Despite owing approximately $791 million in unpaid federal taxes, about 7,000 health care providers in New York, Florida and Texas have collected millions of dollars in Medicaid reimbursements in the past two years, according to a report released this morning by the U.S. Government Accountability Office. Because Medicaid reimbursements are channeled through state programs, they are not considered federal money, and therefore cannot be levied (seized or stopped) by the IRS in order to off-set taxes owed to the federal government.
Under the American Recovery and Reinvestment Act, health care providers may apply for Medicaid funding whether or not they owe federal taxes. Critics recommend implementing stricter requirements for obtaining Medicaid funding from the government, while others claim that such restrictions might discourage upstanding providers from seeking participation in the program, according to the Washington Post.
The GAO report recommended the IRS review its policies for collecting taxes and find more efficient ways to obtain owed funds from Medicaid providers.
One of the most successful ways the government recovers money lost to fraud is through whistleblowers, who have helped the U.S. reclaim about $30 billion. However, the IRS has yet to take full advantage of its whistleblower program, according to attorney Erika Kelton, and would do well to explore the potential of that program.