Medicare providers owe $1B in back taxes

A new report by the Government Accountability Office (GAO) has concluded that Medicare providers and suppliers owe the U.S. government at least $1 billion in back taxes going back almost a decade. Federal researchers found that 21,000 outpatient providers and suppliers who billed Medicare over the first nine months of 2005, or roughly 5 percent, had failed to pay taxes. More than half of unpaid bills were for payroll taxes which were collected from workers but never sent to the IRS, the GAO said. Instead, some medical providers spent the payroll tax money on luxury purchases, the GAO reported.

To date, the money hasn't been collected because HHS hasn't linked up its IT infrastructure with the IRS. Making the link would make it much easier to deduct money from Medicare payments to those who owe, the GAO authors noted. Medicare already withheld $339 million in payments during 2006 from providers and suppliers known to owe the IRS back taxes.

To learn more about the Medicare tax issue:
- read this Washington Post piece