FTC Staff Comment Before the Texas State Board of Dental Examiners Concerning Proposed 22 TEX ADMIN CODE §§ 108.70, 108.74 That Would Restrict the Ability of Texas Dentists to Enter into Agreements with Non-Dentists for the Provision of Admin Services

Office of Policy Planning
Bureau of Competition
Bureau of Economics
October 6, 2014
Simone Salloum
Assistant General Counsel
Texas State Board of Dental Examiners
333 Guadalupe, Suite 3-800
Austin, Texas 78732
rulecomments@tsbde.texas.gov
Dear Ms. Salloum:
The staffs of the Federal Trade Commission’s (“FTC” or “Commission”) Office
of Policy Planning, Bureau of Competition, and Bureau of Economics1 appreciate the
opportunity to respond to the invitation for public comments on two rules proposed by
the Texas State Board of Dental Examiners (“Board”): 22 TEX. ADMIN. C ODE § 108.70,
which would replace the current version of that rule; and 22 TEX. ADMIN. C ODE § 108.74,
a new rule.2
Proposed 22 TEX. ADMIN . C ODE § 108.70 imposes new restrictions on the ability
of Texas dentists to enter into contracts with “unlicensed persons” for the provision of
nonclinical services, such as administrative support and business functions. Proposed 22
TEX. ADMIN. C ODE § 108.74 would make dentists who own, maintain, or operate a dental
practice that employs a dentist “responsible for all administrative and operational”
functions. Although the proposed rules do not expressly refer to Dental Service
Organizations (“DSOs”),3 the rules seem likely to discourage dentists from affiliating
with DSOs by mandating that dentists assume responsibility for the types of functions
that DSOs typically provide, and by expanding the Board’s authority to take disciplinary
action against dentists who enter into such prohibited agreements.
FTC staff are concerned that the proposed rules, if they are adopted and if they
discourage dentists from affiliating with DSOs, may deny consumers of dental services
the benefits of competition spurred by the efficiencies that DSOs can offer. The central
theme of this letter is a relatively narrow one; it focuses on the nonclinical functions of a
dental practice that are unlikely to affect the quality of professional dental care. The rules
would restrict the choices dentists have when deciding upon the most efficient way to
organize the nonclinical aspects of their practices, and deny them potentially significant
cost savings and the ability to focus their own efforts on provision of dental care, rather
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

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than on the business management aspects of running a dental practice. The use of DSOs
for these nonclinical purposes may lead to lower prices and increased access to care.
In light of the likely harm to competition and consumers from the proposed rules,
FTC staff urge the Board to consider whether reliable evidence indicates that (i) the rules
will serve any important public purpose, such as addressing substantiated health and
safety concerns or concerns about fraud; (ii) if so, whether the proposed restrictions may
be greater than necessary to address such concerns; and (iii) whether less restrictive
alternatives might be available.
I. 	FTC Interest and Experience
The FTC is charged under the FTC Act with preventing unfair methods of
competition and unfair or deceptive acts or practices in or affecting commerce.4
Competition is at the core of America’s economy,5 and vigorous competition among
sellers in an open marketplace gives consumers the benefits of lower prices, higher
quality products and services, and increased innovation.
FTC staff have particular experience with issues related to dental competition,6
including dentists’ ability to contract with DSOs for the provision of nonclinical,
administrative functions.7 More generally, FTC staff have investigated and reported on
the competitive effects of restrictions on the business practices of state-licensed
professionals, including dentists, optometrists, physicians, pharmacists, and
veterinarians.8 In addition, staff have submitted comments about the competitive effects
of restrictions on the business practices of state-licensed professionals to state
legislatures, administrative agencies, and others.9 We have consistently maintained that
the choice of business model is an important dimension of the competitive process that
should not be restricted by regulation or private agreement absent reliable evidence that
regulation is reasonably necessary to achieve an important public purpose.
In addition to this relevant competition advocacy work, the Commission has used
its enforcement authority to challenge professional association rules prohibiting
professionals from entering into business relationships with non-professionals. For
example, the Commission found that the American Medical Association’s (AMA) ethical
code provisions, which prohibited physicians from working on a salaried basis for
hospitals or other lay institutions and from entering into partnerships or similar business
relationships with non-physicians, unreasonably restrained competition and violated
federal antitrust laws.10 The Commission also found there to be no procompetitive
justifications for these restrictions and concluded that these prohibitions kept physicians
from adopting potentially efficient business formats and precluded competition from
organizations not directly and completely under the control of physicians.11
II. 	The DSO Business Model
DSOs are management companies that contract with dentists to provide a variety
of nonclinical business services that would otherwise be handled within a practice, or by
multiple contractors providing individual services. The services offered are varied, and

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may include acquisition or sale of capital equipment and dental supplies; accounting,
bookkeeping, payroll, and financial services; billing and collection services; advertising
and marketing services; legal services; and management of external laboratory services.
Contracting for these kinds of business functions can allow dentists to focus on practicing
dentistry, rather than operating a small business, for which they may have limited
training.12
DSOs are often organized as corporations owned by non-dentists. They usually
have offices at more than one location, and may be referred to as “group practices” or
“chains.” The contractual relationship between dentists and non-dentists varies according
to state law. Most states, including Texas, do not permit non-dentists, including
corporations, to own dental practices or employ dentists and allied dental professionals.13
The common attribute of DSOs is that they are “networks of small practices
aligned with a central management organization that provides a veritable array of
business services for a professional group that provides clinical care.”14 Such an
arrangement may provide “efficient centralized management and a number of small
practices located ‘where the patients are.’”15 Other efficiencies claimed by DSOs include
the ability to purchase equipment and supplies at reduced prices and the ability to build or
lease office space economically.16 The percentage of dentists affiliated with such multi-
site companies is small but growing, especially among recent dental school graduates
who may not have the resources necessary to establish an individual practice.17
Some DSO-affiliated dentists have been especially active in providing care to
underserved populations, including those that rely on Medicaid.18 Recent surveys showed
that nationally, while only 6.4 percent of dentists were affiliated with a DSO,19 DSO-
affiliated dentists provided 21 percent of the care received by children in the Medicaid
program.20 In part, the relatively high percentage of care provided to Medicaid
beneficiaries by DSO-affiliated dentists may reflect low participation in the program by
many non-DSO-affiliated dentists, many of whom do not accept Medicaid because of its
low reimbursement rates.21 One commentator has suggested that efficiencies achieved by
the DSOs’ business model enable DSO-affiliated dentists to accept Medicaid rates and
still be financially viable: “In general the business model for these Medicaid [DSOs]
succeeds financially because they are able to reduce operating costs by locating in
economically depressed areas (where real estate and employee costs are low), purchasing
in bulk (to avail themselves of quantity discounts), and providing flexible scheduling that
recognizes the impediments that many low income families face with transportation and
work arrangements.”22
Some DSO critics have maintained that the DSO business model and involvement
of non-dentists creates incentives for low quality care, over-treatment of Medicaid
patients, and Medicaid fraud.23 We understand that Medicaid fraud has been of particular
concern in Texas with regard to DSOs.24 Recent audits by the U.S. Department of Health
and Human Service’s Office of Inspector General (OIG), however, did not identify the
DSO model or any particular business model as a culprit. Rather, the audits found that a
broader cause of the high expenditures in Texas’s Medicaid orthodontics program was a

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need for improved measures by the state to “ensure that the prior-authorization process
was used to determine the medical necessity of orthodontic services under State Medicaid
guidelines.”25 As recommended by the OIG, Texas has taken steps to ensure the integrity
of its Medicaid dental program through the proper use of the Medicaid prior-
authorization process and review of claims.26
III. 	Key Changes That Would Arise from the Proposed Rules
If adopted, the proposed changes to the Board’s rules likely would make it very
difficult for dentists to contract with DSOs, and even with companies that provide
individual management and administrative support services to dental practices. The
contrast between the current rules, which focus on activities related to professional
judgment, and the proposed rules’ restrictions on business, management, and
administrative support services is especially clear in proposed § 108.70(d). Unlike the
current rules, § 108.70(d) would prohibit dentists from entering into agreements that give
unlicensed persons, including corporations, control of various business functions.
The list of covered business functions is long, and agreements covering any one
of the functions are prohibited. For example, proposed § 108.70(d)(4) would prohibit
dentists from entering into agreements giving unlicensed persons sole control of
functions often provided by DSOs, such as banking; acquisition or sale of equipment and
supplies; accounting, bookkeeping, payroll, investment, or financial services; billing and
collection services; advertising and marketing services; or business and personnel
practices.27
The list of functions covered by proposed § 108.70(d)(4) is particularly striking
because agreements for many of these functions are presumed not to violate the Texas
Dental Practice Act as it stands now. Currently, § 108.70(c) provides safe harbors for
agreements covering many business functions, such as the acquisition or sale of
equipment and supplies; accounting, bookkeeping, investment, or similar financial
services; financing or ownership of non-dentist business equipment; billing and collection
services; and advertising and marketing services.28 The proposed new version of
§ 108.70, however, does not contain § 108.70(c) or any other safe-harbor provisions.
Proposed § 108.74(c) also appears to expand the scope of prohibitions on non-
dentists’ provision of business services, stating that “[n]on-owners may advise the owner
on administrative and operational matters” but that a dentist owner is legally
“responsible for all administrative and operational functions” of a practice, including
nonclinical functions often provided by DSOs, such as: providing a practice with the
necessary equipment and resources; billing and invoicing patients; and submitting claims
to third party payers for reimbursement.29 Violations of this provision or proposed
§ 108.70(d) could lead to disciplinary action pursuant to Texas’s Dental Practice Act.30 It
is not clear what administrative or operational functions offered by DSOs, if any, would
qualify as advisory. As a result of the ambiguity in this proposed regulation, and the clear
prohibitions of § 108.70(d), contracting with a DSO likely would become riskier and less

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common, which would deprive the market of the competitive benefits those foregone
DSO arrangements otherwise would have had.
IV. 	Likely Competitive Effects
Competition spurs both current providers and potential entrants to develop more
efficient and innovative ways to deliver their services, without compromising quality. For
these reasons, in health care markets as in other markets, competition should be restricted
only when necessary to protect against a credible risk of harm, such as health and safety
risks to consumers, or fiscal risks to the government. Any warranted restrictions should
be narrowly crafted to minimize their anticompetitive impact.31 DSOs can increase
efficiency and support entry of new dental practices. Dentists generally have little
training in administration, which means that carrying out administrative tasks can be time
consuming. Relieving dentists of the need to perform administrative tasks could increase
the amount of dentistry services dentists could provide, and lower the costs of providing
dental services. In addition, DSOs may support entry into Texas, or prevent exit, by
dentists who prefer to affiliate with a DSO.32 This new entry may lead to lower prices,
expanded services, and improved access to dental services. Because the proposed rules
may well deter licensed dentists from contracting with DSOs, the proposed rules appear
likely to impede competition and deprive consumers of these potential benefits.
Although there has been justifiable concern about fraud in Texas’s Medicaid
dental programs, broad restraints on contractual arrangements with non-dentist providers
of business services such as DSOs are unlikely to address such concerns.33 Incentives for
over treatment “exist across all dental provider types as virtually all dental care in the US
is paid on a fee-for-service quantity-of-care basis.” 34 The OIG’s recommendations to
Texas’s Health and Human Services Commission noted above are specifically designed
to address the suspected problems and appropriately cover DSO- as well as non-DSO-
affiliated dentists.35 Importantly, this type of solution does not risk losing the efficiency
and competition benefits that DSOs may provide.
A. 	Dental Care: Price and Access
Proposed 22 TEX. ADMIN . C ODE §§ 108.70 and 108.74 likely would create a very
restrictive regulatory environment for DSOs and other companies that provide
administrative services to Texas dental practices. Although Texas’s Dental Practice Act
prohibits the Board from adopting rules that would prevent a dentist from contracting
with a management service organization,36 dentists may be reluctant to enter into
agreements with DSOs or other companies that provide such services. In addition, some
dentists may seek to terminate existing contracts because the safe harbors for such
contracts would be eliminated and the new regulations could subject them to disciplinary
action for entering into such agreements.
As a result, the proposed regulatory restrictions likely would lead to reduced
competition in the markets for dental management services and dental care. The
unfavorable business climate may discourage DSOs from entering Texas, and facilitate

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the exit of those currently operating in Texas, resulting in less competition in the markets
for dental management services. The restrictions on affiliating with a DSO might also
reduce competition among dentists in Texas to the extent that dentists who value DSO
services choose not to practice in the state. The unfavorable business climate for DSOs
might have the greatest effect on newly licensed dentists who lack the resources to start a
practice, and on dentists who prefer to concentrate on the professional practice of
dentistry rather than on business functions.37 In addition, the development of potentially
more efficient DSO-affiliated practices that may be able to offer lower prices would be
inhibited, further reducing competition among dentists.38 Ultimately, the restrictions on
dentists and DSOs would impact Texas consumers, who will be deprived of the potential
for lower prices and increased access to dental services.
Texas’s underserved communities would be particularly vulnerable to these
potential anticompetitive effects. Nearly five million Texans, 19.3 percent of the
population, live in a Dental Health Professional Shortage Area.39 DSO-affiliated dentists
have been particularly active in serving underserved populations and could help address
some of these needs.40 Constraining the operation of DSOs likely would restrict further
the supply of dental services in these communities, exacerbating current shortages.
Reductions in access to dental services, including preventive dental care, could lead to
increases in future dental costs and other health care costs.41 Such costs could burden not
only individual patients, but also the state’s Medicaid program.
B. 	Regulations That Restrict Competition Should be Narrowly Tailored
Some states have enacted laws or regulations that prevent licensed health care
professionals from entering into employment or other commercial relationships with non-
licensed entities, on the theory that such restrictions are necessary to preserve the
provider’s independent judgment and adherence to professional standards. The
anticompetitive effects of such restrictive provisions, however, may reduce efficiency and
quality rather than enhance quality. Most studies find quality to be unaffected by
regulation of business practices and in some cases quality actually decreases in response
to the restrictions.42
Since the proposed changes may be intended to address concerns about the
independent judgment of dental professionals,43 we note that Texas already has laws and
regulations to address concerns that a DSO-affiliated practice might be compromised due
to the financial interests of owners who are not licensed professionals. Texas, like many
other states, has laws prohibiting corporations and other non-licensed entities from
owning a dental practice or employing a dentist.44 In addition, Texas’s Dental Practice
Act already prohibits dentists from entering into agreements that have the effect of
controlling or influencing their professional judgment.45
Proposed regulations to limit commercial relationships between dentists and non-
licensed entities should be carefully examined to determine if they are based on credible
and well-founded safety, quality, or other legitimate justifications. To the extent possible,
restrictions should be narrowly tailored to minimize their potential anticompetitive

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effects, and to avoid unduly discouraging innovative and efficient models of practice that
could compete against traditional providers without compromising safety or quality.
Otherwise, such restrictions can be expected to inhibit competition, increase prices, and
decrease access to dental services. Moreover, those anticompetitive effects could impose
the greatest impact on underserved populations that can least afford it, and state programs
that cover such costs.
V. 	Conclusion
Restrictions on the ability of dentists to contract out business functions provided
by DSOs may reduce competition by preventing the emergence and expansion of
efficient forms of professional practice that could increase the supply of dental services.
The proposed rules appear unnecessary to address any concerns about the independent
judgment of dental professionals—DSO-affiliated dentists retain full control over the
clinical aspects of caring for their patients and Texas already has laws and regulations
that prohibit unlicensed persons from influencing a dentist’s professional judgment. In
addition, although there have been concerns about unauthorized treatment and the quality
of care provided to Medicaid dental patients, Texas’s Health and Human Services
Commission is taking action to address these problems by ensuring proper oversight of
the prior-authorization process and adherence to Medicaid policy and procedures. By
contrast, sweeping restrictions on agreements with non-dentist providers of business
support services will not address the fraud and abuse. For these reasons, we urge the
Board to consider the potential anticompetitive effects of the proposed rules, including
higher prices and reduced access to dental services, especially for underserved
populations, and to reject both proposed § 108.70 and § 108.74.
We appreciate your consideration of these issues.
Respectfully submitted,
Andrew I. Gavil, Director
Office of Policy Planning
Michael G. Vita, Acting Director
Bureau of Economics
Deborah Feinstein, Director
Bureau of Competition

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1 This staff letter expresses the views of the Federal Trade Commission’s Office of Policy Planning, Bureau
of Competition, and Bureau of Economics. The letter does not necessarily represent the views of the
Federal Trade Commission or of any individual Commissioner. The Commission, however, has voted to
authorize staff to submit these comments.
2 See 39 Tex. Reg. 6973, 6975 (Sept. 5, 2014). The open comment period extends 30 days from the date of
publication in the Texas Register. Id.
3 A DSO is defined under Texas law as “an entity that . . . is owned wholly or partly by a person who is or
is not a dentist; and . . . under a dental service agreement, provides or offers to provide services to a dentist
or employs or otherwise contracts with a dentist in the dentist’s capacity as a dentist.” T EX. O CC. CODE
ANN. § 254.019(a)(2).
4 Federal Trade Commission Act, 15 U.S.C. § 45.
5 Standard Oil Co. v. Fed. Tr. Comm’n, 340 U.S. 231, 248 (1951) (“The heart of our national economic
policy long has been faith in the value of competition.”).
6 See, e.g., Comment from FTC Staff to the Comm’n on Dental Accreditation (Dec. 2, 2013),
http://www.ftc.gov/policy/policy-actions/advocacy-filings/2013/12/ftc-staff-comment-commission-dental-
accreditation (concerning accreditation standards for dental therapists); N.C. State Bd. of Dental Exam’rs v.
FTC, 717 F.3d 359 (4th Cir. 2013), cert. granted, 134 S.Ct. 1491 (2014) (upholding an FTC ruling that the
North Carolina State Board of Dental Examiners illegally thwarted lower-priced competition by engaging
in anticompetitive conduct to prevent non-dentists from providing teeth whitening services to consumers in
the state); In re S.C. State Bd. of Dentistry, 138 F.T.C. 229, 233-40 (2004), available at
http://www.ftc.gov/os/adjpro/d9311/040728commissionopinion.pdf (FTC opinion on an interlocutory
appeal in a case challenging the South Carolina Dental Board’s adoption of a requirement, which the state
legislature had eliminated, that a dentist examine all school children receiving care from a dental
hygienist); In re S.C. State Bd. of Dentistry, FTC Dkt. No. 9311, Decision and Order (2007), available at
http://www.ftc.gov/os/adjpro/d9311/070911decision.pdf (consent agreement settling charges concerning
the requirement for examination by a dentist for certain preventative dental services provided by a dental
hygienist in a school); Comment from FTC Staff to the Me. Bd. of Dental Exam’rs (Nov. 16, 2011),
http://ftc.gov/os/2011/11/111125mainedental.pdf (concerning proposed rules to allow dental hygienists to
take X-rays in underserved areas); Comment from FTC Staff to the Ga. Bd. of Dentistry (Dec. 30, 2010),
http://ftc.gov/os/2010/12/101230gaboarddentistryletter.pdf (concerning proposed rule governing
supervision of dental hygienists); Comment from FTC Staff to the La. State Bd. of Dentistry (Dec. 18,
2009), http://www ftc.gov/os/2009/12/091224commentladentistry.pdf (concerning proposed rules on the
practice of portable and mobile dentistry); Comment from FTC Staff to the La. House of Representatives
(May 1, 2009), http://www.ftc.gov/os/2009/05/V090009louisianadentistry.pdf; Comment from FTC Staff
to the La. House of Representatives (May 22, 2009),
http://www.ftc.gov/os/2009/05/V090009louisianahb687amendment.pdf (concerning legislation on the
practice of in-school dentistry); see generally Advocacy Filings by Subject, Dentistry, FED. T RADE
COMM ’N, http://ftc.gov/opp/advocacy subject.shtm#detg (last visited Sept. 30, 2014).
7 See Comment from FTC Staff to the Hon. Stephen LaRoque, N.C. House of Representatives (May 25,
2012), http://ftc.gov/os/2012/05/1205ncdental.pdf (concerning North Carolina House Bill 698 and the
regulation of dental service organizations and the business organization of dental practices in North
Carolina).
8 See, e.g., Okla. State Bd. of Veterinary Med. Exam’rs, 113 F.T.C. 138 (Jan. 31, 1990) (consent order
against the Oklahoma State Board of Veterinary Medical Examiners for allegedly restricting veterinarians
from being partners with, employed by, or otherwise associated with non-veterinarians or veterinarians
licensed in other states); RONALD S. B OND ET AL., FED. T RADE COMM ’N, STAFF REPORT ON THE E FFECTS
OF RESTRICTIONS ON ADVERTISING AND COMMERCIAL P RACTICE IN THE P ROFESSIONS: T HE CASE OF
O PTOMETRY (1980), http://www.ftc.gov/sites/default/files/documents/reports/effects-restrictions-
advertising-and-commercial-practice-professions-case-optometry/198009optometry.pdf; F. K ELLY SMITH

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ET AL., FED. T RADE COMM ’N, STAFF REPORT ON ADVERTISING OF V ETERINARY G OODS AND SERVICES
(1978), http://www.ftc.gov/reports/staff-report-advertising-veterinary-goods-services.
9 FTC and staff advocacy may comprise letters or comments addressing specific policy issues, Commission
or staff testimony before legislative or regulatory bodies, amicus briefs, or reports. See, e.g., Comment
from FTC Staff to the Hon. Patricia Todd, Ala. House of Representatives (April 26, 2012),
http://www.ftc.gov/os/2012/04/120426alabamaletter.pdf (commenting favorably on the bill and discussing
the harm that can result from restrictions on the business practices of state-licensed professionals);
Comment from FTC Staff to the Hon. John T. Bragg, Tenn. House of Representatives (Feb. 2, 1996),
http://www.ftc.gov/be/v960005.shtm (commenting favorably on a bill to eliminate restrictions on
veterinarians being employed by non-veterinarians); Comment from FTC Staff to the Tex. Sunset Advisory
Comm’n (Aug. 14, 1992), http://www.ftc.gov/be/healthcare/docs/AF%2017.pdf (commenting on review of
legislation governing various professional boards, including dentists, veterinarians, and physicians, noting
“studies have found little relationship between restrictions on professionals’ business practices and the
quality of care provided”); Barriers to Entrepreneurship: Examining the Anti-Trust Implications of
Occupational Licensing: Hearing Before the H. Comm. on Small Business, 113 th Cong. (2014) (statement
of Andrew I. Gavil, Dir., Office of Policy Planning, Federal Trade Commission), available at
http://smbiz house.gov/UploadedFiles/7-16-2014 Revised FTC Testimony.pdf.
10 Am. Med. Ass’n, 94 F.T.C. 701 (1979), aff’d 638 F.2d 443 (2d Cir. 1980), aff’d mem. by an equally
divided court, 455 U.S. 676 (1982).
11 Am. Med. Ass’n, 94 F.T.C. at 1012-13, 1015-18.
12 See Albert H. Guay, The Evolution of Dental Group Practices, 41 CAL. D ENTAL ASS ’N J. 899, 900-02
(2013), available at http://www.cda.org/Portals/0/journal/journal 122013.pdf. In addition, some DSOs may
provide continuing education and training. See id. at 902.
13 See J IM M ORIARTY & M ARTIN J. SIEGEL, S URVEY OF S TATE L AWS G OVERNING THE CORPORATE
P RACTICE OF D ENTISTRY 44 (2012), available at http://oversight house.gov/wp-content/uploads/2012/04/4-
25-12-Survey-of-State-Laws-Governing-the-Corporate-Practice-of-Dentistry.pdf (listing six states that
permit full or partial ownership of dental practices by business corporations). See also Guay, supra note 12,
at 901, 902 (noting that “[t]he issue of the legality of the ownership of a dental practice by anyone other
than a licensed dentist complicates the structure and the relationship between the professional and business
management aspects of a practice that contracts with a management organization”).
14 Guay, supra note 12, at 902.
15 Id.
16 Id. at 903.
17 Albert H. Guay et al., Evolving Trends in Size and Structure of Group Dental Practices in the United
States, 76 J. D ENTAL E DUC . 1036, 1039, 1041-42 (2012), available at
http://www.jdentaled.org/content/76/8/1036.full.pdf+html. In 2007, the percentage of dentists affiliated
with large multi-site practices was 6.4% nationwide, and 8.7% in Texas. See id. at 1039, 1041. See also
James D. Condrey, Dental Practice Models in Texas, 130 TEX. D ENTAL J. 996 (2013) (noting that although
solo and small practices dominate the marketplace in Texas, “the anticipated growth of large group
practices . . . is challenging the traditional model”).
18 The provision of prompt, high quality dental care is important not only to overall health, but also the
prevention of major dental disease. See, e.g., I NST. OF M ED., N AT ’ L ACADS., ADVANCING O RAL H EALTH IN
AMERICA 16-17, ch. 2 (2011), available at
http://www.nap.edu/catalog.php?record id=13086&utm expid=4418042-5 krRTDpXJQISoXLpdo-
1Ynw.0&utm referrer=http%3A%2F%2Fwww.iom.edu%2FReports%2F2011%2FAdvancing-Oral-
Health-in-America.aspx (discussing the connection between oral health and overall health and well being).
See also infra note 41 and accompanying text.
19 See Guay, supra note 17.

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20 See Burton L. Edelstein, Children’s Dental Health Project, Issue Brief: Dental Visits for Medicaid
Children: Analysis and Policy Recommendations 3 (2012) (data from 2009), available at
https://www.cdhp.org/resources/173-dental-visits-for-medicaid-children-analysis-policy-recommendations;
see also Andrea Janik, My Positive Experience, 131 T EX. D ENTAL J. 142, 143 (2014) (on “We Serve Day”
in 2013, one DSO donated services of its affiliated dentists to patients throughout the United States).
21 See, e.g., U.S. G OV’T ACCOUNTABILITY O FFICE , GAO-11-96, O RAL H EALTH: E FFORTS U NDER W AY TO
I MPROVE CHILDREN’S ACCESS TO D ENTAL SERVICES, BUT S USTAINED A TTENTION N EEDED TO ADDRESS
O NGOING C ONCERNS 11-13 (2010), http://www.gao.gov/assets/320/312818.pdf; U.S. G OV’ T
ACCOUNTABILITY O FFICE , GAO-09-723, M EDICAID: S TATE AND FEDERAL ACTIONS H AVE B EEN T AKEN TO
I MPROVE CHILDREN’S ACCESS TO D ENTAL SERVICES, BUT G APS REMAIN (2009),
http://www.gao.gov/assets/300/296224.pdf.
22 Edelstein, supra note 20, at 3.
23 See, e.g., J OINT S TAFF OF SENATE COMM . ON F INANCE AND COMM . ON THE J UDICIARY, 113 TH CONG., S.
P RT. 113-16, REPORT ON THE CORPORATE P RACTICE OF D ENTISTRY IN THE M EDICAID P ROGRAM 6-7, 17, 32
(Comm. Print 2013), available at http://www.finance.senate.gov/library/prints/download/?id=1c7233e0-
9d08-4b83-a530-b761c57a900b (recommending that states enforce “laws against the corporate practice of
dentistry” to prevent substandard care arising from “dental management services agreements . . . that allow
companies to operate dental clinics under the guise of providing administrative and/or financial
management support.”).
24 STAFF OF H. COMM . ON O VERSIGHT AND G OVERNMENT REFORM , 112 TH CONG., U NCOVERING W ASTE ,
FRAUD, AND ABUSE IN THE M EDICAID P ROGRAM 17 (2012), http://oversight.house.gov/wp-
content/uploads/2012/04/Uncovering-Waste-Fraud-and-Abuse-in-the-Medicaid-Program-Final-3.pdf
(“[M]assive fraud was occurring in Texas’s Medicaid dental and orthodontics program . . . .” which “was
spending about as much on orthodontic services as the rest of the country’s Medicaid programs spent on
orthodontic services combined.”).
25 O FFICE OF I NSPECTOR G EN., D EP’T H EALTH & H UMAN SERVS., T EXAS D ID N OT E NSURE T HAT THE
P RIOR -A UTHORIZATION P ROCESS W AS U SED TO D ETERMINE THE M EDICAL N ECESSITY OF O RTHODONTIC
SERVICES i (2014), https://oig hhs.gov/oas/reports/region6/61200039.pdf. The lack of oversight and use of
the prior-authorization process was disclosed in an earlier report. See STAFF OF H. COMM . O N O VERSIGHT
AND G OVERNMENT REFORM , supra note 24, at 17 (“Texas failed to effectively oversee and manage its
Medicaid orthodontia program, particularly the prior authorization process.”).
26 On May 9, 2014, Texas’s Health and Human Services Commission, the state agency responsible for the
oversight of its Medicaid dental program, took steps to address OIG’s recommendations, including
terminating the contractor it had used for reviewing Medicaid claims, transitioning Medicaid recipients to
managed care, and hiring a dental director to monitor the dental program. See O FFICE OF I NSPECTOR G EN.,
supra note 25 at 5, 9.
27 See also 22 T EX. ADMIN. CODE § 108.70(d)(6) (proposed), prohibiting dentists from entering into
agreements that give an unlicensed person authority to share or receive “profits . . . from the sale of a dental
practice, patient charts, goodwill, or patient lists.”
28 Agreements listed in 22 T EX. ADMIN. CODE § 108.70(c) are presumed not to violate the Texas Dental
Practice Act, T EX. O CC. CODE ANN. § 251.003, which defines the activities that constitute the practice of
dentistry.
29 By contrast, the Texas Dental Practice Act only addresses a dentist’s responsibility for professional acts
of others employed by, or in a contractual relationship with the dentist. See T EX. O CC . CODE ANN.
§ 259.004(b).
30 See 22 T EX. ADMIN. CODE § 108.70(e) (proposed), making violators of proposed 22 T EX. ADMIN. CODE
§ 108.70(d) subject to discipline pursuant to the Texas Dental Practice Act, T EX. O CC. CODE ANN.
§ 263.002(a)(8). Under § 263.002(a)(8), various levels of disciplinary action may be imposed on a person
who “holds a dental license and employs, permits, or has employed or permitted a person not licensed to

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practice dentistry to practice dentistry in an office of the dentist that is under the dentist’s control or
management.” In combination, proposed 22 T EX. ADMIN. C ODE §§ 108.70, 108.74 might be sufficiently
restrictive as to contravene Texas’s Dental Practice Act, which provides that “Rules adopted by the board
under this subtitle may not preclude a dentist’s right to contract with a management service organization.”
T EX. O CC . CODE ANN. § 254.011(b).
31 Cf. FTC. v. Ind. Fed’n of Dentists, 476 U.S. 447, 459 (1986) (“Absent some countervailing
procompetitive virtue,” an impediment to “the ordinary give and take of the market place . . . cannot be
sustained under the Rule of Reason.”) (internal quotations and citations omitted).
32 See Guay, supra note 12, at 900-01, 903-04; Guay, supra note 17, at 1042.
33 See supra notes 23-26 and accompanying text.
34 Edelstein, supra note 20, at 3. In addition, one commentator has explained that, “[u]nlike some of the
other dental delivery sectors, the largest and best managed of the [DSOs] utilize rigorous metrics that seek
to identify and address practitioners who over treat.” Id. See also Janik, supra note 20, at 143 (dentist
affiliated with a DSO explains that rather than maximizing profit for a distant corporation, she has “control
over the treatment plans of [her] patients . . . control over [her] schedule, [her] patient load . . . there is
nothing that comes between [her] and providing the best possible dental care to [her] patients . . . .”);
O FFICE OF I NSPECTOR G EN., DEP’T H EALTH & H UMAN SERVS., Q UESTIONABLE B ILLING FOR M EDICAID
P EDIATRIC D ENTAL SERVICES IN N EW Y ORK 2, 3 (2014), http://oig hhs.gov/oei/reports/oei-02-12-00330.pdf
(individual provider “billed Medicaid for 991 procedures on a single day” and was later convicted of grand
larceny).
35 See O FFICE OF I NSPECTOR G EN., supra note 25 at 5, note 26.
36 See T EX. OCC . CODE ANN. § 254.011(b).
37 See Guay, supra note 12, at 900-01, 903-04; Guay, supra note 17 at 1042.
38 See generally Edelstein, supra note 22 and accompanying text.
39 See K AISER COMM ’N ON M EDICAID & THE U NINSURED, K AISER FAMILY FOUND., O RAL H EALTH IN THE
US 2 (June 2012), http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8324.pdf (based on 2010
census data at http://www.census.gov/2010census/data/).
40 See supra notes 19-22 and accompanying text.
41 See, e.g., I NST. OF M ED., N AT ’ L ACADS., supra note 18, at 7 (“A focus on prevention may help to reduce
the overall need for treatment, reduce costs, and improve the capacity of the system to care for those in
need.”); id. at 46 (“Aside from clinical effectiveness, many studies support the cost-effectiveness of
preventive dental care, often due to the avoided expensive treatments associated with severe dental
disease”).
42 See CAROLYN COX & SUSAN FOSTER , FED. T RADE COMM ’N, , T HE COSTS AND B ENEFITS OF
O CCUPATIONAL REGULATION 25 (1990), http://www.ftc.gov/system/files/documents/reports/costs-benefits-
occupational-regulation/cox foster - occupational licensing.pdf (emphasis in original). This report, a
review of economic studies of licensing, found licensing frequently increases prices and imposes
substantial costs, but generally does not appear to increase the quality of service, especially with respect to
restrictive regulation of business practices. The report recommends careful weighing of likely costs against
prospective benefits. See generally id. at 25-27, 29-36 for a discussion of effects from restrictions on the
business practices of licensed professionals.
43 Telephone discussion with Simone Salloum, Assistant Gen. Counsel, Tex. State Bd. of Dental Exam’rs,
(Sept. 23, 2014).
44 An unlicensed person (or corporation) engages in the illegal practice of dentistry if the person “owns,
maintains, or operates an office or place of business in which the person employs or engages under any
type of contract another person to practice dentistry.” T EX. O CC . CODE ANN. § 251.003(a)(4). See also T EX.
O CC . CODE ANN. § 256.001 (license is required to practice dentistry); T EX. O CC . CODE ANN. §

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251.003(a)(9) (prohibiting unlicensed persons from controlling or influencing dentist’s judgment);
§ 258.001 (dentists may not delegate dental care to unlicensed persons).
45 An unlicensed person (or corporation) engages in the illegal practice of dentistry if the person “controls,
influences, attempts to control or influence, or otherwise interferes with the exercise of a dentist’s
independent professional judgment regarding the diagnosis or treatment of a dental disease, disorder, or
physical condition.”) T EX. O CC . CODE ANN. § 251.003(a)(9). See also 22 T EX. ADMIN. C ODE § 108.70
(“Improper Influence on Professional Judgment”).