How Healthcare Works: Tax Scams and Medicare

Does your local hospital, nursing home or doctor's office collect Medicare reimbursements while skating by on federal taxes? If so, it's far from alone -- the Government Accountability Office notes that more than 27,000 healthcare providers, or almost six percent of all who take Medicare, collectively owed more than $2 billion in back taxes in 2006.

Take note, though: A crackdown might finally be in the works.

The GAO investigation is part of a four-year probe into federal contractors who flout the tax system. Medicare is such a huge part of the federal budget -- it paid out $402 billion in reimbursements in 2006 -- that its payments have drawn particular scrutiny.

From the WaPo:

Some cases cited in the new report were especially egregious. They included a nursing home operator with a history of asset concealment schemes who filed $15 million in Medicare claims while owing $7 million in unpaid taxes and establishing a charitable foundation that purchased luxury cars for the owner's personal use.

And there was the hospital that collected $21 million in Medicare fees while owing $15 million in taxes, mostly for failing to forward to the Internal Revenue Service payroll taxes that were withheld from employees' checks.

In typical fashion, however, the feds have so far done very little to crack down on these tax scammers, because the Department of Health and Human Services that oversees Medicare doesn't yet use automatically withhold payments from providers who are delinquent on their taxes. The acting director of Medicare, however, says the agency will be part of that system by October -- presumably because the numbers, and the resulting headlines, have finally grown to the point that no one can overlook them anymore.

(Hat tip: Fierce Healthcare)