THE MAJOR THRUST OF THE ACT IS TO IMPROVE THE ABILITY OF STATE AND FEDERAL GOVERNMENTS TO DETECT, PROSECUTE, AND PUNISH FRAUD AND ABUSE IN THE MEDICARE AND MEDICAID PROGRAMS. THESE PROGRAMS OPERATE PRIMARILY ON A FEE-FOR-SERVICE BASIS, THAT IS, WHENEVER A PROGRAM BENEFICIARY RECEIVES A SERVICE, THE PROVIDER BILLS THE GOVERNMENT FOR PAYMENT. PROVIDER FRAUD REFERS TO INTENTIONAL BILLING FOR SERVICES NOT RENDERED, BILLING FOR MORE EXTENSIVE SERVICES THAN THOSE ACTUALLY PROVIDED, KICKBACKS, AND FALSIFICATION OF THE COST REPORTS ON WHICH REIMBURSEMENT RATES ARE CALCULATED. PROVIDER ABUSE RELATES TO THE PROVISION OF SERVICES AND SUPPLIES WHERE THEY ARE NOT MEDICALLY NECESSARY. WHEN FRAUD AND ABUSE OCCUR, ELIGIBLE PERSONS GO WITHOUT NEEDED CARE OR ELSE RISK RECEIVING UNNECESSARY CARE, AND SCARCE FUNDS ARE SIPHONED OFF BY PROVIDERS WITHOUT BENEFITTING THE PATIENTS. THE ACT INCREASES THE PENALTIES FOR CONVICTION OF FRAUD; REEMPHASIZES AND STRENGTHENS THE PROHIBITION AGAINST FACTORING; REQUIRES MORE EXTENSIVE DISCLOSURE OF OWNERSHIP AND FINANCIAL INFORMATION; AND ATTEMPTS TO STRENGTHEN PROGRAM MANAGEMENT. POTENTIAL ADVANTAGES OF THE ACT'S PROVISIONS FOR THE POOR INCLUDE: PROTECTION OF PATIENT FUNDS IN NURSING HOMES; PROHIBITION OF A COMMON NURSING HOME PRACTICE OF FORCING CONTRIBUTIONS FROM PATIENTS IN ORDER TO GAIN ADMISSION; ESTABLISHMENT OF STATE MEDICAID FRAUD CONTROL UNITS TO ASSIST BENEFICIARIES IN ENFORCING THEIR RIGHTS; PROTECTION OF BENEFICIARIES FROM UNREASONABLE CHARGES BY PHYSICIANS; AND INVESTIGATION OF DISCRIMINATION IN HOSPITALS' ADMISSION PRACTICES AGAINST PATIENTS WHO ARE MEDICAID AND MEDICARE RECIPIENTS. THERE ARE ALSO POTENTIAL DISADVANTAGES TO THE POOR. THE ACT ADDRESSES RECIPIENT FRAUD AS WELL AS PROVIDER FRAUD, MAKING IT A MISDEMEANOR AND AUTHORIZING SUSPENSION OF THE BENEFITS OF A RECIPIENT CONVICTED OF FRAUD. ANOTHER FEATURE PROVIDES THAT, WHERE AN ABSENT PARENT IS UNDER A COURT ORDER TO PROVIDE MEDICAL SUPPORT FOR THE REST OF THE FAMILY, STATES MAY REQUIRE THAT THE FAMILY MEMBERS ASSIGN TO THE STATE ALL RIGHTS TO SUCH SUPPORT AS A CONDITION FOR MEDICAID ELIGIBILITY. FINALLY, IF IT IS DETERMINED THAT A MEDICARE PATIENT IN THE HOSPITAL OR NURSING HOME NO LONGER NEEDS SERVICE THERE, HE IS GIVEN NOTICE THAT PAYMENT WILL NO LONGER BE MADE. THE ACT NOW ALLOWS ONLY A ONE-DAY GRACE PERIOD TO GIVE THESE PATIENTS AN OPPORTUNITY TO MAKE POST-DISCHARGE ARRANGEMENTS -- AN INSUFFICIENT LENGTH OF TIME.