A NEW YORK ATTORNEY INVOLVED IN THE PROSECUTION OF MEDICAID FRAUD TESTIFIED ON NEW YORK'S EFFORT TO INDICT NURSING HOME OWNERS FOR KICKBACK SCHEMES AND OFFERED THE FOLLOWING RECOMMENDATIONS: INCREASE FEDERAL FUNDING TO IMPROVE INVESTIGATIVE RESOURCES, ESTABLISH SPECIAL FEDERAL GUIDELINES AND PROGRAMS TO DEAL WITH HEALTH CARE FRAUD, AND IMPOSE STIFFER PENALTIES FOR WHITE COLLAR CRIMES. THE U.S. ATTORNEY FOR THE NORTHERN DISTRICT OF ILLINOIS, WHO SET UP THE FIRST GOVERNMENT UNIT TO INVESTIGATE MEDICAID FRAUD IN THE U.S., TESTIFIED CONCERNING PROBLEMS FACING FEDERAL PROSECUTORS. HE COMMENTED THAT FEW LAWS DEAL DIRECTLY WITH MEDICAID FRAUD, BUT THAT THE FEDERAL LAW PROHIBITING KICKBACKS HAD BEEN USED TO OBTAIN THE FIRST CONVICTION IN ILLINOIS. THE TESTIMONY CONTAINED METHODS AND EVIDENCE USED IN PROCURING AN INDICTMENT ON MEDICAID FRAUD AND SPECIFIC SUGGESTIONS FOR IMPROVED MANAGEMENT OF THESE PROGRAMS THROUGH REGULAR AUDITS, DISCLOSURE OF PROVIDERS' RECORDS, INCREASED INVESTIGATIVE MANPOWER, AND STATUTORY CHANGES. THE WITNESS ALSO SUPPORTED MINIMUM MANDATORY SENTENCES FOR FRAUD. (MJM)