Medicare's Lax Approach to Fraud by Suppliers of Medical Equipment

A report by the Associated Press (link here to the Washington Post version) documented the lax controls Medicare has in place to combat fraud involving medical equipment. In particular, equipment suppliers who had been suspended from Medicare participation for violating the rules were often quickly reinstated (192 out of 1038 suspended in 2003 were back in business by mid-2004).
Medicare, it turns out, outsources monitoring of these contracts to the National Supplier Clearinghouse. "But investigators said these standards are too weak to effectively screen out frauds." In addition, the Government Accountability Office also charged the Clearinghouse failed to conduct onsite inspections of suppliers.
Medicare spent about $8.8 billion for medical equipment in 2004.
Again, health policy makers complain repeatedly about the high and rising costs of health care, but when it comes to controlling these costs, they generally take a lax attitude to the sorts of fraud and over-charging that we have noted again and again on Health Care Renewal. Instead, most cost-cutting pressure is on physicians, particularly in primary care and the cognitive specialties, acute hospital care, and mental health. For example, Medicare is once again threatening to cut physicians' reimbursement across the board by 4.4%. This will have the greatest negative effect on primary care and cognitive specialists, who already receive relatively low reimbursement rates. What are the priorities here?