Thousands of health care providers in three states continued to be reimbursed by Medicaid despite owing hundreds of millions of dollars in federal taxes, according to a Government Accountability Office report released on Thursday, the AP/San Francisco Chronicle reports.
GAO investigators scrutinized Medicaid providers only in Florida, New York and Texas, meaning that the full extent of the issue could be much greater, according to the AP/Chronicle.
According to the report, GAO investigators found that about 7,000 health care providers who received a collective $6.6 billion in Medicaid payments owed $791 million in back taxes. Those individuals represent nearly 6% of the total number of providers who were reimbursed by Medicaid in the three states, the AP/Chronicle reports.
Medicaid provider payments are not technically considered federal funds because they are distributed through state programs, which prevents the Internal Revenue Service from cutting off payments to collect back taxes, GAO said.
The report recommended that IRS reassess its policies for collecting unpaid taxes.
The report stated, "[P]ayment of billions of federal dollars to those who do not pay their fair share of federal taxes raises questions about the integrity and fairness of the tax system," adding, "Given that we found over $6 billion of payments made to tax delinquent Medicaid providers in just three states, a more rigorous review ... is warranted."
In a formal response to the report, IRS concurred that action is needed (Alonso-Zaldivar, AP/San Francisco Chronicle, 8/2).
New HHS Command Center Targets Medicare Fraud
In related news, HHS Secretary Kathleen Sebelius on Tuesday made her first visit to a new $3.6 million command center for Medicare fraud detection and investigation, the AP/Washington Times reports.
Peter Budetti, deputy administrator for program integrity at CMS, this week said that the command center could be a turning point in the effort against fraud.
The center allows real-time collaboration between staff members operating Medicare's new $77 million computerized fraud detection system -- which launched last summer -- and investigators around the country, according to the AP/Times.
Budetti said, "Our expectation is that this center will pay for itself many times over."
GOP Senators Question Investment Cost of New Center
In a letter to Sebelius this week, Senate Finance Committee ranking member Orrin Hatch (R-Utah) and Sen. Tom Coburn (R-Okla.) questioned why millions of dollars had been spent on a command center, particularly when the new computer system has not been working well.
According to the AP/Times, the computer system uses tools similar to those adopted by credit card companies to stop theft in Medicare and Medicaid. By late December 2011, it had stopped only one suspicious payment of $7,591 from being made, the AP/Times reports.
The senators wrote, "Institutionalizing relationships through establishing a (command center) may be useful, but if huge sums of money have indeed been spent ... while other common-sense recommendations may have not been implemented due to 'resource concerns,' this seems to be a case of misplaced priorities" (Kennedy/Alonso-Zaldivar, AP/Washington Times, 8/1).