Medicaid: Thousands of Medicaid Providers Abuse the Federal Tax System Page: 4 of 17
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Colorado, Florida, Maryland, New York, Pennsylvania, and Texas.4 We
matched the lists of Medicaid providers with IRS tax debts as of
September 30, 2006. To further analyze abuse of the federal tax system by
selected Medicaid providers, we applied certain criteria-the amount of
outstanding tax debt, and the number and age of reporting periods for
which taxes were due-to select 25 providers for detailed audit and
investigation. For these 25 providers, we reviewed tax records and
performed additional searches of criminal, financial, and other public
records.
To determine whether CMS and states prevent health care providers with
unpaid federal taxes from enrolling in Medicaid, we interviewed officials
from CMS and selected states and examined CMS and selected states'
regulations, policies, and procedures for making determinations in the
enrollment approval process. We also interviewed officials from CMS, the
Internal Revenue Service (IRS), and the Department of the Treasury's
Financial Management Service (FMS) concerning any barriers for levying
Medicaid payments. For further details on our scope and methodology, see
appendix I of the accompanying report.5
We conducted our audit work from July 2006 through August 2007 in
accordance with U.S. generally accepted government auditing standards.
We performed our related investigative work in accordance with standards
prescribed by the President's Council on Integrity and Efficiency.
Summary While the vast majority of Medicaid providers pay their fair share of taxes,
thousands of Medicaid providers in seven selected states abused the
federal tax system with little or no consequence. Our analysis of data
provided by the selected states and IRS indicates that over 30,000
Medicaid providers, over 5 percent, had tax debts totaling over $1 billion
4Throughout this testimony, these seven states are referred to as the selected states.
5GAO-08-17.
6We considered activity to be abusive when a Medicaid provider's actions or inactions,
though not illegal, took advantage of the existing tax enforcement and administration
system to avoid fulfilling federal tax obligations and were deficient or improper when
compared with behavior that a prudent person would consider reasonable.GAO-08-239T
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United States. Government Accountability Office. Medicaid: Thousands of Medicaid Providers Abuse the Federal Tax System, text, November 14, 2007; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc293950/m1/4/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.