Page 1524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212Classes 5, 6 Jurisprudence

Marquette School of Dentistry

Managed Care and Dentist’s Control of Practice

Duties to Provide Care

Government Programs, Fraudulent Billing and Price Fixing

Table of Contents:

Barnes, Introductory Notes on Managed Care

Henry T. Greely, Direct Financial Incentives in Managed Care: Unanswered Questions, 6 HEALTH MATRIX 53 (1996)

Elizabeth Mertz & Edward O’Neil, The Growing Challenge of Providing Oral Health Care to All Americans, HEALTH AFFAIRS, Vol. 21, No. 5 at 65 (2002)***

Bragdon v. Abbott, 524 U.S. 624 (1998)

***Wood v. Thompson, 246 F. 3d 1026 (2001)

Elizabeth J. Fowler, SmileCare v. Delta Dental: Aberration or Signpost fo rthe Future of Antitrust Enforcement in the Supplemental Insurance Industry? 82 Minn. L. Rev. 173 (1997)

U.S. v. Alston, 974 F. 2d 1206 (1992)

Page 2524 U.S. 624, *; 118 S. Ct. 2196, **;

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These readings will serve for the last two classes in the Jurisprudence Course. While each is a topic of interest in itself, the interrelated nature of the three will be emphasized. Anticipated breaks in the readings for each class meeting are indicated below.

Managed Care and Professional Control of Practice

Managed care and costs in dentistry have received less attention in recent years than the soaring cost of medical and hospital care. Significant reasons include the erroneous perception of dental care as optional, and the absence of inflation in costs for services that approaches the changes in medical and hospital care. Nevertheless, dental care is undeniably part of the relatively new “health care industry”, dentists are included in relevant statutes in many states as “health care providers”, and cost constraints have (relatively) quietly been adopted into the structure of payment for dental services.

Managed care refers to any method of payment for health care services that includes strategies to limit or reduce costs. The U.S. government anticipated private sector initiatives at managed care when it implemented four demonstration projects in Medicare in 1982. That model, which included a capitated payment per enrollee per month, has been widely replicated in the private sector for health and dental services. The demonstrations themselves were largely unsuccessful since they were rife with fraud, including such tactics as enrolling “Medicare beneficiaries” from the obituaries in the newspaper and buttonholing elders on the street the sign them up.

Prior to the implementation of managed care, health care and dental payments were fixed based on a reasonable charge identified by the health care professional, which included the cost of care, time, expertise, and desired profits. Fee for service was identified as inflationary within five years of the implementation of Medicare and Medicaid.

Managed care utilizes two basic payment strategies to improve on the basic fee for service model. Whenever possible, a payer (i.e., an insurer or HMO) contracts with a health care provider for capitated payments (a set amount per patient per month) that covers all the services of specified kinds. The payment is fixed, regardless of the patient’s need for care. Thus, if the services the patient needs cost more than the monthly payment, the heath care provider is at risk of losing total income.

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The corporate structures of managed care may be contrary to the doctrine of corporate practice of medicine, which prohibits anyone who does not have a license to practice from directing individuals who do. The doctrine applies to dentistry. Although a corporation is considered a legal person, it cannot of course hold a professional license.

Little is written about corporate practice in Wisconsin. Rather, this is one of the many states that have the law and seem at the moment to be content to ignore it.

9 No. 5 HTHLAW 18: Wisconsin *Wisconsin's corporate practice of medicine doctrine extends only to for-profit corporations.

*See: OAG 39-86 (10-21-86) [states that business corporations may not provide medical services through employed physicians as to do so would violate Wisconsin's fee splitting statute, Wis.Stat. § 448.08(1), and licensure statute, Wisc.Stat. §§ 448.03(1), 448.08(1), and 448.05].

*OAG 31-86 (states that hospitals and medical education and research organizations may employ physicians subject to certain restrictions).

Most patients and many insurers know little about managed care incentives to limit care.The following reading sheds some light on the conflicts of interest created by such incentives.

Henry T. Greely, Direct Financial Incentives in Managed Care: Unanswered Questions, 6 HEALTH MATRIX 53 (1996)

Case Western Reserve UniversityHealth Matrix: Journal of Law-Medicine

Winter, 19966 Health Matrix 53

SYMPOSIUM: ON PHYSICIAN DECISION-MAKING AND MANAGED CARE: DIRECT FINANCIAL INCENTIVES IN MANAGED CARE: UNANSWERED QUESTIONS

Henry T. Greely

Professor of Law, Stanford Law School. I want to thank Professor Mehlman for the opportunity to participate in the workshop from which this article is drawn and all the participants for their thoughtful and stimulating presentations.

…

Page 4524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212I. WHAT WE (DO NOT) KNOW ABOUT DIRECT FINANCIAL INCENTIVES

Before probing the consequences for patients of direct financial incentives in managed care, we need to understand more about these incentives. This section first describes the direct financial incentives used in managed care. It then surveys what we know about the extent to which managed care uses different direct financial incentives. Finally, it looks at the actual incidence of direct financial incentives on the physicians who provide patient care.

A. What Are Direct Financial Incentives?

Managed care has become a vague term for almost any system in which third parties pay for medical care, other than the "traditional" system of nearly unquestioning payment on a fee-for-service basis for anything ordered by a licensed physician. n6 In fact, there are three basic approaches that payors take toward managing care: micro-management, panel selection, and direct financial incentives.

Micro-management encompasses a variety of ways in which the payor "second guesses" a physician's recommendation and a patient's decision. The most common form of micro-management is through various types of utilization review. Prospective review requires approval by the payor, or its agent, of a physician's recommendation before the action is undertaken, whether it is an expensive procedure or a hospitalization. Concurrent review in hospitals or elsewhere most commonly is applied to inpatient care. It requires approval for continuing the patient's stay in the institution. Retrospective review involves deciding, after the fact, [*56] whether or not the provided services were "proper" and hence, whether they will be reimbursed.

Page 5524 U.S. 624, *; 118 S. Ct. 2196, **;

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The second approach that payors take towards managing care is through panel selection. In a panel selection (and "deselection") system, the payor "manages" care indirectly by encouraging or requiring its customers to use only particular physicians or facilities. It then selects the providers that are part of its plan based, among other things, on their costs to the payor. These costs encompass both the amount of the fees charged by the provider, often heavily discounted, and the cost of that provider's style of practice. The providers are encouraged to be economical not by direct micro-management, but by knowing that they will no longer be on the panel should they fail to meet the plan's standards for the cost of practice style. This creates an indirect financial incentive for physicians as such de-selection, presumably, would cut the number of the physicians' patients and reduce their incomes. Panel selection and micro-management are often combined, but they need not be.

The third method of managing care is through direct financial incentives. These can take many forms, but the key is structuring the physician's compensation in ways that create incentives to practice economically. Direct financial incentives in medicine are by no means new. The traditional fee-for-service system was a system of direct financial incentives; the more a physician did, the more the physician got paid. The financial incentives in a managed care system are aimed at discouraging the physician from doing everything possible, and instead aim at encouraging the physician to provide the "right" amount of care. Direct financial incentives also can be combined with panel selection and micro-management. If the incentives are strong enough, however, they should make the other systems unnecessary.

But what are these incentives? One federal statute defined a "physician incentive plan" for Medicare and Medicaid purposes so broadly as to be of questionable value, to wit: "any compensation arrangement between an eligible organization and a physician or physician group that may directly or indirectly have the effect of reducing or limiting services provided with respect to individuals enrolled with the organization." n7 As that definition [*57] implies, financial incentives can take many forms, but four general approaches are commonly used: salary, capitation, profit sharing, and bonus. n8 Each can be combined with others in a variety of forms.

Under a salaried system, the physician's income is set by the plan, generally annually, through a salary. A salaried physician has no incentive to do "too much" for patients in order to make more money. Her incentive to do what the managed care plan considers "the right amount" comes from the fact that her salary could be raised or lowered, or she could be fired, depending on the cost of her practice patterns.

Under a capitated system, the physician is paid a certain amount, generally on a monthly basis, for each of the managed care plan's patients for whom she is responsible. In its purest form, if the doctor spends less than the capitated amount, she makes a profit on that patient; if she spends more, she takes a loss. Capitation comes in a dizzying number of forms, with the variations spreading over at least two dimensions.

Page 6524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212 One dimension is the range of services included in the capitation. Capitation to a

primary care physician almost always will include primary care services. It may or may not include the costs of specialty or hospital services. It may include or exclude laboratory or radiological services. It could, but rarely does, include mental health services or pharmaceutical costs. If a service is excluded from the capitation agreement, its costs are not charged against the capitated physician, but are paid from some other pool of funds.

The second dimension is the degree to which the physician is at risk even for the capitated services. At the extreme, the risk could be total. A physician receiving ninety dollars per month as "global" capitation (physician services and hospital services) might be held financially responsible for the entire $ 150,000 or higher costs if he prescribes high dose chemotherapy with autologous bone marrow transplantation, for example. More commonly, however, the risk is shared. The physician might be responsible for higher costs only up to a certain point, defined either in terms of dollars per patient or patient pool (through stop-loss insurance n9 ) or in terms of a percentage of the capitated amount (through withheld funds). In the alternative, the physician, in turn, may spread the risk through capitated arrangements with other providers, such as hospitals or specialists.

A concrete example might make this more clear. Stanford University offers its employees a choice among three health maintenance organizations and the University's own "triple option" plan. n10 The three options in the triple option plan are:

1) to receive care on an HMO basis from physicians with whom the University has contracted;

2) to receive care on a "preferred provider" basis from certain other physicians, while paying a deductible and a twenty percent copayment; or,

3) to go entirely outside the network to any licensed provider, but pay a higher deductible and a forty percent copayment. n11

The University contracts with three physician groups to provide the HMO-level care. These physician groups would receive approximately ninety dollars per month to cover all physician and hospital services for a middle-aged individual. The physicians then contract with a local hospital to cover all hospital ser- [*59] vices for about forty dollars per month. The University's plan administrator withholds a percentage of the capitated payment to each physician group. This "withhold" pool is used to pay for services members receive under the second and third options, as well as for unanticipated expenses. At the end of the year, if money remains in the "withhold" pool, it is shared between the physician group, which receives eighty percent of the pool, and the University, which keeps the balance. If no money remains in that pool, the physician group is left with only the payments it has already received, but it is not responsible for any cost overrun.

A third strategy is the bonus. The physicians may be paid during a fixed period under any system: salary, capitation, or fee-for-service. At the end of that period, physicians receive a bonus based on the plan's financial results that year and the physicians' contribution to them. The manner of determining the bonus can vary widely.

Page 7524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212 One method sometimes used to determine the bonus makes up the last approach to

direct financial incentives in managed care, that is, profit sharing. Under this method, the physicians receive a negotiated share of the plan's profits. They may receive that share as owners of the plan or otherwise. The details of the profit-sharing plan may vary widely.

In reality, all of these systems can be used and most of them can be combined. A salary system usually will have some kind of bonus, including possibly some profit sharing, to add to the incentives provided by the salary-setting mechanism. The bonus itself may be determined as a result of some comparison with expected capitation results. A capitation system also may have a bonus, determined in a myriad of ways. The number of possible systems of direct financial incentives is virtually unlimited. Our next problem is to determine how often each method is actually being used.

Page 8524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

Because of the on-line formatting of this HEALTH AFFAIRS QUARTERLY article, a number of irrelevant entries cannot be deleted.

The entire article will be relevant to the 2 classes remaining. For Class 5, please take note in particular of the headings:The Oral Care Workforce and Practice Characteristics.

Elizabeth Mertz & Edward O’Neil, The Growing Challenge of Providing Oral Health Care to All Americans, HEALTH AFFAIRS, Vol. 21, No. 5 at 65 (2002)

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The growing challenge of providing oral health care services to all Americans

Elizabeth Mertz,  Edward O'Neil. Health Affairs. Chevy Chase: Sep/Oct 2002.Vol.21, Iss. 5;  pg. 65

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Page 9524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212Subjects: Statistical analysis,  Demographics,  Health care access,  Dental care

demand,  Ratios

Classification Codes 9190   United States ,  9130   Experimental/theoretical ,  8320   Health care industry ,  1220

Locations: United States,  US

Author(s): Elizabeth Mertz,  Edward O'Neil

Document types: Feature

Publication title: Health Affairs. Chevy Chase: Sep/Oct 2002. Vol. 21, Iss. 5;  pg. 65

Source type: Periodical

ISSN/ISBN: 02782715

ProQuest document ID: 187442131

Text Word Count 5386

Document URL: http://0-proquest.umi.com.libus.csd.mu.edu:80/pqdlink?did=187442131&sid=1&Fmt=3&clientId=1953&RQT=309&VName=PQD

Abstract (Document Summary)

By many measures, the practice of dentistry has improved for the dentist over the past decade. Hours of work are down, and compensation is increasing. However, there is a growing disconnect between the dominant pattern of practice of the profession and the oral health needs of the nation. To address these needs, the profession will need to take some radical steps toward redefinition, or the responsibility for many for these needs and special populations may shift to other providers and other institutions. A recent surgeon general's report cataloged the advances that have been made in the technology and science of oral health care but also clearly showed that there are worsening disparities in the oral health status for certain population groups. Underserved groups include people who are low-income or indigent; live in rural communities; are racial or ethnic minorities, non-English speaking, children, or elderly; and are developmentally disabled or have major medical problems.

Full Text (5386   words)

Copyright The People to People Health Foundation, Inc., Project HOPE Sep/Oct 2002 [Headnote]ORAL HEALTH CARE The current practice model of dentistry, which serves insured patients and those who can pay out of pocket, must be changed to include the rest of the population. PROLOGUE: Frustrations over the difficulty of improving health care in the United States often reflect a sense that the system's overwhelming complexity is our worst enemy. In the following overview of the state of the nation's oral health, it is apparent

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that even in a relatively simple subdomain of the health enterprise, our cherished preference for harnessing private institutions to the pursuit of public goals brings success only at the price of endless tensions and trade-offs. Elizabeth Mertz and Edward O'Neil find that better preventive care and patient habits have helped improve oral health "for many parts of the population." At the same time, the number of dental hygienists in the workforce has grown steadily and is expected to increase by 37 percent between 2000 and 2010. But the U.S. dentist-to-population ratio declined during the 1990s, and the amount of time that dentists spend with patients every week has also been declining-partly a result of the increasing use of hygienists. This apparent signal of market equilibrium is misleading. The authors find "abundant evidence that a sizable segment of the population does not have access" to private care, while the dental safety net is "poorly defined and underdeveloped." Dentists' participation in Medicaid is not robust; community health centers and public health facilities have scant dental capabilities; and Medicare offers no dental coverage. "Radical steps" will be needed to correct "a growing disconnect between the dominant pattern of practice...and the oral health needs of the nation," the authors write, including new practice settings for dental care, integration of oral and primary health care, and expanded scope of practice for hygienists and other allied professions. Mertz is project director at the Center for the Health Professions, University of California, San Francisco (UCSF), and has written and lectured extensively on oral health and workforce issues. She received her master's degree in public affairs from the University of Minnesota. O'Neil is director of the center and a professor of dentistry and public health at UCSF. He is a national authority on workforce issues and holds a doctorate in American studies from Syracuse University. ABSTRACT: By many measures, the practice of dentistry has improved for the dentist over the past decade. Hours of work are down, and compensation is increasing. However, there is a growing disconnect between the dominant pattern of practice of the profession and the oral health needs of the nation. To address these needs, the profession will need to take some radical steps toward redefinition, or the responsibility for many for these needs and special populations may shift to other providers and other institutions.

DENTAL DISEASE HAS BEEN WIDESPREAD, recognizing few barriers of class, ethnicity, or economic status. By the middle of the twentieth century the acute manifestations of caries and advanced periodontitis left large numbers of persons with no options except extensive removal of teeth, restoration of the remaining teeth, and either fixed or removable prostheses. As the profession emerged from the Second World War, it was equipped with the skills for extracting teeth and manufacturing a vast array of mechanical structures fabricated from a variety of materials.

The 1950s witnessed the rise of a much more focused approach to

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science in all of health care. Through this movement the profession began to understand the systemic causes of infection and disease, which led to more scientific evaluation of existing treatments and new evidence-based approaches to prevention and therapy. Key among the preventive developments was the recognition of the efficacy of fluoride in preventing the onset of disease and the application of fluoride through water supplies as a population health strategy. Also contributing to prevention was the widespread information sharing among dentists, dental hygienists, and educators about the causes of infection and the corresponding change in patterns of self-care and treatment in large parts of the population. New restorative techniques, coupled with the middle-class cultural expectation of the annual dental check-up and the disposable income to pay for these preventive and therapeutic services, led to improved oral health for many parts of the population.'

Although these improvements in oral health are a great success story for the dental profession, science, and the public, patterns of current and incipient oral disease and disability lie outside much of the traditional focus of practice and policy. Emerging concerns for the nation's oral health include access to care for low-income and underserved minority groups, oral diseases related to tobacco use, chronic facial pain, craniofacial birth defects and trauma, and the emergent health needs of an aging population that will need services in new locations and in new forms.2 To assess how these epidemiological, social, and economic challenges will confront dentistry, we begin with an assessment of the current dental professional workforce and contrast it, where possible, to the physician workforce.

The Oral Health Care Workforce

There are approximately 150,000 clinically active dentists in the United States.' The number of dentists has been increasing for the past twenty years, but the growth has leveled off in comparison with the growth in the U.S. population, resuiting in a decreasing dentist-to-population ratio (Exhibit 1).

* Dentist-to-population ratio. From 1950 to 1970 the dentist-to-population ratio hovered at 50 per 100,000.4 With increasing demand for dental services and growing state and federal investment in education, there was a sharp rise in the ratio through 1990 when it peaked at close to 60 dentists per 100,000 population. In the late 1970s and 1980s there was a growing perception of oversupply in

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practitioners by many dental professionals, in both practice and education.5 Partly in response to this, applications to dental schools declined sharply during the period. A number of schools closed during this period, and others reduced class sizes. The size of the entering dental class reached an all-time high in 1978 at 6,301, but by 1989 it had fallen by just over a third to 3,979.6 This dramatic decline had an almost immediate impact, as dentist-to-population ratios began to fall in the decade of the 1990s. By 2020 this ratio is projected to drop back to 52.7, which translates into one dentist for every 1,898 people.

In contrast, the physician-to-population ratio has been increasing for the past forty years and now stands at 286 per 100,000, about one physician for every 349 people.8 Between 1960 and 1998 the physician population grew by 198.6 percent, while the total population increased only 56.3 percent. Both the physician and dentist ratios vary greatly by region and state.

* Age and sex distribution. The dentist workforce is aging, and a good portion will reach retirement age in the next decade. As shown in Exhibit 2, there are fewer young dentists in practice and fewer dentists working past age sixty-five in comparison to physicians. Just 12.5 percent (19,089) of dentists and 38 percent (4,300) of the entering dental students were women in 1996.9 In the same year, women were 21 percent (157,387) of the physician population, 35 percent (34,100) of residents/ fellows, and close to 43 percent (6,918) of the entering medical school class.lo

* Racial/ethnic composition. The racial/ethnic distribution of the dentist workforce is among the least diverse of health professions. Approximately 13 percent of dentists are nonwhite, compared with 22 percent of physicians and 29 percent of the population (Exhibit 3).11 Blacks, Hispanics, and Native Americans are generally considered to be underrepresented minorities in the health professions. Dentistry contains 6.8 percent underrepresented minorities, compared with 8.5 percent of physicians and 24.8 percent of the population.12 First-year dental students in 1999 were 34 percent nonwhite; however, just 10.2 percent of this entering class were underrepresented minorities.13 In medicine, 36 percent of first-year students in 1998 were nonwhite, and 14 percent were underrepresented minorities.14

* Workforce size. The dentist workforce is much smaller than the physician workforce. It is growing at a slower rate in comparison to the population, and it tends to be more middle-aged (40-55), more

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male, and less ethnically diverse.

Practice Characteristics

The vast majority of dentists, more than 80 percent, are in general practice. The remainder are subspecialists, including orthodontists (5.8 percent), oral and maxillofacial surgeons (4.1 percent), periodontists (3.1 percent), pediatric dentists (2.4 percent), endodontists (2.2 percent), public health dentists (0.8 percent), and oral and maxillofacial pathologists (0.2 percent).15 This contrasts to the distribution in medicine, where approximately one-third practice the general medicine specialties of family medicine, internal medicine, or general pediatrics.6

* Hours worked per week. Private dental practitioners spent an average of 36.5 hours per week in their offices in 1998. Of these, an average of 33.3 hours were spent treating patients; this figure was 33.4 hours for generalists and 33.0 for specialists." By contrast, physicians in 1999 spent an average of 51.6 hours per week treating patients and an additional 4.7 in other professional activities.18

* Full time versus part time. The majority of dentists work full time; however, there has been a trend toward increased part-time work. The number of part-time dentists has increased at a greater rate than the number of full-time practitioners. In 1982 only 14.2 percent of dentists worked part time, compared with 23.8 percent in 1995.19 In conjunction with this trend, the average number of hours spent in the office for both full- and part-time practitioners has fallen, although the average number of hours spent treating patients has increased slightly. Therefore, although there has been an increase in overall numbers of dentists in the past few decades, the American Dental Association (ADA) found only "modest gains in the total number of office hours and the total number of treatment hours available to address the dental care needs of all Americans."20

E Solo versus group practice. of all dentists in private practice in 1998, 66.3 percent were solo practitioners working in an incorporated or unincorporated practiCe.21 Generalist dentists (673 percent) were somewhat more likely to work in a solo practice than specialists were (61.5 percent). Women made up a larger percentage of non-solo practice dentists (13.9 percent) than solo practitioners (7.6 percent).22 An estimated 92 percent of dentists owned their own practices; 76.5 percent were sole proprietors. Most dentists worked in only one office (90.0 percent), while 3.2 percent worked in three or

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more offices. In contrast, in 1999 only a quarter (25.5 percent) of physicians in active practice were in solo self-employed practice.23

* Income. Independent dentists' median net income from all dental sources in 1998 was $135,000-$125,520 for general dentists and $192,000 for specialists.24 The median net income, after expenses and before taxes, for physicians in 1998 was $164,000; however, the medians across subspecialties ranged from $120,000 for pediatrics to $205,000 for orthopedic surgeons.25

* Patients' characteristics. Of patients in private dental practices in 1998, 21.5 percent were under age fourteen, 58.4 percent were ages fifteen to sixty-four, and 20.2 percent were age sixty-five or older. Almost 56 percent of patients were female.26 It is interesting to note the high percentage of patients older than age sixty-five, as this age category represents only 12.7 percent of the U.S. population. Given that Medicare does not cover dental care and that Medicaid dental benefits are not available in all states even for the elderly who have coverage, this may account for a large portion of out-of-pocket payments.27

On average, 63.7 percent of patients were covered by private insurance in 1998, 5.7 percent were covered by public insurance, and 30.6 percent were uninsured.28 In 1998, $53.8 billion in private funds was spent on dental services, nearly half of which took the form of out-of-pocket payments.29

* Summary of comparisons. Overall, the practice of dentistry has become a more lucrative and less time-consuming profession over the past decade. In comparison to physicians, dentists work more independently, have a higher rate of solo practice, and have greatly increased their earnings, in some cases surpassing the net income of physicians. Dentistry has remained a "cottage industry," which has fought incorporation into larger systems of managed care and capitated payments that have permeated medical groups.

The Allied Dental Health Workforce

* Hygienists. Dental hygienists are licensed health care professionals who provide preventive, educational, and therapeutic services for the control of oral diseases and the promotion of oral health. All registered dental hygienists (RDHs) graduate from a minimum two-year college program that includes classroom studies and supervised clinical experience. Dental hygienists also must pass a national

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written exam and a state clinical exam to earn the RDH license. Most dental hygienists practice as independent contractors, and many work part time or for more than one practice. The Bureau of Labor Statistics (BLS) estimated that more than 90,000 hygienists practiced in the United States in 2000, with a mean salary of $48,150.(30)

* Assistants. Dental assistants work chairside with the dentist, in the business office, and in the dental laboratory. Many states do not require formal training or licensure for dental assistants. However, there are many certified dental assistant training programs, mostly at the community college level, as well as expanded practice dental assistant certifications in many states. The BLS estimates that there were 175,160 dental assistants employed in the United States in 2000, with an average salary of $24,130.(31)

* Laboratory technicians. Dental laboratory technicians are responsible for filling prescriptions from dentists for bridges, dentures, crowns, and other dental prosthetics. According to the BLS, dental technicians held about 43,000 jobs in 2000, mostly in small dental laboratories. The average salary for a dental technician was $26,915.(32) Formal training for this profession is available primarily through community and vocational programs; however, most dental technicians learn their trade "on the job." In 2000 there were thirty accredited programs in the United States, although in most states certification is not mandatory.33

* Job growth. The rate of growth in new jobs in health care occupations is projected to be 28.8 percent between 2000 and 2010. However, among the five health occupations with the lowest rate of growth are dentists (5.7 percent) and dental laboratory technicians (6.3 percent). In contrast, the number of hygienist jobs will grow by 37.1 percent.34

Approximately 62 percent of solo dentists employed at least one part-time or full-time dental hygienist in 1998, compared with 54 percent in 1986.35 Dentists in nonsolo practice tended to employ more hygienists; only 16 percent employed no hygienist. Also, 93.4 percent of all solo general practice dentists employed at least one dental assistant. All nonsolo practices had at least one dental assistant, and more than half employed three or more.36

The projected growth in hygiene positions may indicate a trend for dentists to use more auxiliary staff for preventive and basic restorative care so they can concentrate on more specialized, highly

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reimbursable procedures. However, although the use of auxiliary staff has increased, these workers are more likely to be employed in group settings or practices, which are still relatively uncommon in dentistry. An increasing number of states are exploring expanded practice rights for dental hygienists, usually for the purpose of providing preventive care for underserved populations. This is allowable by law in only a few states, and independent hygiene practice is still relatively rare.

Dental Services In the Public Health Sector

There is abundant evidence that a sizable segment of the population does not have access to dental care through the traditional private practice model." Yet there is a poorly defined and underdeveloped dental -safety net." The result is that a growing number of people, many of them children, are unable to get regular dental care through the dental public health system or any other way.

The Health Resources and Services Administration (HRSA) estimates that in 1998 there were only 2,032 public health dental workers employed in federal or state agencies.38 These workers are responsible for planning, developing, implementing, and evaluating programs to promote and maintain the oral health of the public. Functioning at the federal, state, and local levels, these public health workers are defined officially only by their training in dentistry or dental health. Additional public health staff may work on dental public health issues but under a different official title. The release of Healthy People 2010 and the surgeon general's report on oral health, which discussed the disparate burden of oral disease on the underserved, stimulated more interest in public health dental programs. However, to staff these programs with professionals willing to work in the public sector with underserved populations is an ongoing challenge.39

There are relatively few public health dentists in the United States. Just 0.8 percent of professionally active dentists in 1998 were public health specialists, approximately 1,207 dentists.40 In addition, approximately 400 dentists (in 2002) work for the Indian Health Service, and 258 are serving in the National Health Service Corps.41 While some dentists volunteer their time to help the underserved, the lack of dentists participating in Medicaid continues to be a major access barrier for many low-income populations.42 Community health centers (CHCs), serving 8.6 million people, including 2.8 million Medicaid beneficiaries, were only able to provide 1.2 million patients with preventive and basic dental care in 1998, less than 13 percent of the total clientele.43 Dentists actively fought any Medicare dental

Page 17524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

benefit when the program was created in the late 1960s. Unless this lack of coverage changes, baby boomers soon reaching retirement age will be faced with no systematic way to finance their dental care.

RDHs, with their occupational growth and focus on preventive care, may be the oral health professionals best poised to address issues of access. However, RDHs are restricted in most states from practicing without a dentist's supervision. The growing shortage of dentists in many areas limits hygienists' ability to provide preventive care where it is needed most. The low priority of dental public health within public funding mechanisms has also restricted full-scale prevention activities in schools and health care facilities. While many benefit from fluoridated water, only those who can afford regular dental care receive the benefits of regular, comprehensive preventive care.

Current Crisis Of Care

The recent surgeon general's report cataloged the advances that have been made in the technology and science of oral health care but also clearly showed that there are worsening disparities in the oral health status for certain population groups. Underserved groups include people who are low-income or indigent; live in rural communities; are racial or ethnic minorities, non-English speaking, children, or elderly; and are developmentally disabled or have major medical problems.44 Each of these populations faces sizable barriers to care, and all are at a notable disadvantage with poorer health outcomes. Socioeconomic status tends to be the most important indicator for use of services and health outcomes, regardless of race and gender, while people with dental insurance have a higher likelihood of visiting a dentist than do those without.45

In no small measure, this is attributable to the current practice model of dentistry, which is structured to serve insured patients or patients who have the disposable income to pay for services out of pocket, in areas served by dental providers. Moreover, dental education trains new providers within the current practice model, leaving little room for developing a different type of practitioner that might appropriately address unmet needs. There is limited public financing for oral health care services outside of private dental offices. The dental safety net is small compared with the medical safety net, and many safety-net providers are underfinanced, understaffed, and overburdened.46

Practitioners operating in the traditional delivery service model are able to sustain and increase income while working shorter hours, so

Page 18524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

they have little financial incentive to modify their practice. This lack of incentive, the limited supply of dentists, and the lack of alternatives for delivery and financing of care mean that much of the population with the greatest and fastest-growing set of needs will continue to be underserved by the traditional system of private practice, fee-forservice dentistry.

Alternatives To Current Practice

A system of dental care that will begin to address the unmet health needs of a growing part of the population will likely need to move beyond the existing system of finance, practice organization, and professional utilization.47 The standard response to the lack of dental services is to suggest increasing the number of dentists. Some increase may be warranted, and perhaps inevitable, but it may be more useful to understand this problem less as a problem of supply of practitioners and more as a poor fit between part of the current practice model, the patterns of disease, and the people needing care. Such a change will raise several critical questions, such as the following: Where do those who have the greatest oral health needs receive other health care? What physical and financial impediments could be removed to facilitate meeting current and future demand? Are there social service or employment settings that might effectively sponsor oral health services? What motivations might bring the underserved more seamlessly into a system of care? How can expectations regarding oral health be raised within the underserved population?

* Alternative organizational structures. A variety of strategies have been explored to provide some level of improved access to dental care for underserved populations.48 On the supply side, public dental clinics, whether freestanding or integrated into larger medical clinics, represent the closest alternative to private practice. Dental vans and mobile dental services have become a popular solution for delivering services to rural communities or schools. Increasingly, school-based or -linked services organize care at easily accessible sites and emphasize preventive care and screening. Teledentistry enables dentists in remote clinics to communicate with specialists in urban centers, to provide better diagnosis and referral.49

* Increased education about programs. Alternative organizational structures of dental services are only a part of the equation. Many communities have historically underused dental services. To increase participation in oral health care, focused population-targeted

Page 19524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

programs concentrate their efforts on increasing education and awareness about services within specific population groups. Some programs go further, providing case management for their clients to ensure proper screening, treatment, and follow-up? Policy responses to increasing the supply of and demand for dental services must move beyond funding the traditional models of Medicaid coverage and provider incentives to take more charity cases. A sound policy response would vastly expand the dental public health infrastructure to creatively bring those with unmet need into a system of care.

* Integrating oral and primary health care. Another model of care focuses on the reintegration of oral health care into primary health care. This concept is being explored in both the dental and medical communities.51 One of the keys to improving access to care is making dental services visible, affordable, and convenient for underserved populations. Primary care medicine has more routine contact with these populations, providing opportunities for preliminary dental screening and education as well as integration of clinical services.

Any strategy to address the barriers to care will need to be a collaborative effort across health care providers, as no single profession can tackle the issue alone.52 For example, the monitoring of oral health could be incorporated into a chronic care model and be offered in systemic primary care carried out by family physicians.53 This would be beneficial to Medicare recipients who have no dental coverage. Addition of a dental benefit to Medicare is unlikely in the current fiscal environment, and to date alternative public mechanisms to finance dental care for the elderly are not in sight. Although access to care for underserved populations is on the policy screen, the important issues associated with dental care for the elderly have yet to catch policymakers' attention.

* Multidisciplinary approach. The public health system has not been competitive in attracting dentists, so the use of a variety of health professionals and social workers should be considered. Multidisciplinary efforts may better reach underserved populations by combining administrative efforts and public health goals.

* Expanded practice for hygienists and assistants. Expanded practice for dental hygienists and assistants is another option being explored as a way to increase access to preventive services and education.54 Pilot studies have shown the expanded practice models to be safe and effective, and these practices have been successful in reaching

Page 20524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

underserved populations.55 Regulatory change around scopes of practice is a slow process, and few states have implemented major changes. Expanding the roles of allied oral health practitioners could increase the contact points for oral health information and care for numerous populations.

* New dental school strategies. It is unlikely that the current dental workforce will be adequate to meet the oral health needs of our communities; therefore, the pipeline for providers is an important issue that must be addressed.56 Dental schools could recruit and support more students from underserved backgrounds, who have been shown to be more likely to work in underserved communities.57 Education programs also should encourage all oral health providers to serve underserved communities throughout their professional careers. Similarly, an expansion of dental hygiene and dental assisting education may increase the raw supply of these practitioners, but only if this effort is combined with regulatory change that ensures full use of their skills.

* Program evaluation. While experimental interventions to increase demand and alter the structure and financing of care hold promise, evidence of effectiveness is still nascent. For the most part, safety-net programs focus on meeting the enormous volume of demand for services rather than dissipating resources to evaluation. A focused effort on program evaluation, with concentration on cost-effectiveness and patient outcomes, is an important final step for alternative models to gain legitimacy and support. Alternative programs remain a small fraction of all dental services.

MEETING THE CHALLENGES of reducing disparities in oral health care will require fundamental redefinitions of how dental practice is organized, financed, and provided. In the long run, it would seem that systems of oral health care must be either directly integrated into larger systems of care or more effectively articulated with them. Financing of care must be realigned to pay for proven and effective interventions. Finally, the education of dental professionals must focus on community health and well-being, in addition to individual treatment and private practice.

[Sidebar]"Dentistry has remained a 'cottage industry,' which has fought incorporation into larger systems of managed care."

Page 21524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

[Sidebar]"Much of the population with the greatest set of needs will continue to be underserved by fee for-service dentistry."

[Footnote]The authors acknowledge the California HealthCare Foundation for its support of the California Dental Access Project, as well as the Bureau of the Health Professions for supporting the authors' workforce research through the Center for California Workforce Studies. It was with this support that much of the previous research for this paper was done.

[Footnote]NOTES

[Footnote]1. A.B. White, DJ. Kaplan, and J.A. Winetraub, "A Quarter Century of Changes in Oral Health in the United States, Journal of Dental Education 59, no. 1 (1995):19-60. 2. WD. Hendricson and P.A. Cohen, "Oral Health Care in the Twenty-first Century: Implications of Dental and Medical Education," Academic Medicine 76, no. 12 (2001):1183-1185. 3. American Dental Association, Survey Center, The 1999 Survey of Dental Practice (Chicago: ADA Press, 2000). 4. R.W. Valachovic et al., "Trends in Dentistry and Dental Education: 2001,"Journal of Dental Education 65, no. 6 (2001): 539-561.

[Footnote]5. E.H. O'Neil and B.D. Barker, Pew National Dental Education Program Developing an Agenda for Change," Journal of Dental Education 53, no. 8 (1989): 469-474. 6. Valachovic et al., Trends in Dentistry and Dental Education." 7. Ibid. 8. American Medical Association, Physician Characteristics and Distribution in the U.S., 2000 Edition (Chicago: AMA, 2000). 9. ADA, Survey Center, Distribution of Dentists in the United States by Region and State, 1996 (Chicago: ADA, 1998); and Valachovic et al., -Trends in Dentistry and Dental Education.

[Footnote]10. AMA, Physician Characteristics and Distribution in the US.; and Association of American Medical Colleges, "FACTS-Applicants, Matriculants, and Graduates," 24 October 2001, www.aamc.org/data/facts/ famg72001a.htm (9 May 2002). 11. ADA, Survey Center, Distribution of Dentists; AMA, Physician Characteristics and

Page 22524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

Distribution in the US.; and US. Bureau of the Census, "Resident Population Estimates of the United States by Sex, Race, and Hispanic Origin: April 1, 1990 to July 1, 1999, with Short-Term Projection to November 1, 2000," eire.census.gov/ popest/archives/national/nation3/intfile3-l.txt (8 May 2002). 12. Ibid. 13. valachovic et al., "Trends in Dentistry and Dental Education."

[Footnote]14. AAMC, "FACTS-Applicants, Matriculants, and Graduates." 15. ADA, Survey Center, Distribution of Dentists. 16. AMA, Physician Characteristics and Distribution in the LLS. 17. ADA, Survey Center, The 1999 Survey of Dental Practice 18. AMA, Physician Characteristics and Distribution in the LLS. 19. LJ. Brown and V Lazar, "Workforce Trends That Influence Dental Service Capacity,"Journal of the American Dental Association (May 1998): 622. 20. Ibid.

[Footnote]21. ADA, Survey Center, The 1999 Survey of Dental Practice 22. Ibid. 23. J.D. Wassenaar and S.L. Thran, eds., Physician Socioeconomic Statistics, 2000-2002 Edition (Chicago: AMA, 2001). 24. ADA, survey center, The 1999 Survey of Dental Practice. 25. AMA, Physician Socioeconomic Statistics, 1999-2000 Edition (Chicago: AMA Press, 1999). 26. ADA, Survey Center, The 1999 Survey of Dental Practice 27. U.S. Bureau of the Census, "Resident Population Estimates." 28. ADA, Survey Center, The 1999 Survey of Dental Practice

[Footnote]29. Centers for Medicare and Medicaid Services, Health Care Financing Statistics (Baltimore: Office of the Actuary, National Health Statistics Group, 2000). 30. Bureau of Labor Statistics, 1999 Occupational Employment and Wage Estimates, February 2002, www.bls.gov/ oes/1999/oes_29He.htm (9 May 2002). 31. Ibid. 32. BLS, Occupational Outlook Handbook 2002-03 Edition, www.bls.gov/oco/home.htm (9 May 2002). 33. Ibid. 34. Center for Health Workforce Studies, Health Care Employment Projections: An Analysis of Bureau of Labor Statistics Occupational Projections, 2000-2010 (Rensselaer: University at Albany, State University of New York, School

Page 23524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

[Footnote]of Public Health,January 2002). 35. ADA, Survey Center, The 1999 Survey of Dental Practice. 36. Ibid

[Footnote]37 E.A. Mertz et al., Improving Oral Health Care Systems in California: A Report of the California Dental Access Project (San Francisco: UCSF Center for the Health Professions, 2000); and Department of Health and Human Services, Oral Health in America: A Report of the Surgeon General (Rockville, Md.: DHHS, 2000). 38. K. Gebbie, The Public Health Workforce Enumeration 2000 (New York: Center for Health Policy, Columbia University School of Nursing, and Rockville, Md.: Bureau of Health Professions, Health Resources and Services Administration, 2001). 39. Mertz et al., Improving Oral Health Care Systems in California. 40. ADA, Survey Center, The 1999 Survey of Dental Practice.

[Footnote]41. Indian Health Service, "Indian Health Service Dental Program," www.ihs.gov/MedicalPrograms/Dental/index.asp (8 May 2002); and Stan Bastacky, MHSA acting chief, Dental and Special Projects Branch, Division of Medicine and Dentistry, Bureau of Health Professions, HRSA, personal communication, 1 May 2002. 42. U.S. General Accounting Office, Factors Contributing to Low Use of Dental Services by Low-Income Populations, Pub. no. GAO-00-149 (Washington: GAO, 2000). 43. DHHS, Oral Health in America. 44. Ibid. 45. RJ. Manski and L.S. Magder, "Demographic and Socioeconomic Predictors of Dental Care Utilization," Journal of the American Dental Association (February 1998):195-200.

[Footnote]46. North Carolina Institute of Medicine Task Force on Dental Care Access, Report to the North Carolina General Assembly and to the Secretary of the North Carolina Department of Health and Human Services (Durham: North Carolina Institute of Medicine, 1999); and Minnesota Department of Human Services, Dental Access Services Report (St. Paul: Minnesota Department of Human Services, 1999). 47. D. Grembowski, A. Ronald, and C. Meei-shai, "A Public Health Model of the Dental Care Process," Medical Care Review 46, no. 4 (1989): 439-497. 48. R.C. Warren, Oral Health for All: Policy for Available, Accessible, and Acceptable Care (Washington: Center for Policy Alternatives, 1999). 49. Mertz et al., Improving Oral Health Care Systems in California 50. Ibid. 51. M. Drum, D. Chen, and R. Duffy, "Filling the Gap: Equality and Access to Oral

Page 24524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

Health Services for Minorities and the Underserved," Family Medicine 30, no. 3 (1998): 206-209.

[Footnote]52. DHHS, Oral Health in America. 53. E.H. Wagner, "Chronic Disease Management: What Will It Take to Improve Care for Chronic Illness?" Effective Clinical Practice 1, no. 1 (1998): 2-4. 54. Dental Health Foundation, Oral Health Access Council, personal communication, 8 May 2002. 55. JR. Freed, D.A. Perry, and J.E. Kushman, "Aspects of Quality of Dental Hygiene Care in Supervised and Unsupervised Practices," Journal of Public Health Dentistry 57, no. 2 (1997): 68-75. 56. Valachovic et al., "Trends in Dentistry and Dental Education." 57. E.A. Mertz and K. Grumbach, "Identifying Communities with Low Dentist Supply in California," Journal of Public Health Dentistry 61, no. 3 (2001): 172-177.

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Subjects:Statistical analysis  Demographics  Health care

access  Dental care  Labor force  Supply &

demand  Ratios 

Classification Codes9190 United States  9130 Experimental/theoretical 

8320 Health care industry  1220 Social trends & culture

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Author(s):Elizabeth Mertz  Edward O'Neil

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Page 25524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

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Page 26524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

Duties to Provide Care

The Americans with Disabilities Act

RANDON BRAGDON, PETITIONER v. SIDNEY ABBOTT, ET AL.

SUPREME COURT OF THE UNITED STATES

524 U.S. 624; 118 S. Ct. 2196; 141 L. Ed. 2d 540; 1998 U.S. LEXIS 4212; 66 U.S.L.W. 4601; 8 Am. Disabilities Cas. (BNA) 239; 98 Cal. Daily Op. Service 5021; 98 Daily Journal

DAR 6973; 1998 Colo. J. C.A.R. 3268; 11 Fla. L. Weekly Fed. S 726

March 30, 1998, Argued June 25, 1998, Decided

JUSTICE KENNEDY delivered the opinion of the Court. We address in this case the application of the Americans with Disabilities Act of 1990 (ADA), 104 Stat. 327, 42 U.S.C. § 12101 et seq., to persons infected with the human immunodeficiency virus (HIV). We granted certiorari to review, first, whether HIV infection is a disability under the ADA when the infection has not yet progressed to the so-called symptomatic phase; and, second, whether the Court of Appeals, in affirming a grant of summary judgment, cited sufficient material in the record to determine, as a matter of law, that respondent's infection with HIV posed no direct threat to the health and safety of her treating dentist.

Respondent Sidney Abbott has been infected with HIV since 1986. When the incidents we recite occurred, her infection had not manifested its most serious symptoms. On September 16, 1994, she went to the office of petitioner Randon Bragdon in Bangor, Maine, for a dental appointment. She disclosed her HIV infection on the patient registration form. Petitioner completed a dental examination, discovered a cavity, and informed respondent of his policy against filling cavities of HIV-infected patients. He offered to perform the work at a hospital with no added fee for his services, though respondent would be responsible for the cost of using the hospital's facilities. Respondent declined.

Page 27524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212 Respondent sued petitioner under state law and § 302 of the ADA, 104 Stat. 355, 42

U.S.C. § 12182, alleging discrimination on the basis of her disability. The state law claims are not before us. Section 302 of the ADA provides:

"No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who . . . operates a place of public accommodation." § 12182(a).

The term "public accommodation" is defined to include the "professional office of a health care provider." § 12181(7)(F). A later subsection qualifies the mandate not to discriminate. It provides:

"Nothing in this subchapter shall require an entity to permit an individual to participate in or benefit from the goods, services, facilities, privileges, advantages and accommodations of such entity where such individual poses a direct threat to the health or safety of others." § 12182(b)(3).

[Procedure omitted]

IIWe first review the ruling that respondent's HIV infection constituted a disability under the ADA. The statute defines disability as:

"(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual;

"(B) a record of such an impairment; or

"(C) being regarded as having such impairment." § 12102(2).

We hold respondent's HIV infection was a disability under subsection (A) of the definitional section of the statute. In light of this conclusion, we need not consider the applicability of subsections (B) or (C).

Our consideration of subsection (A) of the definition proceeds in three steps. First, we consider whether respondent's HIV infection was a physical impairment. Second, we identify the life activity upon which respondent relies (reproduction and child bearing) and determine whether it constitutes a major life activity under the ADA. Third, tying the two statutory phrases together, we ask whether the impairment substantially limited the major life activity. In construing the statute, we are informed by interpretations of parallel definitions in previous statutes and the views of various administrative agencies which have faced this interpretive question.

Congress … adopted a specific statutory provision in the ADA directing as follows:

Page 28524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212"Except as otherwise provided in this chapter, nothing in this chapter shall be construed to apply a lesser standard than the standards applied under title V of the Rehabilitation Act of 1973 (29 U.S.C. 790 et seq.) or the regulations issued by Federal agencies pursuant to such title." 42 U.S.C. § 12201(a).

The directive requires us to construe the ADA to grant at least as much protection as provided by the regulations implementing the Rehabilitation Act.

1. The first step in the inquiry under subsection (A) requires us to determine whether respondent's condition constituted a physical impairment. The Department of Health, Education and Welfare (HEW) issued the first regulations interpreting the Rehabilitation Act in 1977. The regulations are of particular significance because, at the time, HEW was the agency responsible for coordinating the implementation and enforcement of § 504. The HEW regulations, which appear without change in the current regulations issued by the Department of Health and Human Services, define "physical or mental impairment" to mean:

"(A) any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive, digestive, genito-urinary; hemic and lymphatic; skin; and endocrine; or

"(B) any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities." 45 CFR § 84.3(j)(2)(i) (1997).

In issuing these regulations, HEW decided against including a list of disorders constituting physical or mental impairments, out of concern that any specific enumeration might not be comprehensive. The commentary accompanying the regulations, however, contains a representative list of disorders and conditions constituting physical impairments, including "such diseases and conditions as orthopedic, visual, speech, and hearing impairments, cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, mental retardation, emotional illness, and . . . drug addiction and alcoholism."

In 1980, the President transferred responsibility for the implementation and enforcement of § 504 to the Attorney General. See, e.g., Exec. Order No. 12250, 3 CFR 298 (1981). The regulations issued by the Justice Department, which remain in force to this day, adopted verbatim the HEW definition of physical impairment quoted above. 28 CFR § 41.31(a)(1) (1997). In addition, the representative list of diseases and conditions originally relegated to the commentary accompanying the HEW regulations were incorporated into the text of the regulations. Ibid.

Page 29524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212HIV infection is not included in the list of specific disorders constituting physical

impairments, in part because HIV was not identified as the cause of AIDS until 1983. HIV infection does fall well within the general definition set forth by the regulations, however.

The disease follows a predictable and, as of today, an unalterable course. Once a person is infected with HIV, the virus invades different cells in the blood and in body tissues. Certain white blood cells, known as helper T-lymphocytes or CD4+ cells, are particularly vulnerable to HIV. The virus attaches to the CD4 receptor site of the target cell and fuses its membrane to the cell's membrane. HIV is a retrovirus, which means it uses an enzyme to convert its own genetic material into a form indistinguishable from the genetic material of the target cell. The virus' genetic material migrates to the cell's nucleus and becomes integrated with the cell's chromosomes. Once integrated, the virus can use the cell's own genetic machinery to replicate itself. Additional copies of the virus are released into the body and infect other cells in turn. [The Court cites numerous articles and treatises.)

The virus eventually kills the infected host cell. CD4+ cells play a critical role in coordinating the body's immune response system, and the decline in their number causes corresponding deterioration of the body's ability to fight infections from many sources. Tracking the infected individual's CD4+ cell count is one of the most accurate measures of the course of the disease.

The initial stage of HIV infection is known as acute or primary HIV infection. In a typical case, this stage lasts three months. The virus concentrates in the blood. The assault on the immune system is immediate. The victim suffers from a sudden and serious decline in the number of white blood cells. There is no latency period. Mononucleosis-like symptoms often emerge between six days and six weeks after infection, at times accompanied by fever, headache, enlargement of the lymph nodes (lymphadenopathy), muscle pain (myalgia), rash, lethargy, gastrointestinal disorders, and neurological disorders. Usually these symptoms abate within 14 to 21 days. HIV antibodies appear in the bloodstream within 3 weeks; circulating HIV can be detected within 10 weeks.

After the symptoms associated with the initial stage subside, the disease enters what is referred to sometimes as its asymptomatic phase. The term is a misnomer, in some respects, for clinical features persist throughout, including lymphadenopathy, dermatological disorders, oral lesions, and bacterial infections. Although it varies with each individual, in most instances this stage lasts from 7 to 11 years. The virus now tends to concentrate in the lymph nodes, though low levels of the virus continue to appear in the blood. It was once thought the virus became inactive during this period, but it is now known that the relative lack of symptoms is attributable to the virus' migration from the circulatory system into the lymph nodes. The migration reduces the viral presence in other parts of the body, with a corresponding diminution in physical manifestations of the disease. The virus, however, thrives in the lymph nodes, which, as a vital point of the body's immune response system, represents an ideal environment for the infection of other CD4+ cells.

Page 30524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212In light of the immediacy with which the virus begins to damage the infected person's

white blood cells and the severity of the disease, we hold it is an impairment from the moment of infection. As noted earlier, infection with HIV causes immediate abnormalities in a person's blood, and the infected person's white cell count continues to drop throughout the course of the disease, even when the attack is concentrated in the lymph nodes. In light of these facts, HIV infection must be regarded as a physiological disorder with a constant and detrimental effect on the infected person's hemic and lymphatic systems from the moment of infection. HIV infection satisfies the statutory and regulatory definition of a physical impairment during every stage of the disease.

2. The statute is not operative, and the definition not satisfied, unless the impairment affects a major life activity. Respondent's claim throughout this case has been that the HIV infection placed a substantial limitation on her ability to reproduce and to bear children. Given the pervasive, and invariably fatal, course of the disease, its effect on major life activities of many sorts might have been relevant to our inquiry. Respondent and a number of amici make arguments about HIV's profound impact on almost every phase of the infected person's life.

From the outset, however, the case has been treated as one in which reproduction was

the major life activity limited by the impairment. It is our practice to decide cases on the grounds raised and considered in the Court of Appeals and included in the question on which we granted certiorari. We have little difficulty concluding that it is. As the Court of Appeals held, "the plain meaning of the word 'major' denotes comparative importance" and "suggests that the touchstone for determining an activity's inclusion under the statutory rubric is its significance." Reproduction falls well within the phrase "major life activity." Reproduction and the sexual dynamics surrounding it are central to the life process itself.

3. The final element of the disability definition in subsection (A) is whether respondent's physical impairment was a substantial limit on the major life activity she asserts. The Rehabilitation Act regulations provide no additional guidance.

Our evaluation of the medical evidence leads us to conclude that respondent's infection substantially limited her ability to reproduce in two independent ways. First, a woman infected with HIV who tries to conceive a child imposes on the man a significant risk of becoming infected. The cumulative results of 13 studies collected in a 1994 textbook on AIDS indicates that 20% of male partners of women with HIV became HIV-positive themselves, with a majority of the studies finding a statistically significant risk of infection. Osmond & Padian, Sexual Transmission of HIV, in AIDS

Second, an infected woman risks infecting her child during gestation and childbirth, i.e., perinatal transmission. Petitioner concedes that women infected with HIV face about a 25% risk of transmitting the virus to their children.

Page 31524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212Petitioner points to evidence in the record suggesting that antiretroviral therapy can

lower the risk of perinatal transmission to about 8%. The Solicitor General questions the relevance of the 8% figure, pointing to regulatory language requiring the substantiality of a limitation to be assessed without regard to available mitigating measures. We need not resolve this dispute in order to decide this case, however. It cannot be said as a matter of law that an 8% risk of transmitting a dread and fatal disease to one's child does not represent a substantial limitation on reproduction.

[The Court considers whether patient Sydney Abbott poses a direct threat under the ADA as a dental patient to Bradgon.] The determination of the Court of Appeals that respondent's HIV infection was a disability under the ADA is affirmed. The judgment is vacated, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

CONCURBY: STEVENS; GINSBURG; REHNQUIST (In Part); O'CONNOR (In Part)

Page 32524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

Government Programs and Fraud

Brief class lecture will cover the structure of Medicare and Medicaid, and other public benefits.

Floyd Wood, Plaintiff-Appellant, v. Tommy G. Thompson, * as Secretary of the Department of Health and Human

Services, Defendant-Appellee.

UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT

246 F.3d 1026; 2001 U.S. App. LEXIS 6174; 73 Soc. Sec. Rep. Service 263

November 16, 2000, Argued April 12, 2001, Decided

OPINIONBY: Cudahy

OPINION: [*1028]

Cudahy, Circuit Judge. This case is almost as hard as pulling the teeth of Floyd Wood, who lost a final decision of the United States Department of Health and Human Services Secretary Tommy Thompson that the extraction of his diseased teeth was not reimbursable under Part B of the Medicare program, 42 U.S.C. § 1395 et seq. We now affirm the district court's decision to uphold the Secretary's ruling. I.

Wood, an enrollee in the Medicare program, needed a heart valve replacement. At the time his physician determined the need for this procedure, Wood had severe infection in the tissue supporting his teeth. His cardiologist determined that Wood's severe periodontal disease presented a significant risk of bacterial infection to his artificial heart valve after implantation of the device. Because of his poor dental health--and the possibility of infection--Wood's doctor recommended that he undergo dental extractions prior to his surgery. On June 6, 1994, a [**2] dentist removed 14 of Wood's diseased teeth and recontoured his upper and lower jaw (a procedure designed to prepare the tooth sockets for future denture construction). On September 13, Wood was admitted to a St. Paul, Minnesota hospital to undergo the heart valve replacement surgery. The doctor who

Page 33524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212performed the operation, Lyle Joyce, said he would not have performed the procedure if Wood had not undergone the tooth removal prior to surgery because of the risk of bacterial infection.

After removing Wood's teeth, Wood's dentist submitted a $ 1,156 claim for dental services to MetraHealth Companies, a Medicare carrier, n1 which denied coverage of the services. Wood appealed this determination to a Medicare Part B hearing officer, who upheld the carrier's decision. Wood then appealed to a social security administrative law judge (ALJ), who affirmed the hearing officer's determination. The ALJ decided that Wood was not qualified for coverage because services in connection with the treatment of teeth were not covered under Part B of the Medicare Act, Title XVIII of the Social Security Act, 79 Stat. 290, as amended, 42 U.S.C. § 1395 et seq. Congress, the ALJ concluded, [**3] specifically excluded dental care from coverage under Medicare. See Social Security Act § 1862(a), 42 U.S.C. § 1395y(a). The ALJ did identify three exceptions to this exclusion: dental care in preparation for radiation of the jaw; a covered medical procedure performed by the same physician [*1029] doing the dental work; and inpatient dental examinations conducted in preparation for kidney transplant surgery. While the ALJ did not dispute that Wood's extractions were medically necessary, he concluded that this procedure did not fall within one of the exceptions to the blanket denial of dental coverage under Medicare. Wood requested review of the ALJ's decision by the Medicare Appeals Council, but the Council declined to review the case, stating that the ALJ's decision would stand as the final decision of the Secretary.

Because the Medicare Appeals Council adopted the decision of the ALJ, that decision stands as the final decision of the Secretary. Judicial review of such final decisions lies in the appropriate district court under 42 U.S.C. § 405(g). Wood thus appealed to the District Court for the Western District of Wisconsin, which affirmed. We review the ALJ's decision with the deference due to final decisions of agencies. n2 Under 42 U.S.C. § 405(g), "findings of the Secretary . . . if supported by substantial evidence, shall be conclusive, and where a claim has been denied by the Secretary . . . the court shall review only the question of conformity with [the Secretary's] regulations and the validity of such regulations." See also Johnson v. Heckler, 741 F.2d 948, 952 (7th Cir. 1984). "Substantial evidence" is "more than a scintilla" but less than a preponderance of the evidence, and is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." II.

Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et seq., established Medicare as a federally funded and administered health insurance program for eligible persons who (1) are 65 or older and entitled to social security retirement benefits; (2) are disabled and entitled to social security disability benefits; or (3) have end stage renal (kidney) disease. The Secretary of Health and Human Services administers the Medicare program through the Health Care Financing Administration (HCFA), which enters into agreements with private contractors to administer payments of funds to hospitals and providers for covered services on behalf of eligible beneficiaries.

The Medicare program is divided into three major components. Part A, the hospital insurance benefits program, provides coverage for inpatient hospital care, post-hospital

Page 34524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212care in skilled nursing facilities and post-hospital home care services. Part B generally provides coverage for outpatient physician services, physical and occupational therapy services, outpatient rehabilitation facility services, and medical equipment and services provided at rural health clinics and qualified health centers. Part B does not provide reimbursement for dental services. Expenses excluded from Part B coverage include those that are incurred: in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth, except that payment may be made under Part A of this subchapter in the case of inpatient hospital services . . . .

There is only one exception to the exclusion of dental services under Part B. Section 2136 of the Medicare Carriers Manual n3 states that otherwise noncovered services performed by a dentist "as incident to and as an integral part of a covered procedure or service" will be covered by Medicare. Medicare Carriers Manual § 2136. Both the dental and the covered procedure under this provision must be furnished by the same provider. Citing this--the "same physician rule"--the ALJ concluded that the case here neither fits within the rule's purview nor falls within any corollaries to that rule.

There are two corollaries to the "same physician rule," under which dental procedures will be covered under Part B even if the covered procedure is performed by someone other than a dentist. The first is outlined in § 2136 of the Medicare Carriers Manual: the extraction of teeth to prepare the jaw for radiation treatment of abnormal jaw growths (neoplastic disease). The second corollary allows for Medicare coverage of an inpatient dental examination performed "as part of a comprehensive workup prior to renal [kidney] transplant surgery." Medicare Coverage Issues Manual § 50-26. n4 The ALJ concluded that Wood's procedure fit within neither of these corollaries, and that therefore Wood could not escape the exclusion for dental services. III.

On appeal, Wood advances a three-step argument: (1) the dental services exclusion in the statute is ambiguous; (2) the HCFA's interpretation of the statute is unreasonable; and (3) the legislative history is inconsistent with the over-broad interpretation of the exclusion and HCFA's interpretation of the other medically necessary exceptions to it.

In reviewing an agency's interpretation of a statute, we first determine whether that statute is ambiguous.. The Secretary appears to concede that the statute is ambiguous on this point: he begins by arguing for the reasonableness of his articulated exceptions and the exclusion of Wood's procedure. As described above, the statute delineates the type of dental services that can be covered under Part A, and does not indicate any exceptions to the exclusion from coverage under Part B. n5 Because there are exceptions, Wood reasons, the statute must be ambiguous and the Secretary does not appear to view the exclusion as absolute. This is not an entirely outlandish argument. That a statute has several articulated exceptions does not necessarily mean it is ambiguous, but it does suggest the need for a possible concession on the part of the administrator of the statute as to ambiguity. The Secretary argues that the HCFA has interpreted the Medicare Act and its legislative history to allow for coverage of dental procedures in a few limited circumstances--and has not felt free to make further exceptions to the exclusion, even if it

Page 35524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212believes the added exceptions would not undermine Congress' goals. The Secretary fails to explain why the existing exceptions, and not others, serve any express intent of Congress to exclude procedures such as Wood's. We thus consider the statutory exclusion of dental coverage to be ambiguous, and consider whether the Secretary's interpretation of the statute in the present case is reasonable.

IV.

Wood argues that the HCFA's interpretation of the statute is unreasonable, and attempts to show that the Secretary's proposed list of exceptions to the Part B exclusion is not exhaustive. This argument is two-pronged: first, he argues that the HCFA's current interpretation of the statute is inconsistent with prior interpretations, and second, that the rationale behind the other exceptions applies here. Wood claims the exclusion of procedures like his is inconsistent with prior interpretations because those interpretations are premised on the idea that life-saving procedures are or should be covered by Medicare. Because dental services received prior to a kidney transplant are covered under an administrative interpretation of the Act, see National Coverage Decision § 50-26, Medicare Coverage Issues Manual, Wood believes that coverage for dental services prior to a heart valve replacement is a "logical extension." He reasons that the rationale of the kidney transplant exception would apply in his case as well:

The [dental] examination is for the identification, prior to a complex surgical procedure, of existing medical problems [*1032] where the increased possibility of [**13] infection would not only reduce the chances for successful surgery but would also expose the patient to additional risks in undergoing such surgery.

The Secretary notes that while the HCFA has outlined limited exceptions to the general exclusion, each exception is consistent with the language of the Medicare Act and congressional intent. The only statutorily explicit coverage of services related to dental procedures does not actually cover the dental services at all; it merely reimburses providers of inpatient hospital services in connection with dental procedures. Also, the corollary to the "same physician rule" in Medicare Carriers Manual § 2136 is for the extraction of teeth to prepare the jaw for radiation treatment of oral tumors. The Secretary argues that the ALJ reasonably limited this exception to its facts. We agree. A possibly questionable exception promulgated by the HCFA is no argument that the exception should be expanded further.

Section 2136 contains a reference to another section that Wood argues indicates an intent to extend coverage to his kind of procedure. That section, § 2020.3 of the Medicare Carriers Manual, indicates that Medicare Part B pays for "otherwise covered" services furnished by a doctor of dental surgery or dental medicine if those services would be covered as physicians' services when performed by a doctor of medicine. The section indicates further that "otherwise covered services" include "treatment of oral infections and interpretations of diagnostic X-ray examinations in connection with covered services." But the section goes on to note that "the general exclusion of payment for dental services has not been withdrawn." The Secretary argues that interpreting this

Page 36524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212provision in the way Wood suggests would open the door to coverage of any extraction performed by a dentist to treat an infected tooth. He suggests, as an alternative, that this section should be interpreted to refer to "treatment of oral infections using antibiotics," as suggested in an Institute of Medicine report. Institute of Medicine, Extending Medicare Coverage to Preventive and Other Services 63 (2000). This counter-argument of the Secretary is only modestly convincing. But, in the absence of more specific support for Wood's claim, we cannot extend coverage to dental procedures simply because they are necessary for heart valve replacement surgery.

Wood also attempts to find support in the HCFA's Rural Health Clinic and Federally Qualified Health Centers Manual. That manual defines coverage for services offered at such facilities, which provide services that can be covered under Medicare Part B. See 42 U.S.C. § 1395k(a)(2)(D). The manual, as Wood notes, has a provision nearly identical to § 2136 of the Medicare Carriers Manual, with a significant exception:

A dental examination for patients requiring certain complex surgical procedures may be covered. To date, [**17] the only identified procedures for which dental examinations are covered are kidney transplants and heart valve replacements.

Rural Health Clinic and Federally Qualified Health Centers manual § 442 (emphasis added). First, this provision is not applicable to Wood, as he was not treated at either a rural health clinic or a federally qualified health center. Second, this reference to heart valve replacements indicates their specific inclusion within the general exception to the exclusion for examinations in connection with surgical procedures. While this reference lends some weight to Wood's argument, it appears in an isolated corner of the administrative provisions and is not strong enough to prevail over the authority to the contrary. And, again, the Manual specifically covers an "examination," not "treatment."

Wood also notes that, had the services been provided after December 1, 1996 and in Wisconsin, he would have been covered under the Wisconsin Physicians Service's Local Medical Review Policy. He did not rely on this policy in his arguments before the ALJ or the Medicare Appeals Council, and he has therefore waived this argument. Even if the argument had not been waived, this policy would be of no use to Wood. It does indeed state that Medicare covers dental extractions due to infections prior to heart valve replacement surgeries.

Unfortunately, even on the assumption that this plan was approved by the HCFA, the WPS policy is not controlling authority. The policy was adopted more than two years after the dental services in this case were provided--and they were performed in Minnesota, not Wisconsin. In addition, as the Secretary notes, local medical review policies may not conflict with national policy, and allowing Part B coverage of dental extractions in connection with procedures other than radiation treatment conflicts with the Medicare Act. Wood argues that the local policy means that the HCFA approves of coverage of procedures like his, but he has presented no evidence that the HCFA has approved the policy. Indeed, a report by the Institute of Medicine--commissioned by

Page 37524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212Congress to report on certain aspects of Medicare coverage--cites the WPS policy as an example of a local policy that conflicts with national coverage policy.

Wood next contends that the rationale behind the exceptions to the dental exclusion for certain medically necessary services should extend to the services [*1034] performed in this case. Because all the exceptions appear to be aimed at dental services that are medically necessary under the circumstances, Wood reasons, there is an implied intent to extend coverage to all medically necessary dental services. The common thread among the narrow exceptions, Wood argues, is the purpose to avoid creating "an impediment to accessing covered services." All the exceptions, he notes, involve "dental services [that] are medically necessary components of the treatment of underlying medical conditions." But the "common thread" seems actually to be that the exceptions involve dental services that are requisite to performing a procedure involving the mouth or jaw. The only exception to this logic is the coverage of an inpatient dental examination prior to kidney transplant surgery. n8 But, the Secretary argues, this latter exception is only the Secretary's reasonable interpretation of the Part A coverage for inpatient hospital services in connection with certain dental procedures. Medicare Part A will cover inpatient hospital services in connection with dental services if the claimant has an underlying medical condition that requires hospitalization, or if the severity of the dental service itself requires hospitalization. The Secretary also notes that the "underlying medical condition" exception is applicable only to claims for inpatient services--not claims such as this one, brought under Part B for outpatient dental work. We agree.

Finally, Wood argues that a decision of a social security ALJ supports his view. n9 In that case, the claimant needed to have a defibrillator implanted, and was required to have his diseased teeth removed prior to the surgery. The ALJ held that the extractions were covered because "the claimant's dental work would fall under an exception to the dental services exclusion in the regulations because the dental work was required secondary to a severe heart condition." Because of the scanty record, the details of the case are a mystery, but it appears that the claimant had received inpatient dental surgery, which would distinguish the circumstances from those before us and would justify a recovery under Part A. If the ALJ awarded benefits under Part B, he did so erroneously. Even if we knew enough about the case to receive guidance from it, the decision would not authorize an exception adverse to HCFA policy.

The bottom line is that the statute is clear, with clear exceptions, and an argument based only on the rationale supporting the exceptions, absent some constitutional argument, cannot prevail. As the Secretary repeatedly notes, not all medically necessary services are covered by Medicare, and the Medicare Act specifically excludes dental coverage, with a few narrowly defined exceptions. Whether the case before us looks like one of those exceptions or not (and the Secretary argues persuasively that it does not), we are not armed with power to fashion a new exception:The Secretary's interpretation is reasonable, and Wood has failed to demonstrate that the denial of coverage for his procedure was based on an erroneous reading of the statute or a misapplication of HCFA regulations.

Page 38524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212Wood's next effort is an argument that the legislative history of the statute supports

his proposed interpretation. To the contrary, the history supports the Secretary's view. Wood relies heavily on a Senate report in which the Senate Finance Committee discusses the exclusion of coverage for routine dental services. But the strongest support for Wood's argument can arguably support the Secretary's interpretation as well: "The committee bill provides a specific exclusion of routine dental care to make clear that the services of dental surgeons covered under the bill are restricted to complex surgical procedures." Id. While Wood's procedure probably does not qualify as "routine dental care," it does not qualify as a "complex surgical procedure" either. Later in the report, the committee notes that "routine dental treatment--filling, removal or replacement of teeth or treatment of structures directly supporting teeth--would not be covered." Id. This evidence of congressional intent arguably supports the Secretary's view, and certainly is not authority for us to fashion an additional exception out of thin air.

Page 39524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

V.

Wood finally argues that the Secretary's decision was not based on substantial evidence. We may indeed set aside the Secretary's decision on a matter of Medicare payment if it is not based on substantial evidence. Wood's argument centers on the "overwhelming evidence" that the dental services he received were a medically necessary precursor to a heart valve replacement surgery. That these services were medically necessary does not appear to be disputed. The dispute in this case is whether the Secretary properly denied coverage for these services, despite the fact that they were medically necessary. Thus, this argument is misplaced. VI.

Wood should lobby Congress or the Secretary; the judicial branch can be of no use to him. [**26] For the foregoing reasons, we AFFIRM.

Page 40524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

Laws regarding fraudulent billing of health care programs will be discussed in class. The following readings relate to fraud:

Elizabeth J. Fowler, SmileCare v. Delta Dental: Aberration or Signpost fo rthe Future of Antitrust Enforcement in the Supplemental Insurance Industry? 82 MINN. L. REV. 173 (1997)

COMMENT: SmileCare v. Delta Dental: Aberration or Signpost for the Future of Antitrust Enforcement in the Supplemental Insurance Industry?

Elizabeth J. Fowler

A recent article in a prominent dental journal chronicles the case of a fifty-four year old woman in desperate need of dental care. n1 Despite having basic insurance coverage for dental care through her husband's part-time job, the woman could not afford the steep copayment required by the dental insurer in order to obtain services. n2 As a direct result of forgoing necessary dental care for a serious oral health condition, the woman was eventually hospitalized.

The patient's dentist was willing to perform the treatment and waive the cost-sharing amount, accepting the third-party coverage as payment in full. He made repeated attempts to persuade the dental insurer to allow him to provide the services under such an arrangement, but the insurer refused. The dental insurer suggested instead that the dentist simply provide the care at no cost. n3

Although cost sharing in the form of deductibles and copayments is common among health and dental insurers to limit unnecessary utilization of services, it can impose substantial barriers to access to care for patients with limited financial means. In fact, out-of-pocket costs often represent the determining factor in deciding among dental or medical treatment options, irrespective of efficacy or quality. n4 Medical care providers frequently waive copayment requirements for patients who could not otherwise afford treatment. Most dental insurers and a handful of states, however, expressly forbid this practice among dentists. n5

In response to the problem of underinsured dental patients and the ban that many dental insurers place on waiver of copayments, the SmileCare Dental Group of Irvine, California, developed an innovative insurance product known as "supplemental dental care plans." n6 These plans, offered to employers, labor unions, and individuals, were modeled after supplemental insurance products purchased by Medicare beneficiaries and were designed to offset the out-of-pocket costs not covered by a subscriber's primary dental insurance. n7 The supplemental insurance coverage relieves patients of copayments for services, since the supplemental insurer pays this portion of the bill directly to providers. n8

Page 41524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212 Immediately following the introduction of this new dental insurance product, Delta

Dental Plan of California, the state's predominant dental insurer, retaliated by instituting a new policy prohibiting its participating providers from accepting supplemental payments from SmileCare. n9 Delta Dental deemed any provider who violated this policy in breach of contract. As a penalty for breach, providers faced reduced fees, threats of termination, or actual termination. n10 With a sixty percent market share for dental insurance and a participation rate of ninety-five percent by California dentists, Delta Dental's policy greatly affected SmileCare's business. SmileCare responded by filing a claim against Delta Dental. [*175]

In SmileCare Dental Group v. Delta Dental Plan of California, n11 SmileCare alleged that Delta Dental violated section 2 of the Sherman Act. n12 According to SmileCare, Delta Dental engaged in intentional predatory or anticompetitive conduct and characterized Delta Dental's practice as a "group boycott." The Court of Appeals for the Ninth Circuit disagreed and affirmed the lower court's dismissal of SmileCare's complaint for failure to state a claim. n13

The SmileCare case is unique because it is the first to examine whether a primary insurer's policy of prohibiting providers from accepting supplemental payments in lieu of patient copayments violates antitrust laws. The judicial affirmation of Delta Dental's policy has significant implications for the dental insurance industry and, potentially, for other markets like the Medigap market for Medicare supplemental insurance.

This Comment maintains that the circuit court in SmileCare wrongly upheld the dismissal of SmileCare's complaint against Delta Dental. Part I examines the market for dental care services and recent antitrust enforcement activity in the health care industry. Part II discusses the circuit court's reasoning and holding in the SmileCare case. Part III argues that the court misconstrued the application of SmileCare's group-boycott claim and erred in considering Delta Dental's "business justification" for its policy prior to determining whether Delta Dental engaged in anticompetitive and predatory conduct. This Comment concludes that SmileCare represents an unwarranted departure from accepted principles in antitrust jurisprudence but does not signify a major shift in evaluating antitrust cases in the supplemental insurance industry or the health care market as a whole.

Page 42524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212

The next case discusses conduct by dentists that may amount to illegal price fixing and health care fraud. With regard to the discussion of a “per se violation” of law, the phrase “per se” means that the conduct is clearly a violation of a standard prescribed by law, so no further examination of circumstances or motives is needed to show that a wrong has been committed. Since this is a crime, the fact that the defendant committed the act must show his intent to do so beyond a reasonable doubt. Such a conclusion is unusual. The court considers whether the antitrust laws create a lower standard with regard to the particular acts they identify.

U.S. v. Alston, 974 F. 2d 1206 (1992)

UNITED STATES OF AMERICA, Plaintiff-Appellant, v. A. LANOY ALSTON, D.M.D., P.C.; RONALD D. WALKER;

DESERT VALLEY DENTAL, LTD.; RICHARD B. MEYER; AARON L. ("LANOY") ALSTON, Defendants-

Appellees.

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

974 F.2d 1206

OPINIONBY: KOZINSKI

KOZINSKI, Circuit Judge.

We examine three dentists' criminal antitrust convictions.

Background

Aaron Lanoy Alston, Richard B. Meyer and Ronald D. Walker provide dental services for members of prepaid dental plans in Tucson, Arizona. n1 They and other providers receive two kinds of payments: capitation fees, which are paid by the plans to the dentists based on the number of plan-member patients they see, and co-payment fees, which are paid by the patients to the dentists based on the services performed. The plans, not the dentists, determine both fee amounts.

n1 Drs. Alston and Walker do business as corporations, which are also defendants; all references to the individuals include their corporations.

Page 43524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212Co-payment fees in Tucson had not risen for ten years, although they had in other

cities, including nearby Phoenix. Some Tucson dentists were failing to break even on the most commonly performed services, such as porcelain crowning. Several Tucson dentists had individually approached the plans about increasing the fee schedule; their efforts proved unsuccessful. Drs. Alston, Meyer and Walker were among the dentists who felt the fees were too low. They met with about fifty local dentists at Dr. Alston's office to discuss the fees, after which many of those present at the meeting mailed letters to the plans requesting higher fees. The plans did in fact revise their fee schedules, resulting in higher costs to plan members for some services.

n2 The exact agenda and purpose of the meeting is disputed. The government contended, and the jury apparently found, that the dentists met with the intention of exerting pressure on the plans to increase fees. The dentists claimed, however, that the topic of the meeting was a new co-payment schedule proposed by the plans, and that the letter-writing campaign was undertaken at the behest of the president of one of the plans as a pro forma "show of force" to help the plans justify increasing the fees in Tucson to match those in Phoenix.

This practice drew immediate fire from the Justice Department, which obtained an indictment against Alston, Meyer and Walker for conspiring to fix prices in violation of section 1 of the Sherman Act. The jury convicted all three defendants, but the district court granted judgments of acquittal notwithstanding the verdict to Meyer and Walker and a new trial to Alston. United States v. Alston, 1991-1 Trade Cas. Par. 69,366 (D. Ariz. 1990). The government appeals.

n3 "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." 15 U.S.C. § 1.

Discussion

I. We begin with the Supreme Court's most recent per se case, FTC v. Superior Court Trial Lawyers Association, 493 U.S. 411, 107 L. Ed. 2d 851, 110 S. Ct. 768 (1990) (SCTLA). About 100 private lawyers in Washington, D.C., regularly served as court-appointed attorneys for indigent defendants. More than 90 percent of them agreed to stop providing legal representation until the District of Columbia government increased their compensation. Because of the boycott's detrimental effect on the quality of criminal justice, the District government acceded to the lawyers' demands. The Federal Trade Commission brought a civil action against SCTLA, alleging that the boycott constituted an unfair method of competition in violation of section 5 of the FTC Act. n5 After hearings before an ALJ, the Commission and the D.C. Circuit, the case came before the Supreme Court. The Court held that the lawyers' boycott was "a plain violation of the antitrust laws," and that it was prohibited per se.

n5 "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful." 15

Page 44524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212U.S.C. § 45(a)(1). Practices that violate section 1 of the Sherman Act also violate section 5 of the FTC Act.

In so holding, the Court made clear that the per se condemnation of price fixing is a substantive rule of antitrust law, not merely a device of administrative convenience: "The per se rules are, of course, the product of judicial interpretations of the Sherman Act, but the rules nevertheless have the same force and effect as any other statutory commands." Price fixing is illegal regardless of pro-competitive justifications offered therefor: "It is not our task to pass upon the social utility or political wisdom of price-fixing agreements," "every such horizontal arrangement among competitors poses some threat to the free market," "[price-fixing agreements] are all banned because of their actual or potential threat to the central nervous system of the economy".

The government analogizes the dentists here to the lawyers in SCTLA, and argues that the per se rule is thus applicable. Amici supporting the dentists argue that the case should be analyzed instead under the rule of reason. It's true that in a very narrow class of cases, market arrangements involving horizontal restraints are nevertheless analyzed under the rule of reason rather than the per se approach.

[The court reviews the history of health care markets.]

II. A. The jury returned guilty verdicts against all three defendants, who then moved for judgments of acquittal notwithstanding the verdict, and in the alternative for a new trial. The district court granted judgments of acquittal to Meyer and Walker, and granted Alston's new trial motion. The reasons for the court's decision appear to be two: That there was insufficient evidence to support the convictions, and that the instructions given were deficient. We reject the argument that the jury instructions were erroneous. We have reviewed the instructions and agree that they were "technically and legally correct."

The court began by correctly characterizing a conspiracy as "an agreement of two or more persons to accomplish some unlawful purpose or to accomplish a lawful purpose by unlawful means." Instruction #8. The court went on to state: In order to convict any defendant, the government must prove beyond a reasonable doubt as to that defendant each of the following: First, that the conspiracy charged existed at or about the time stated in the indictment; second, that the defendant knowingly - that is, voluntarily and intentionally - became a member of the conspiracy charged in the indictment, knowing of its goal and intending to help accomplish it; third, that interstate commerce was involved.

The court also specified the conduct charged in this case: "What the government has charged here, and what it must prove, is that there was a single, continuing conspiracy, which the defendant joined, to fix and raise co-payment fees paid by members of the

Page 45524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212dental plans named in the indictment." Id. This instruction accurately characterizes the indictment and, if proven, would constitute an antitrust violation. The court then instructed the jury on the per se nature of price fixing: Under the Sherman Act, price fixing is per se illegal. If you find there was a conspiracy to fix co-payment fees, it does not matter why the fees were fixed or whether they were too high or low; reasonable or unreasonable; fair or unfair. It is not a defense to price fixing that the defendants may have had good motives, or may have thought that what they were doing was legal, or that the conspiracy may have had some good results. You may not consider any justification for fixing the fees. Instruction #10. Although defendants strenuously object to this instruction on the grounds that it left the jury no choice but to convict, it is an accurate statement of the law.

Finally, the court noted that "the defendants are competitors if you find that they are individuals providing the same service to customers." Instruction #12. Again, this instruction is correct under the Supreme Court's most recent price-fixing case. Each of these jury instructions accurately stated the law of conspiracy and price fixing; they cannot serve as the basis for acquittal. Nor does the district judge's sense he could have made clearer to the jury they didn't have to convict support the judgment of acquittal. A jury is presumed to follow the instructions given by the court. We therefore turn to the evidence in the case.

…

The government charged, and was required to prove, that defendants agreed to persuade the plans to raise co-payment fees and then took steps to carry out the agreement. The government charged that, in furtherance of this scheme, the defendants met at various offices, including Dr. Alston's, to discuss fees; that they agreed on higher co-payment fees to be paid by the plans; that they agreed to and did mail identical letters to the plans demanding higher fees; and that the plans did in fact raise the fee schedules.

The record here shows that the government made its case. For example, the government introduced Dr. Alston's appointment calendar, which indicated more than one meeting with Dr. Meyers and/or Dr. Walker. Although on appeal, as at trial, defendants offer an alternative explanation for these meetings, the jury must have weighed the evidence and determined that defendants met to discuss fees. We cannot second-guess that determination.

It is undisputed, moreover, that a large number of dentists gathered one evening at Dr. Alston's office to discuss fees, and that all three defendants were instrumental in arranging the meeting. Although defendants advance various explanations for the meeting, the jury was entitled to find that defendants conspired to set the co-payment fees. Defendants had ample opportunity to persuade the jury otherwise; they failed, and this is not the forum to resolve competing factual claims.

The dentists attending the meeting were mailed a form letter to be sent to the plans, together with a cover letter bearing Dr. Alston's name. The cover letter opened: "Enclosed is a copy of the letter we agreed to send." It closed as follows: "I feel it

Page 46524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212mandatory . . . that we get 100 percent participation from all 50 doctors so that we can make a significant impact." The letter to the plans stated, in part, [**16] that the sender was "establishing a minimum co-payment schedule," and that it would "be the minimum schedule accepted." Defendants and several other dentists did in fact mail these letters to the plans. Sometime thereafter, the plans raised the co-payment fees to match the schedules in the letters.

The district judge saw the witnesses, reviewed the evidence and was intimately familiar with all aspects of the case. We are reluctant to overturn his informed judgment in this matter. Nevertheless, under the per se rule the jury had only to find that defendants knowingly participated in an agreement to raise co-payment fees. Our review of the record convinces us that it was not irrational for the jury to conclude that defendants did so. Because we must review judgments of acquittal notwithstanding the verdict in the light most favorable to the government, the judgments of acquittal as to Meyer and Walker cannot stand. On remand, the district court shall consider their alternative motions for a new trial.

[The Circuit Court considers the value and appropriateness of remanding the cases to the lower court for resolution.] Here the district judge sat through the entire trial, and after the jury returned its verdicts the judge reviewed all the transcripts. Upon careful reflection, he granted Alston's motion for a new trial. The district judge discussed in detail [**19] the dentists' proffered explanations for their behavior:

In essence the testimony is as follows: Dr. Alston says: I talked to Steve Touche [one of the plan managers,] and I have discussed the co-payment schedules, and I think it is undisputed that all of the dentists were complaining they were too low. It wasn't any secret to anybody. They had more expenses because of the AIDS scare and so forth.

I think the companies were well aware that there was unhappiness within the profession with the co-payment schedules.

In any event, Dr. Alston testified and he said that Steve Touche had told him that the Phoenix schedule [the one the dentists wanted adopted] was acceptable and that he should get together with the doctors and make what was called a quote, "show of force," and that as a result of his conversations with Touche he got the doctors together.

I reviewed Steve Touche's testimony. Interestingly enough, he never denies having said that. He just says: I don't recall. That's exactly what he says.

The testimony of the defendants Walker and Meyer and the other people that were at the meeting are [sic] that Dr. Alston had told them and said at the meeting that the companies had approved [**20] the schedule - and I am not citing exact words, but, in essence, that he had talked with the companies and the companies were in agreement and that basically what the companies wanted was to see if any dentists would approve of the Phoenix schedule. And, in fact, at the meeting there were discussions about wanting to change some here and there, and Dr. Alston said that he didn't think that they would get approval but that he would go back to the company, or the companies.

I think it is uncontradicted, or certainly the reasonable conclusion of the evidence is that Dr. Meyer and Dr. Walker were told that - or certainly were under the impression

Page 47524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212that the companies had approved the schedule and that Dr. Alston was kind of the go-between.

It seems to me that if that is the reasonable conclusion of what the dentists all thought, that there was no conspiracy. They weren't conspiring to do anything, they thought they were working with the company. We have reviewed the transcripts of the trial. The dentists offered alternative [*1213] explanations for almost everything the government presented. Although the jury apparently chose to believe the government's version of events, a reasonable trier of fact could have come out the other way. Given the district judge's familiarity with the evidence and his ability to evaluate the witnesses, and in light of the deferential standard of review we are bound to apply in reviewing an order granting a new trial, we cannot say the district judge abused his discretion in coming to a different conclusion than did the jury.

The government argues that the district judge's ruling was an abuse of discretion nevertheless, because even under the facts as he viewed them a criminal antitrust violation has been made out. We are confronted, therefore, with a question of law: Assuming that the jury had found the facts as the district court believed it should have, would that have led to a judgment of acquittal? In other words, would a finding that the dentists believed the schedule was proposed or approved by the plans prior to the meeting, and was submitted to the assembled dentists merely for their reaction, absolve them of liability for price fixing?

We recognize that the dental consumers actually bear the burden of higher co-payments, and that the plans' approval of the dentists' action cannot transform an otherwise unlawful conspiracy into a harmless meeting. But in a criminal case the government must prove that the defendants had the requisite mental state to commit the crime. The indictment charges, and the district court correctly instructed the jury to find, that the defendants knowingly conspired to fix and raise co-payment fees. In a criminal antitrust prosecution, the government need not prove specific intent to produce anticompetitive effects where a per se violation is alleged. But while they need not have entered the agreement with the specific intent to violate the Sherman Act, mere acquiescence in a fee schedule proposed or approved by the plans does not an antitrust conspiracy violation make. If the dentists had believed they were only complying with the plans' requests, they would have lacked the mens rea necessary for a price-fixing conspiracy.

It is, of course, for the jury to determine whether the dentists' version of this key fact is to be believed, and the first jury apparently did not believe them. The district judge, on the other hand, determined that the evidence weighed heavily against the verdict. We cannot say that the district judge committed a "clear and manifest abuse of discretion" in concluding that an injustice could be avoided by presenting the issue to a second jury. "The task of safeguarding the rights of criminal defendants ultimately rests with the experienced men and women who preside in our district courts. We should let them do their jobs."

Page 48524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212If the government chooses to retry Alston (and the other defendants if the district

court grants their motions for a new trial), the matter that gave the district court pause can be the focus of particular attention. Like the learned district judge, who was troubled by what he termed his "sterile" instructions, we underscore the importance of giving the jury sufficient useful guidance in sorting the evidence before it. For example, while we have approved the district court's Instruction #10, we note that "price fixing" is a term of art that is hardly self-defining. Many things that might occur at a meeting such as in Dr. Alston's office would escape the per se rule and might be perfectly legal under the rule of reason: dentists commiserating over the low fee schedules; or impugning the motivations or integrity of the Plans; even sabre-rattling about economic retribution at some indefinite time in the future if their grievances remain unaddressed. Some such activity, like clamoring for governmental protection of their economic interests vis-a-vis their antagonists or competitors, would even be constitutionally protected. As the Seventh Circuit has observed, the district court must explain clearly what the jury has to find in order to trigger the per se rule: "In such a case, it must be explained to the jury that its function is to decide whether certain conduct, described with precision in the instruction, did or did not occur."

Moreover, while we hold that the situation here is not sufficiently novel or unusual to escape scrutiny under the per se rule, the relationship between individual health care providers and medical plans is not without subtlety and complexity. In a market consisting of individual service providers and individual consumers, concerted action by the suppliers even on matters not directly related to price is viewed with the greatest suspicion. Needless to say, adoption of suggested or "maximum" fee schedules will run afoul of Section One's per se rule as thinly-veiled attempts at price fixing.

But health care providers who must deal with consumers indirectly through plans such as the one in this case face an unusual situation that may legitimate certain collective actions. Medical plans serve, effectively, as the bargaining agents for large groups of consumers; they use the clout of their consumer base to drive down health care service fees. Uniform fee schedules - anathema in a normal, competitive market - are standard operating procedure when medical plans are involved. In light of these departures from a normal competitive market, individual health care providers are entitled to take some joint action (short of price fixing or a group boycott) to level the bargaining imbalance created by the plans and provide meaningful input into the setting of the fee schedules. Thus health care providers might pool cost data in justifying a request for an increased fee schedule. Providers might also band together to negotiate various other aspects of their relationship with the plans such as payment procedures, the type of documentation they must provide, the method of referring patients and the mechanism for adjusting disputes. Such concerted actions, which would not implicate the per se rule, must be carefully distinguished from efforts to dictate terms by explicit or implicit threats of mass withdrawals from the plans.

Finally, we are told that this is the first criminal antitrust prosecution of health care professionals in half a century. See Brief for the ADA and the AMA as Amici Curiae at 4. While it is not our place to question the government's motives in elevating to the criminal level a dispute normally handled as a civil enforcement matter, the crushing consequences of a criminal conviction on the lives and careers of the defendants singled

Page 49524 U.S. 624, *; 118 S. Ct. 2196, **;

141 L. Ed. 2d 540, ***; 1998 U.S. LEXIS 4212out for such treatment makes it all the more important that the district judge spell out with specificity what the jury must find in order to convict. Although both criminal and civil violations may be made out under the same substantive provisions of the Sherman Act, "the Act has not been interpreted as if it were primarily a criminal statute; it has been construed to have a generality and adaptability comparable to that found . . . in constitutional provisions." The district court should therefore be chary of wholesale adoption of jury instructions developed primarily in the civil enforcement context. It may deem it appropriate instead to pattern its instructions around the unique setting of a criminal prosecution. We leave this, like other matters on remand, in the capable hands of the district judge.

Conclusion

The order granting a new trial as to Alston is AFFIRMED; the orders granting judgments of acquittal notwithstanding the verdicts as to Meyer and Walker are VACATED. The case as to all three defendants is REMANDED for further proceedings consistent with this opinion. If the government elects to retry any of the defendants, the Double Jeopardy Clause does not bar retrial because the first convictions were supported by substantial evidence.