Dental Care Firm Says State Made Gross Errors in Critical Audit

The company that provides managed care dental services to 112,000 indigent Medi-Cal recipients in Los Angeles County has challenged a harshly critical state audit report, contending that the state made gross calculation and interpretation errors.

The company, Laguna Niguel-based Denticare of California, said the mistakes led the Department of Health Services to draw erroneous conclusions in its June 16 audit report. The audit accused Denticare of effectively cheating thousands of Medi-Cal recipients out of proper care.

The department says it stands by the audit report.

Officials at Foundation Health Corp., Denticare’s parent company since late 1991, also disclosed Thursday that Dr. Carl E. Bozzo, chairman and co-founder of Denticare, resigned last Friday, citing personal reasons.

Bozzo was at the helm for most of the period covered by the state audit, although Foundation relieved him of day-to-day control in September, when it installed Foundation Vice President Steven D. Bonham as chief executive.

The report--covering January, 1992, through January, 1993--said Denticare delayed and denied care to Medi-Cal enrollees, charged excessive administration fees, exposed patients to unhealthy conditions, denied patients the right to register complaints and improperly kept money that was meant to pay dentists for patient care.

Denticare disputes those conclusions and says it has made significant improvements, especially since Foundation began taking more control last summer.

The Department of Health Services recommended that Cigna Healthplan of Southern California, the prime medical contractor for the Medi-Cal contract in question, drop Denticare as its dental subcontractor. Cigna has requested a meeting next week on the issue.

The case is significant because the Department of Health Services is involved in a crash program to shift up to half of its 5 million Medi-Cal recipients out of traditional indemnity health insurance and into managed care plans, such as Denticare, which emphasize low-cost and preventive care.

Some critics cited the audit report as evidence that the managed care concept is flawed by financial incentives that reduce access to care and quality of care.

If, however, Denticare is correct in portraying the audit report as grossly inaccurate, it would call into question the Department of Health Services’ ability to monitor a large managed care system.

“Our Audits and Investigations Division stands behind the report that it issued,” Judith Imel, staff attorney for the department, said Thursday. She added that the department is still analyzing the Denticare response.

Besides disputing the audit’s main conclusions, Denticare cites what it says are significant factual errors by the auditors. These include:

* In concluding that dentists were not seeing patients at the expected rate, the auditors overlooked nearly 60,000 patient visits--two-thirds of the total--apparently because those visits were billed differently than the 24,000 visits that the auditors counted.

* The auditors overlooked $571,000 that Denticare paid its dentists in 1992. The oversight led the state to conclude that only 43% of the $6.9 million that the state paid under the contract that year went to dentists for actual care, while the remainder went to Denticare and Cigna for administration costs and profit. In fact, Denticare asserted, 51% of the total went to patient care. Denticare added that its costs are not out of line with those of competitors.