CSHM, which owns 54 Small Smiles dental clinics in the U.S., has agreed to sell the chain after the company was recently excluded from participating in the Medicaid and Medicare programs by the U.S. Department of Health and Human Services (HHS).
The March 7 exclusion letter sent from the HHS' Office of Inspector General (OIG) cited CSHM for failing to cure several breaches of the Corporate Integrity Agreement (CIA) between CSHM and the OIG.
CSHM said it will sell the company within six months as part of a negotiated settlement with the OIG, according to a press release. The settlement gives the chain a six-month extension of the exclusion order, until September 30, 2014, which will allow Small Smiles clinics to continue participating in federal programs such as Medicaid and Medicare.
CSHM disagreed that it breached the CIA.
"Since CSHM agreed to assume the Corporate Integrity Agreement (CIA) obligations in mid-2012 from a former and completely unrelated entity, CSHM has engaged in robust and good faith compliance efforts," CSHM said.
Small Smiles changed hands in 2012 while in bankruptcy.
The March exclusion followed a recommendation by a U.S. Senate committee that the Small Smiles chain should be excluded from the Medicaid program for encouraging dentists to perform unnecessary treatments to boost profits.
In July, 2013, an investigative report by a U.S. Senate committee concluded that the Small Smiles dental chain should be excluded from the Medicaid program for encouraging dentists to perform unnecessary treatments to boost profits.
The report followed a two-year Senate investigation by Sens. Charles Grassley (R-IA) and Max Baucus (D-MT) of dental chains owned by private-equity firms. The 1,500-page report recommended that corporate-owned chains that use similar deceptive business models should be ousted from the federal program as well.
The Senate report recommended that HHS and the OIG exclude Small Smiles from Medicaid and "any other corporate entity that employs a fundamentally deceptive business model resulting in a sustained pattern of substandard care."
