Organized crime has moved into Medicare and Medicaid, according to a General Accounting Office report, skimming off hundreds of millions of dollars a year. They form or corrupt scores of "medical entities" -- clinics, physician groups, diagnostic labs and medical equipment suppliers.

In a report to Sen. Susan Collins (R-Me.), chairman of the Permanent Subcommittee on Investigations, the GAO said many of the companies exist only on paper and bill the government for services and equipment not provided or not medically necessary.

• The investigators looked at what they said were 160 sham companies in Florida, North Carolina and Illinois -- and took a broad look at New Jersey as well.

• But they suspect that the problem is nationwide.

• Often the principal players moved into the Medicare and Medicaid arena after being involved in other types of rackets.

• In one type of scheme, they pay people to recruit Medicare beneficiaries who are sent to clinics and offices for unnecessary tests and services.

The recruiters usually receive about $100 to $135 for each patient they find, then share the fees with cooperating beneficiaries.

In another type of scheme, members of criminal groups rented private mailboxes, set up bogus corporations and opened phony corporate bank accounts. Payments from the agencies and private insurers were sent to the mailboxes, deposited in bank accounts and quickly converted to cash or moved to other accounts beyond the reach of law-enforcement authorities.

Source: Robert Pear, "U.S. Cites Criminals' Raids on Medicare and Medicaid," New York Times, November 4, 1999.

For GAO reports http://www.gao.gov