Medicaid providers with unpaid taxes should be barred from federal reimbursement, lawmakers say

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Sen. Carl Levin (D-MI)
Sen. Carl Levin (D-MI)
The federal government should bar healthcare providers with large amounts of unpaid taxes from receiving Medicaid funds, incensed lawmakers said Thursday following the release of a government report.

As many as 7,000 healthcare providers owed at least $791 million in federal taxes from 2009 or earlier, but received a total of $6.6 billion in Medicaid reimbursements during the same year, a recently released Government Accountability Office report found.

The GAO looked at Medicaid providers — including medical suppliers, physicians, hospitals, physician practices, and others — in three states, Florida, New York and Texas. It was not specified whether skilled nursing facilities were among the providers investigated by the GAO, but nursing organizations were cited in the report.

“The federal government ought to prohibit healthcare providers with unpaid taxes from enrolling in Medicaid, allow continuous levies on healthcare providers' Medicaid payments to recover unpaid taxes, and authorize tax levies on Medicaid payments to Managed Care Organizations whose doctors or other principals are tax delinquent,” Sen. Carl Levin (D-MI), chairman of the Permanent Subcommittee on Investigations said in a statement.

According to the report, more than 40% of the unpaid federal taxes owed by providers found in the investigation were from payroll taxes. Employers could be subject to civil and criminal penalties if they do not pay these payroll taxes.
Providers with unpaid taxes are not banned from receiving Medicaid payments, according to the report, but the Internal Revenue Service can seize Medicaid reimbursements to satisfy a provider's tax debt.

Click here to read the full report.
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