WASHINGTON, DC – One in every 20 health providers getting taxpayer money from Medicaid is delinquent on their federal taxes, and in some cases the tax cheats are years behind in paying the IRS, according to a new audit by Congress’s investigators.
The Government Accountability Office looked at about 7,000 providers in three large states who Medicaid reimbursed more than $6 billion in 2009 and found that they had nearly $800 million in unpaid federal taxes.
In two cases, the health companies — which range from dentists and doctors to private ambulances and medical supply companies — had been under criminal investigation, including for medical billing fraud.
“It is outrageous that heath care providers who cheat on their taxes are getting paid with taxpayer dollars through the Medicaid program,” said Sen. Carl Levin, chairman of the Senate’s investigative subcommittee.
He called for the government to prohibit companies with unpaid taxes from Medicaid money.
Medicaid is the federal-state partnership health program for the poor. It spends hundreds of billions of dollars a year to reimburse health providers for care they give to beneficiaries.
One dentist GAO reviewed owed more than $100,000 in federal taxes, but continued to spend money on nice restaurants, trips and spas.
Another couple who owned a nursing business and owed more than $3 million in taxes claimed the problem was the timing of government payments. When the IRS took action, the company reduced its business with Medicaid.
The owners also bought a new home while the business debt was growing, GAO said. The IRS eventually referred the case to the Justice Department for action.
GAO said the IRS is usually allowed to deduct unpaid taxes from other government payments, but said the IRS does not believe Medicaid reimbursements for care qualify as federal payments. GAO said if IRS had used those tools, than it could have recovered up to $330 million of the money owed in 2009.
“People who cheat on their taxes show a clear disregard for the law, so they might be more likely to defraud Medicaid or even harm patients,” said Sen. Tom Coburn, Oklahoma Republican and a medical doctor. “GAO’s findings raise serious questions about steps that need to be taken to improve the integrity of the Medicaid program.”