Potential federal funding cuts could heavily impact DSOs’ ability to care for adult and child Medicaid recipients, according to Barry Lyon, DDS.
The One Big Beautiful Bill Act (H.R. 1) is expected to shrink state Medicaid budgets by $664 billion through 2034, according to a RAND study published Feb. 26.
Dr. Lyon, dental director for Main Street Children’s Dentistry and Orthodontics and Dental Care Alliance, recently spoke with Becker’s about how these cuts could threaten oral healthcare.
Editor’s note: This Q&A is part of a weekly series featuring Dr. Lyon focused on topics in the dental industry and DSO field. The views expressed are those of Dr. Lyon and do not necessarily reflect those of Main Street Children’s Dentistry and Orthodontics or Dental Care Alliance.
This response was lightly edited for clarity and length.
Dr. Barry Lyon:
More than 76 million Americans were enrolled in Medicaid as of November, according to Medicaid.gov. Meanwhile, 70% of DSOs provide care to Medicaid patients even though reimbursement levels are [largely] below private insurance fees and are down from pre-pandemic levels, according to the American Dental Association. DSOs with significant Medicaid exposure must prepare for an unsettled system.
While some states have implemented reimbursement rate increases to improve pediatric dental access, the federal government’s threat to cut Medicaid leaves many states, and some DSOs, under a dark cloud. The system is entering a prolonged period of reimbursement compression, eligibility tightening and state-level variability that will disproportionately impact DSOs. This will affect access to care, cause wavering provider participation and increase dependency on high-volume practice models. Rate increases, should they occur, will be incremental and not sweeping. Adult dental coverage remains particularly vulnerable and could be targeted first. DSOs with high concentrations of adult Medicaid patients should prepare for that outcome.
If DSOs are to continue relying on providing care to Medicaid enrollees, they must have a strong payer-mix, create operational efficiency, have contracting leverage and maintain a compliance program able to deal with changing regulatory requirements. Without those, dependency on Medicaid reimbursements will place some DSOs on shaky ground.
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