Medicare: Thousands of Medicare Providers Abuse the Federal Tax System

GAO-08-618 Published: Jun 13, 2008. Publicly Released: Jun 19, 2008.
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Under the Medicare program, the Centers for Medicare & Medicaid Services (CMS) and its contractors paid over $400 billion in Medicare benefits in calendar year 2006. GAO was asked to determine if Medicare providers have unpaid federal taxes and, if so, to (1) determine the magnitude of such debts, (2) identify examples of Medicare providers that have engaged in abusive or potentially criminal activities, and (3) determine whether CMS prevents delinquent taxpayers from enrolling in Medicare or levies payments to pay taxes. To determine amount of unpaid taxes owed by Medicare providers, GAO compared claim payment data from CMS and tax debt data from the Internal Revenue Service (IRS). In addition, GAO reviewed policies, procedures, and regulations related to Medicare. GAO also performed additional investigative activities.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Centers for Medicare & Medicaid Services To enhance program integrity, the Administrator of CMS should consider (1) issuing guidance requiring Medicare contractors to determine to the extent feasible if prospective Medicare providers (including any Medicare providers that reenroll into Medicare) have delinquent federal taxes, including obtaining applicant consent to inquire as to tax debt status from IRS, and (2) using the results of those inquiries in determining whether to enroll such providers into the Medicare program. In making this determination, CMS could also build in consideration of the potential adverse effect that this requirement may have on Medicare's ability to provide health care to the elderly and other Medicare beneficiaries.
Closed – Implemented
In June 2010, Public Law 111-192 was enacted, requiring a CMS-Internal Revenue Service (IRS) data match to identify the amount of delinquent tax debt for which a notice of lien has been filed and owed by Medicare providers applying for enrollment or re-enrollment as a Medicare provider of services or supplier under the Medicare program . The legislation also requires CMS to "take into account" this information "in determining whether to deny" an enrollment or reenrollment application or "to apply enhanced oversight." This will help ensure providers with delinquent tax debt are subject to enhanced oversight and may prevent their enrollment or re-enrollment in Medicare.
Centers for Medicare & Medicaid Services The Administrator of CMS should incorporate all Medicare payments into the continuous levy program as expeditiously as possible.
Closed – Implemented
As of September 2011, CMS reported that 96 percent of total Medicare program payments are accounted for in the CMS standard accounting system know as the Healthcare Integrated General Ledger and Accounting System (HIGLAS), and all (100 percent) of Medicare FFS payments will be subject to FPLP by 2012. By implementing the FPLP for all Medicare FFS payments, CMS has helped the federal government to collect unpaid taxes through Medicare payments made to delinquent taxpayers.

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