NC mulls tougher rules for dental management companies

North Carolina lawmakers are considering tougher rules for oversight of out-of-state dental management companies.

SB 655 would give the state dental board more control over contracts between dentists and such chains. But opponents contend the state's rules are already the nation's most restrictive.

Supporters and opponents of the proposed legislation have poured hundreds of thousands of dollars into media campaigns and political contributions to sway lawmakers when it comes up for a vote this month.

The Alliance for Access to Dental Care, which opposes the bill, has raised more than $1 million and made $86,000 in campaign contributions last year. The group has spent $370,000 on a media campaign, according to disclosure reports.

The North Carolina Dental Society gave about $57,000 to lawmakers in 2011 and hired political consultants for TV ads and mailings supporting the bill.

"They've made it clear that North Carolina is their battleground, and they'll do whatever it takes to prevail here," Ken Burgess, a partner with the law firm Poyner & Spruill and attorney for the state Board of Dental Examiners, told DrBicuspid.com.

Level playing field needed

North Carolina has 4,600 dentists, and more than 50 dental practices in the state use management companies, according to the state dental board and the state dental society. And the number of such companies is growing in Texas and other states, with disturbing ramifications.

Ronald Venezie, DDS, an Apex, NC, dentist and member of the state dental society, said new regulations are needed to clarify existing rules about the ownership of dental practices. As in many states, North Carolina's Dental Practice Act (DPA) specifies that only licensed dentists may own, manage, supervise, or control dental practices.

"These regulations will ensure that everybody's on a clear playing field," Dr. Venezie told DrBicuspid.com. "It's been clear that some management companies try to find ways to get around current rules. The potential problem is if corporate profits start driving decisions rather than what's in the best interest of patients."

Most of the money to fight the legislation has come from out-of-state companies, he noted.

Other supporters of the bill point to a recent case as a prime example of its necessity.

In November, Asheboro, NC, dentist Gary Cameron, DDS, agreed to settle charges by the dental board that he illegally sold his practice to the Heartland Dental Care practice management chain for $2.1 million through a complicated series of transactions, contracts, and employment agreements.

M. Alec Parker, DMD, executive director of the North Carolina Dental Society, said the measure would give the board more tools to investigate and enforce regulations regarding dental chains. He noted that a challenge by the Orthodontic Centers of America on the ownership issue took 10 years to resolve and was finally settled only after the dentist involved found out about a fee-splitting arrangement the company had set up.

"If people are playing by the rules and being forthcoming this won't be a problem," Dr. Parker told DrBicuspid.com. "But some of these companies seem to find ways to get around the concept of control and management."

Current laws 'sufficient'

Doug Brown is the CEO of Affordable Care, a dental management company based in North Carolina that contracts with nine dental practices there, in addition to 37 other states where it does business. He contends that current laws are sufficient to prevent management companies from controlling dental practices.

"The proposed bill seems to take away the very financial elements that make it work: We do the finances, IT, and insurance administration for dentists, and we can negotiate for insurance fees," he told DrBicuspid.com. "We can do a lot of things that dentists have a hard time doing on their own. These regulations are designed not to help patient care; they're designed to take away the models that have been so successful for us and other companies."

Brown called the proposed measure "completely unprecedented," asserting that North Carolina's existing rules regarding dental service organizations are the most restrictive in the U.S.

"Other medical professions have been doing this for years, and it brings down costs," he said.

But board attorney Burgess said he's gotten calls from Texas legislators who are considering tougher laws for the oversight of dental chains in that state.

"They've told me they need to model their laws after North Carolina's," he said.

Improving access to care

Tom Fetzer, a lobbyist for the Alliance for Access to Dental Care, which opposes the legislation, also believes the proposed bill is unnecessary. He maintains it would result in more government control, more regulations, and higher costs, because dental management companies usually charge less and accept more types of insurance than private practitioners.

"It's a way to overreach from a regulatory standpoint, and we don't feel there's any harm that needs to be cured," he told DrBicuspid.com.

He pointed to the U.S. Federal Trade Commission's (FTC) recent finding that the state's dental board illegally thwarted competition by working to bar nondentist providers of teeth-whitening services from selling their products to consumers in salons, retail stores, and mall kiosks.

"The FTC issued a scathing report sanctioning the dental board for anti-competitive behavior, and that's the overarching mindset of the board," Fetzer said.

The board is appealing the FTC decision.

North Carolina is 47th in the country in the number of dentists per capita, and 40% of its children don't receive adequate dental care, Fetzer said, adding that some counties don't have any dentists.

"It seems the dental board would want to do more to improve access to care."

But Burgess claims that while dental chains have 44 locations in North Carolina, none are in underserved areas because "it's not profitable."

Dr. Parker said the dental society has agreed to compromise, including allaying concerns about company audits and the board's authority to see documents that management companies complained were unnecessarily intrusive.

"We've been working with board attorneys to soften some of that and back off things that some senators thought might be overreaching," he said.

Burgess maintains the dental board is on the right side of the issue.

"We have offered to compromise, but the goal of opponents is to make it a big controversy and delay it in an election year," he said.