DSO vs. FQHC: How Dental Fraud Can Happen in Each

The chain: paid by the procedure

A dental chain that takes Medi-Cal is paid the same way as any private dentist outside the two managed care counties. The State publishes a price list, the Schedule of Maximum Allowances, with a fee for every procedure. On the schedule that took effect on 1 October 2026, a periodic exam is $15, an adult cleaning is $40, a one-surface filling is $39, a simple extraction is $41 and a sealant on a child's tooth is $22.

Those base fees have not changed in years, so the State pays extra on top. Until 30 June 2027, Proposition 56 tobacco tax money raises many of them: the exam to $45, the cleaning to $90, the filling to $54.60 and the extraction to $57.40. A separate CalAIM supplement raises a child's sealant to $38.50. DHCS says the Proposition 56 supplements end for services on or after 1 July 2027.

Under this rule, more money means more procedures, or more expensive ones. That is the shortcut a chain is tempted by.

The health center: paid by the visit

Federal law sets a health center's Medicaid rate “in an amount (calculated on a per visit basis)” based on the clinic's own costs in 1999 and 2000, raised every year for inflation. California's provider manual puts the result plainly. Clinics “may bill one (1) medical or mental health visit and one (1) dental visit at the Medi-Cal PPS rate per member per day.” PPS stands for prospective payment system, the federal name for this flat rate.

The rate is the same whether the dentist does one filling or six. It is also far higher than any single procedure fee. On the State's current list, published 24 February 2026, the middle dental rate among the 1,919 clinic sites is $292.46 a visit. One site in ten is paid less than $202.11 and one in ten more than $460.63. In Sacramento County the middle rate across 51 sites is $320.86. At almost every site, the dental rate is exactly the same as the medical rate.

The State does not hide that this costs more. A DHCS fact sheet from 2025 says “PPS per-visit rates for FQHC and RHC services are typically higher than Medi-Cal Fee Schedule rates for equivalent services provided by non-FQHC and non-RHC providers.” In its own 2016 plan for reforming clinic payment, DHCS described the system as “volume-based.”

The high rate is the design, not a loophole. The California Health Care Foundation explains that the intent “was to offset the costs that FQHCs incur for providing care to uninsured and underinsured patients while ensuring FQHCs are paid appropriately.” It also makes the case for the flat rate: it is meant “to reduce the incentive to deliver unnecessary health care services, which can occur in a volume-based fee-for-service (FFS) system.” It does that. It also creates a new incentive: more visits.

The government has said so in writing. In 2012 Senator Chuck Grassley, then investigating corporate dental chains in Medicaid, described the dentists who own chain clinics on paper: “These ‘owner dentists’ are effectively ghost owners who maintain none of the traditional aspects of ownership of their operations, allowing the corporate investors to have control over clinical operations.” The joint Senate staff report that followed in 2013 found that one management company's ownership setup was “fundamentally deceptive.” The same report found the opposite for another chain it examined, whose agreements “truly provide only administrative and scheduling support.” Not every DSO is the same, and the Senate said that too.

Here are the ways chain billing has gone wrong in cases that were proven or paid for.

When a dentist's pay or job depends on how much revenue they bring in, the pressure lands on the treatment plan.

Medicaid children are the core of many chains' business, and the same procedures appear again and again: baby root canals, called pulpotomies, and stainless steel crowns on baby teeth.

Every Medicaid claim names the dentist who did the work. When that person is not credentialed, the claim goes out under someone who is.

When the people in charge cannot bill Medicaid, someone else's name goes on the door.

A company that settles usually keeps operating. What happened to the two biggest children's chains after they settled:

The inspector general analyzed Medi-Cal's 2012 dental claims for children, leaving out health centers, and looked for dentists whose billing was far outside the norm.

Six of the health center and clinic cases in section three are Californian: Horisons Unlimited, Clinica Sierra Vista, North East Medical Services, Southern California Medical Center, Clinicas del Camino Real and Community Health Centers of the Central Coast. On the chain side, the California record is mostly multi-office groups, often controlled by people who were not the dentists doing the work.

• The corporate practice ban. Business and Professions Code section 1625 counts as practicing dentistry anyone who “Manages or conducts as manager, proprietor, conductor, lessor, or otherwise, a place where dental operations are performed.”
• The dentist's own duty. Section 1685 makes it unprofessional conduct for a dentist “to require, either directly or through an office policy, or knowingly permit the delivery of dental care that discourages necessary treatment or permits clearly excessive treatment.” The words “through an office policy” matter for chains. The duty falls on the licensed dentist, not the management company.
• SB 351, in force since 1 January 2026. Health and Safety Code section 1191 now says a private equity group or hedge fund involved with a dental practice may not interfere with dentists' judgment, including “Determining how many patients a physician or dentist shall see in a given period of time,” and may not control “Making decisions regarding the coding and billing of procedures for patient care services.” The Attorney General “shall be entitled to injunctive relief and other equitable remedies.” There are no fines in it, it covers only private equity groups and hedge funds, and outsiders may still assist with those decisions “provided that the physician or dentist retains the ultimate responsibility for, or approval of, those decisions and activities.”
• What did not pass. AB 3129 would have required the Attorney General's consent for private equity purchases of health care provider groups of ten or more licensed professionals, dentists included. The Governor vetoed it on 28 September 2024, saying the Office of Health Care Affordability should review such deals. In 2000, AB 2332 would have licensed dental management companies as health plans. Its hearings were canceled at the author's request and it died in committee.

• Nobody has published a fraud rate by type of practice. The California audit reported how many of the flagged dentists worked for chains. It did not report how many of all 4,091 dentists and orthodontists it reviewed worked for chains, so the two cannot be compared.
• Half the flagged California dentists did not work for chains. Solo and small group dentists commit Medicaid fraud too, and the state fraud unit counts above are mostly individuals.
• Single offices can be as bad as any chain. In Houston, the operator of one children's dental office pleaded guilty and was sentenced in 2024 to 120 months; prosecutors said he “illegally employed his son, who was not a licensed dentist, to provide dental services to Medicaid-insured children.” In Manhattan, an unlicensed dentist and the licensed dentist he worked with were each sentenced to two years in prison in 2019, over cash kickbacks to patients and work the unlicensed man was not allowed to do.
• A settlement is not a verdict. Most of the large chain and clinic settlements on this page say the claims are allegations only, and several companies publicly denied them.
• The State's own fraud worry has been questioned. In 2016 the Little Hoover Commission wrote that it “heard anecdotally that fraud rates are no different for Denti-Cal than commercial insurance.” The source, in the report's own sidebar, was an executive of the company that administered Denti-Cal, who “said he didn't have data to answer the questions, but speculated” there was little difference. The same report, in another sidebar, said “Some California dentists do generate income with questionable procedures on Denti-Cal beneficiaries.”
• The flat visit rate was built to fix a real problem. Paying by the procedure rewards piling on procedures. The per-visit rate removes that reward. It replaces it with a different one.
• Research on chains measures volume, not fraud. A study of more than 13 million Virginia Medicaid dental claims found “providers in DSO settings had an increased number of patients and claims compared with private-practice providers.” A 2025 study of commercial claims found private equity buyouts “increased charges for dental care services by 3.3%,” while “allowed prices for these services remained statistically unchanged,” and a shift toward “generally higher reimbursement restorative, specialty, and surgical procedures.” Neither study measured whether the care was needed.