 
 
 
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  A P P E N D I X   D
 
Comparison of Documentation and Total Error Rates by State  
 
Table 1 4:  Documentation Error Rates in the Five  States  
Proportion of  Services  
 
State  Documentation Errors  Total Errors 
 
A  18.3%  18.9% 
 
B  24.3%  31.7% 
C    26.1%  30.9% 
D  21.7%  31.2% 
 
E  17.1%  33.4% 
 
Note that estimated total error rates do  not include overlapping errors. 

Source:  O ffice of  Inspector General  medical record review results, 2006. 
 
See Tables 9 and 10 of Appendix B for the confidence intervals associated with 
these estimates.  
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  A P P E N D I X   E
AGENCY COMMENTS 

 
 
 
 
 
 
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A P P E N D I X   E  

 
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A P P E N D I X   E  

 
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  A C K N O W L E D G M E N T S
  
This report was prepared under the  direction of  Robert A. Vito, Acting 
Regional Inspector General, and Ann OConnor, Regional Inspector 
General for Evaluation and Inspections.   
Mina Zadeh served as the team leader for this report.  Other principal 
Office of Evaluation and Inspections staff from the Atlanta and San 
Francisco regional offices who contributed include Sarah Ambrose,  
Camille Harper, Scott Hutchison, Gerius Patterson, Thomas Purvis, and 
China Tantameng; central office staff who contributed include Ayana 
Everett and  Kevin Farber.   
 
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