THE HEARINGS OPENED WITH STATEMENTS FROM SEVERAL SENATORS CONCERNED WITH LEGISLATION INVOLVING HEALTH CARE AND THE ELDERLY. THESE SPEAKERS VIEWED MEDICARE AND MEDICAID AS BEING EXCEPTIONALLY VULNERABLE TO FRAUD AND IN NEED OF IMPROVED PROGRAM MANAGEMENT. AN OFFICIAL FROM THE MICHIGAN DEPARTMENT OF SOCIAL SERVICES DESCRIBED THE DEPARTMENTS' INVESTIGATIVE EFFORTS IN EXPOSING MEDICAID FRAUD, DISCUSSING THE ORGANIZATION AND PERSONNEL IN MICHIGAN'S PROGRAM, METHODS USED IN DETERRING FRAUD, AND ITEMS LOOKED FOR WHEN REVIEWING PHYSICIANS' PHARMACIES', LABORATORIES', AND NURSING HOMES' RECORDS. MEDICARE AND MEDICAID ABUSE BY HEALTH CARE FACILITIES IN ILLINOIS WAS DESCRIBED BY A REPRESENTATIVE FROM THE BETTER GOVERNMENT ASSOCIATION WHOSE TESTIMONY CONCENTRATED ON THE PRACTICE OF SELLING ACCOUNTS RECEIVABLE TO FACTORING FIRMS FOR CASH MINUS A SIZABLE PERCENTAGE. REPORTERS FROM THE CHICAGO TRIBUNE PRESENTED THEIR PERSONAL EXPERIENCES WITH INVESTIGATING HEALTH CARE IN HOSPITALS AND MEDICARE/MEDICAID ABUSE, AND A REPRESENTATIVE FROM THE ILLINOIS ASSOCIATION OF CLINICAL LABORATORIES COMMENTED ON THE PROBLEMS OF UNETHICAL BUSINESS PRACTICES IN LABORATORIES AND STRONGLY RECOMMENDED PROMPT PAYMENT OF MEDICAID BILLS BY THE STATE. THE APPENDIXES CONTAIN DETAILED STATEMENTS FROM ALL WITNESSES, COPIES OF NEWSPAPER ARTICLES ON MEDICAID FRAUDS, RESPONSE FROM A CHICAGO HOSPITAL TO ALLEGATIONS OF SUBSTANDARD CARE BY REPORTERS, AAND A STATEMENT FROM BLUE CROSS AND BLUE SHIELD OF MICHIGAN IN RESPONSE TO TESTIMONY BY THE MICHIGAN OFFICIAL. A REPLY TO THIS STATEMENT IS INCLUDED. (MJM)