SENATOR MOSS SUMMARIZED THE MOST COMMON ABUSES OF MEDICAID PAYMENTS BY CLINICAL LABORATORIES AS FOLLOWS: PERFORMING ADDITIONAL TESTS NOT ORDERED BY A DOCTOR, CLAIMING LAB TESTS WERE PERFORMED MANUALLY WHEN THEY WERE ACTUALLY COMPLETED BY MACHINE, BILLING TWICE FOR THE SAME SERVICE BY FALSIFYING DATES, AND REPORTING PROCEDURES AS COMPLETED WHEN A CLINIC WAS UNABLE TO PERFORM THE TEST. AFTER OPENING STATEMENTS BY SEVERAL SENATORS, THE ASSOCIATE COUNSEL FOR THE COMMITTEE ON THE AGING TESTIFIED ON THE INVESTIGATIONS INTO CLINICAL LABORATORY FRAUD IN ILLINOIS, NEW JERSEY, CALIFORNIA, PENNSYLVANIA, AND NEW YORK THAT THE COMMITTEE STAFF HAD UNDERTAKEN. THEIR REPORT CONCLUDED THAT A SMALL NUMBER OF CLINICAL LABORATORIES CONTROLLED MOST MEDICAID BUSINESS AND THAT KICKBACKS TO PHYSICIANS OR CLINIC OWNERS WERE WIDESPREAD. THE WITNESS STATED THAT MEDICAID FEE SCHEDULES ESTABLISHED IN 1967 WERE OVERGENEROUS BECAUSE TECHNOLOGICAL ADVANCES HAD REDUCED THE TIME AND LABOR NECESSARY FOR MANY TESTS. INVESTIGATORS FROM THE BETTER GOVERNMENT ASSOCIATION IN CHICAGO DESCRIBED THEIR INVESTIGATIONS OF KICKBACKS OFFERED BY LABORATORIES TO CLINICS SPECIALIZING IN MEDICAID PATIENTS. THE EXECUTIVE DIRECTOR OF THE NEW JERSEY COMMISSION OF INVESTIGATION TESTIFIED ON PIONEER INVESTIGATIONS OF FRAUD BY CLINICAL LABORATORIES WHICH UNCOVERED KICKBACKS, REBATES, AND INSTANCES OF DOCTORS HAVING PARTIAL OWNERSHIP IN LABORATORIES. THE WITNESS RECOMMENDED SUBSTANTIAL REDUCTIONS IN SCHEDULED LAB FEES TO ELIMINATE CLINICS' OPPORTUNITIES FOR WINDFALL PROFITS. THE APPENDIX CONTAINS A RANDOM SELECTION OF LABORATORY BILLS WHICH ILLUSTRATE FRAUDULENT PRACTICES, AFFIDAVITS BY INVESTIGATORS FOR THE BETTER GOVERNMENT ASSOCIATION, AND LETTERS FROM THE PRESIDENT OF THE COLLEGE OF AMERICAN PATHOLOGISTS AND TWO NEW JERSEY STATE OFFICIALS. (MJM)