Medical equipment suppliers that defraud Medicare or operate without a proper license often have little trouble regaining billing privileges so they can do it all over again.

The Government Accountability Office has identified 1,038 equipment suppliers suspended from Medicare in 2003 -- generally for violating multiple standards. Of these, 192 were re-enrolled as of May 31, 2004, after an average suspension of about three months. The GAO's advice: "Suppliers whose previous performance was poor or that demonstrated a lack of integrity should not be allowed to quickly re-enter the program."

As an example, the report points to one Miami supplier that re-entered the program after a three-month suspension and billed Medicare almost $1.4 million for colostomy supplies. When contractors for the government began to ask for documentation, such as a physician's order, the company did not provide any. Investigators have determined the company was overpaid at least $200,000.

Fraudulent billings result in higher taxes and premiums for the federal health insurance program, which serves about 43 million elderly and disabled Americans.

The Centers for Medicare and Medicaid Services paid suppliers about $8.8 billion in the 2004 budget year. The CMS contracted with the National Supplier Clearinghouse to monitor the suppliers and make sure they meet certain standards. But investigators said the standards are too weak. They noted how one woman told the Senate Finance Committee she was able to open up a sham business with $3,000. Then she began billing Medicare.

The GAO said that, in addition to weak standards, the National Supplier Clearinghouse did not conduct hundreds of required onsite inspections.

"Complacency by the watchdogs hurts both taxpayers and beneficiaries," said Sen. Charles E. Grassley (R-Iowa), chairman of the Finance Committee, which has jurisdiction over Medicare.

CMS said its contractor has started conducting more on-site inspections in "vulnerable areas of the country" that has resulted in the revocation of billing privileges. Administrator Mark B. McClellan said that the CMS would pursue regulatory changes to strengthen the standards that suppliers must meet.

-- Associated Press