Thousands of Medicare Part B Providers Abuse the Federal Tax System

The Government Accountability Office (GAO) sought to determine if Medicare Part B medical professionals have unpaid federal tax debt, the magnitude of the debt, the types of associated abusive or criminal activities, and assess the U.S. Department of Health and Human Services (HHS) efforts to counter providers with delinquent taxes. GAO reviewed data from HHS and the Internal Revenue Service (IRS), and reviewed Medicare policies and procedures.
 
To determine the types of abusive or criminal activities associate with high levels of unpaid federal taxes, GAO selected 40 Medicare providers for in-depth investigation. In addition to failure to pay employees' federal withholding taxes other problems existed, such as money laundering, payments to physicians with documented quality-of-care issues or previous exclusions from Medicare participation.

GAO noted that HHS has not issued Medicare regulations or policies requiring Medicare contractors to consider outstanding tax debt when deciding to enroll a physician, health professional, or supplier into Medicare. HHS also lacks a policy to request tax information from IRS as part of Medicare eligibility decisions. HHS does not participate in the IRS federal payment garnishment procedures to ensure that outstanding taxes are paid.