AN INVENTORY OF BEST ESTIMATES OF FRAUD, ABUSE, AND WASTE IN HEW PROGRAMS INDICATED LOSSES OF $6.3 BILLION TO $7.4 BILLION ANNUALLY, OR 4.7 TO 5.4 PERCENT OF THE FEDERAL OUTLAYS CONCERNED. THE LARGEST SOURCE OF LOSSES PROBLEM IS THAT OVER 51,000 HEW ENTITIES MUST BE AUDITED. EXAMINATIONS OF CURRENT CRIMINAL INVESTIGATIONS AND CONVICTIONS OF THOSE WHO DEFRAUD HEW PROGRAMS SHOWED A CURRENT CASELOAD OF 1,349 AND A TOTAL OF 265 CONVICTIONS. AN AVERAGE OF 2.5 MONTHS PASSED BETWEEN REFERRAL AND INDICTMENT. PROJECT INTEGRITY, WHICH INVESTIGATED FRAUD AND ABUSE BY PHYSICIANS AND PHARMACISTS, HAS REVEALED 535 POTENTIAL FRAUD CASES. IN WELFARE, PROJECT MATCH HAS SYSTEMATICALLY IDENTIFIED AND REVIEWED WELFARE RECIPIENTS FOR ELIGIBILITY. THE VARIOUS STUDENT FINANCIAL ASSISTANCE PROGRAMS HAVE BEEN REORGANIZED AND STUDENT LOAN DEFAULTS INVESTIGATED. THE INSPECTOR GENERAL'S OFFICE HAS ALSO FOCUSED ON EMPLOYEE CONDUCT AND CONFLICT OF INTEREST CASES AND SERVICE DELIVERY ASSESSMENT. AMONG RECOMMENDATIONS ARE THAT (1) THE INSPECTOR GENERAL'S OFFICE CONDUCT PERIODIC INVENTORIES OF ESTIMATES OF FRAUD, WASTE, AND ABUSE; (2) TIGHTER CONTROLS OVER ELIGIBILITY DETERMINATION AND CLAIMS PAYMENT BE INSTITUTED; (3) THE INSPECTOR GENERAL'S OFFICE GRADUALLY TAKE OVER INVESTIGATION OF MEDICARE AND MEDICAID FRAUD; AND (4) PROJECT MATCH BE EXPANDED AND CONTINUED. FIGURES AND TABLES ARE INCLUDED. FOR RELATED MATERIALS PRESENTED AT THE HEARING ON INSPECTOR GENERAL LEGISLATION, SEE NCJ 67353-55 AND 67357-58. (CFW)