More than 27,000 healthcare providers who received Medicare payments in 2006 together owe the government more than $2 billion in back taxes, according to a new report from the Government Accountability Office.
The GAO selected 25 Medicare providers for more in-depth investigation and found potentially criminal activity, including failure to remit payroll taxes deducted from their employees' paychecks.
"Rather than fulfill their role as 'trustees' of this money and forward it to IRS as required by law, these Medicare providers diverted the money for other purposes," the GAO report says.
The GAO puts forth as an example of abusive and criminal activity a hospital that received $21 million in Medicare payments and owes $15 million in unpaid taxes. The owners were found liable for submitting false claims to Medicare from another medical business.
The GAO recommends that the Centers for Medicare & Medicaid Services consider issuing guidance to require Medicare contractors to screen prospective Medicare providers for unpaid taxes, including obtaining consent from these providers to disclose federal tax debts.
The GAO also recommended that CMS incorporate all Medicare payments into the continuous levy program.
The IRS can continuously levy up to 15 percent of each payment made to a federal payee - a Medicare hospital, for example - until that tax debt is paid. However, CMS has not incorporated most of its Medicare payments into the continuous levy program.
"As a result, for calendar year 2006, the government lost opportunities to potentially collect over $149 million in unpaid taxes," the GAO report states.