Approximately 7,000 providers in three states received a total of $6.6 billion in Medicaid reimbursement despite having roughly $791 million in unpaid federal taxes from 2009 or earlier, according to a new report from the Government Accountability Office.
The 7,000 providers from Florida, New York and Texas represent about 5.6 percent of reimbursed Medicaid providers from those three states in 2009, according to the report. These states were selected for investigation as they received the largest portion of the Recover Act Medicaid funding.
About 77 percent of the unpaid taxes were individual income taxes, corporate income taxes and payroll taxes. The GAO said the amount of unpaid federal taxes "is likely understated" since IRS data reflects only the unpaid amount that is reported on tax returns — it does not include entities that either didn't file tax returns or underreported their income.
The GAO said an increased levy of Medicaid reimbursement could help the IRS collection unpaid federal taxes owed by Medicaid providers. Because Medicaid reimbursements are not considered "federal payments," the IRS can only apply a one-time levy to reimbursements instead of a continuous levy.
The GAO deemed one-time levies ineffective in these cases. It estimated that if a continuous levy was put in place for the 7,000 providers with unpaid taxes, between $22 million and $55 million could have been collected to offset the unpaid taxes in 2009.
The GAO recommended the IRS conduct a cost-benefit analysis of a continuous levy program and pursue expanded use of levies against providers that have large Medicaid payments and a significant amount of unpaid taxes. "Where appropriate, IRS should seek legislation to modify existing law to allow for more efficient collection of outstanding tax debts from Medicaid providers," according to the report.
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The 7,000 providers from Florida, New York and Texas represent about 5.6 percent of reimbursed Medicaid providers from those three states in 2009, according to the report. These states were selected for investigation as they received the largest portion of the Recover Act Medicaid funding.
About 77 percent of the unpaid taxes were individual income taxes, corporate income taxes and payroll taxes. The GAO said the amount of unpaid federal taxes "is likely understated" since IRS data reflects only the unpaid amount that is reported on tax returns — it does not include entities that either didn't file tax returns or underreported their income.
The GAO said an increased levy of Medicaid reimbursement could help the IRS collection unpaid federal taxes owed by Medicaid providers. Because Medicaid reimbursements are not considered "federal payments," the IRS can only apply a one-time levy to reimbursements instead of a continuous levy.
The GAO deemed one-time levies ineffective in these cases. It estimated that if a continuous levy was put in place for the 7,000 providers with unpaid taxes, between $22 million and $55 million could have been collected to offset the unpaid taxes in 2009.
The GAO recommended the IRS conduct a cost-benefit analysis of a continuous levy program and pursue expanded use of levies against providers that have large Medicaid payments and a significant amount of unpaid taxes. "Where appropriate, IRS should seek legislation to modify existing law to allow for more efficient collection of outstanding tax debts from Medicaid providers," according to the report.
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