INITIALLY, MEMBERS OF THE SENATE COMMITTEE STATED THAT THE MEDICAID MANAGEMENT INFORMATION SYSTEM (MMIS) EXTOLLED BY THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE (HEW) AS THE PRINCIPAL TOOL FOR REDUCING FRAUD AND ABUSE WAS BEING MISMANAGED AND POSSIBLY CONTRIBUTING TO FRAUD. AN INVESTIGATOR FROM THE SENATE STAFF BEGAN THE HEARINGS WITH A DESCRIPTION OF INQUIRIES INTO THE ROLE OF COMPUTER SERVICE COMPANIES IN PROCESSING CLAIMS FILED BY PROVIDERS AND BENEFICIARIES OF GOVERNMENT HEALTH PROGRAMS, WITH PARTICULAR EMPHASIS ON THE MMIS PROGRAM. THREE INDIVIDUALS FROM PRIVATE CONTRACTING FIRMS APPEARED TO DISCUSS VOLUNTARILY THEIR CONTRACTS WITH CHARLES A. CLUBBER, THE ACTING DIRECTOR OF THE MEDICAID SYSTEMS DIVISION OF THE OFFICE OF INFORMATION SYSTEMS WHOM THE SENATE INVESTIGATORS CHARGED WITH MISMANAGEMENT AND ABUSE. REPRESENTATIVES FROM TWO COMPANIES TOLD ABOUT QUESTIONABLE PRACTICES IN MMIS CONTRACT AWARD PROCESS. CHARLES CLUBBER WAS SUBPOENAED, BUT HE REFUSED TO APPEAR AT THE HEARINGS. A SENATE STAFF INVESTIGATOR PRESENTED A DETAILED ACCOUNT OF THAT OFFICIAL'S ACTIVITIES IN ACCEPTING PAYMENTS AND SERVICES FROM COMPANIES WHO WON CONTRACT AWARDS FOR MMIS IN WEST VIRGINIA AND MARYLAND. CLUBBER'S PREVIOUS INVOLVEMENT WITH THE PENNSYLVANIA MEDICAID PROGRAM WAS ALSO EXAMINED. THREE OTHER INDIVIDUALS FROM HEW COMMENTED ON MR. CLUBBER'S RESPONSIBILITIES, PERSONALITY, AND ACTIVITIES. TESTIMONY GIVEN BY MR. CLUBBER'S IMMEDIATE SUPERVISOR COVERED HIS TRANSFER TO A DIFFERENT POSITION BECAUSE OF THE SENATE INVESTIGATION AND ACCESS BY HEW EMPLOYEES TO STATES' ADVANCE PLANNING DOCUMENTS. THE WITNESS ALSO SUBMITTED A DETAILED STATEMENT ON THE MMIS PROGRAM. THE ADMINISTRATOR OF HEW'S SOCIAL AND REHABILITATION SERVICE AND THREE OTHER PERSONS INVOLVED WITH THIS AGENCY DISCUSSED THEIR EFFORTS TO COMBAT FRAUD AND ABUSE, MANAGEMENT DIFFICULTIES, AND CONFLICT OF INTEREST PROBLEMS. THE APPENDIX CONTAINS CORRESPONDENCE BETWEEN THE COMMITTEE AND THE DEFENSE DEPARTMENT, A CONSULTANT FIRM, AND THE TEXAS DEPARTMENT OF PUBLIC WELFARE FOLLOWING THE HEARING. (MJM)