GAO: 1 in 20 Medicaid providers owes taxes

WASHINGTON – Government auditors found that more than 30,000 Medicaid providers – about 5 percent – owed federal taxes totaling more than $1 billion last year.

A report by the Government Accountability Office, Congress’ investigative arm, said it found examples of providers who owed taxes living in million-dollar homes, withdrawing $100,000 in cash from casinos, and owning several luxury vehicles and a pleasure boat. The GAO looked at doctors, hospitals and other Medicaid providers in seven states – California, Colorado, Florida, Maryland, New York, Pennsylvania and Texas.

Medicaid is the federal-state partnership that provides health coverage to about 55 million poor people. The Senate Permanent Subcommittee on Investigations will take up the findings at a hearing today.

The report noted that federal law does not prevent health care providers who owe back taxes from enrolling in Medicaid.

The GAO said that if the IRS had a system to levy part of the Medicaid payments, it could have collected between $70 million and $160 million last year.

But the IRS does not consider Medicaid payments to be “federal payments,” and so they are not subject to continuous levy, said Fred Schindler, the agency’s director of collection policy. That’s because the payments are made by states, he said.