Department of Health and Human Services
 

OFFICE OF 

INSPECTOR GENERAL 

IMPROPER PAYMENTS FOR 


MEDICAID PEDIATRIC DENTAL 


SERVICES
 

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. 
 

 

 

 

 

 

Δ EXECUTIVE SUMMARY 

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 State’s 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. 

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EXECUTIVE SUMMARY 
 

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 State’s 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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EXECUTIVE SUMMARY 
 

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 CMS’s technical comments. 

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Δ TABLE OF CONTENTS 

EXECUTIVE SUMMARY ..................................... i 
 

INTRODUCTION ........................................... 1 
 

FINDINGS ................................................. 7 
 

Thirty-one percent of services resulted in improper payments .... 7 
 

Documentation errors accounted for the largest

amount of improper payments ............................ 10 
 

RECOMMENDATIONS ..................................... 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 
 

ACKNOWLEDGMENTS .................................... 29 
 
 

 

 

 

Δ INTRODUCTION 

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 California’s MFCU led the State Attorney 

General to file charges against 20 dentists for defrauding California’s 

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-President’s Council on Integrity and 

Efficiency Erroneous and Improper Payments Work Group. 

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INTRODUCTION 

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, Florida’s MFCU investigated a widespread Medicaid fraud 

scheme by dentists who recruited children to receive Medicaidreimbursable 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/cgibin/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. 

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INTRODUCTION 

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 Provider’s 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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INTRODUCTION 

frequency of services that can be provided within a specific timeframe, 

such as the number of cleanings per year, and limitations based on the 

patient’s 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 State’s 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 State’s 

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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INTRODUCTION 
 

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 State’s 

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 State’s 

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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INTRODUCTION 
 

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 President’s Council on 

Integrity and Efficiency and the Executive Council on Integrity and 

Efficiency. 

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Δ FINDINGS 

Thirty-one percent of Medicaid pediatric dental 

services in the five States resulted in improper 

payments 

In the five States we reviewed, 

31 percent of Medicaid pediatric 

dental services provided during 

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 

Type of Error 

Services 

(Percentage) 

Amount Paid 

(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 category’s 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 

 OEI-04-04-00210 

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. 

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F I NDING S 

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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FINDINGS 

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 State’s 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 State’s 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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FINDINGS 

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 State’s 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 

State 

Projected Improper Payments (Millions) 

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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FINDINGS 

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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Δ RECOMMENDATIONS 

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 Group’s charge to provide effective support and 

assistance to States. 

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RECOMMENDATIONS 

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 children’s 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 CMS’s 

technical comments. The full text of CMS’s comments is provided in 

Appendix E. 

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Δ APPENDIX 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 State’s 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 State’s 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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APPENDIX A 

We cross-checked the provider information for the services in our 

sample with the Office of Inspector General’s Office of Investigations 

and the lists of active investigations compiled by each State’s 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 

Sample Excluding 

Providers Under 

Investigation Population 

Population Excluding Providers 

Stratum Definition Under Investigation 

(Range of 

Amounts Paid in 

Stratum) 

Services 

(Stratum 

Size) 

Amount 

Paid* 

Services 

(Records 

Requested) 

Amount 

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 State’s 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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APPENDIX 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 

State 

Records 

Requested 

Records 

Received 

Response 

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 1—Certified 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 2—Licensed 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 contractor’s 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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APPENDIX 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 patient’s 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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APPENDIX 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 

patient’s 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 State’s 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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APPENDIX 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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Δ APPENDIX 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 

Medicaid requirements 

30.9% 26.5% - 35.3% 

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 

that did not meet Medicaid requirements) $154,715,679 $137,378,140 - $172,053,218 

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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APPENDIX 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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APPENDIX 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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Δ APPENDIX 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 

Type of Documentation Error Services Amount Paid 

Services 

(Percentage) 

Amount Paid 

(Millions) 

 Insufficient documentation to 

determine whether medically 

necessary 

292 $36,018 13.2% $78,797,909 

 Insufficient documentation to 

determine whether correctly billed 131 $15,701 8.7% $46,190,060 

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 

not documented) 58 $6,023 2.3% $13,567,274 

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 category’s 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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APPENDIX C 

Table 12: Medicaid Pediatric Dental Services - Billing Errors in Five States, 2003 

Sample Population 

Type of Billing Error Services Amount Paid 

Services 

(Percentage) 

Amount Paid 

(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 category’s 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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Δ APPENDIX D 

Comparison of Documentation and Total Error Rates by State 

Table 14: Documentation Error Rates in the Five States 

State 

Proportion of Services 

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: Office 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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Δ APPENDIX E 

AGENCY COMMENTS 

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APPENDIX E 

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APPENDIX E 

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Δ ACKNOWLEDGMENTS 

This report was prepared under the direction of Robert A. Vito, Acting 

Regional Inspector General, and Ann O’Connor, 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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