Data were obtained from more than three dozen interviews with persons responsible for the policing of the medicare and medicaid programs at both State and Federal levels, medical licensing personnel, officials of the American Medical Association, and others. Interviews were also conducted with 42 criminally and administratively sanctioned physicians, almost exclusively from New York and California, the Nation's two largest medicaid systems. In addition, 34 nonsanctioned providers and 8 sanctioned psychologists were interviewed, and a demographic portrait was compiled of physicians who have been suspended and excluded from medicare and medicaid from 1977 through 1982. Family practitioners composed the largest percentage of violators, followed by psychiatrists, general surgeons, internists, and obstetricians and gynecologists. Thiry-six percent of the physicians sanctioned were foreign medical school graduates. Among the domestically trained doctors, Meharry College, a school for black students, had the greatest number of violators. Billing systems and low reimbursement are shown to invite fraud and abuse. In addition, the study found that some unknown proportion of cheaters go totally undetected. Psychiatrists are overrepresented among sanctioned physicians, probably because they bill for time and are easier to monitor and police. Sanctioned physicians generally did not view themselves as cheaters. In addition, no major differences were found between the attitudes of sancitioned and nonsanctioned doctors about the programs. Interview instruments, grant publications and manuscripts, and approximately 22 tables are contained in the appendixes. Also provided are approximately 90 references. For the executive summary, see NCJ 95225. (Author abstract modified)