More than 30,000 Medicaid providers had a total of over $1 billion in unpaid federal taxes last fiscal year, according to a report released by the Government Accountability Office.

The GAO selected 25 Medicaid providers in California, Colorado, Florida, Maryland, New York, Pennsylvania and Texas with high federal tax debts and gave them a closer look. In all the cases, it discovered abusive and criminal activity, including failure to pay individual income taxes and payroll taxes to the IRS.

"Rather than fulfill their role as 'trustees' of federal payroll tax funds and forward them to IRS, these providers diverted the money for other purposes," said the report.

Individuals often diverted the money to pay for lavish houses and luxury vehicles while failing to pay taxes, the study found. Some of the businesses were sanctioned for substandard care of their patients. Despite the criminal activity, the 25 providers received Medicaid payments ranging from $100,000 to $39 million.

The Centers for Medicare & Medicaid Services and the states selected by the GAO do not prevent health care providers who owe federal tax debts from enrolling in Medicaid. Federal law generally prohibits the disclosure of taxpayer data to CMS and the states.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access