This final report points out that improper payments under Medicare's fee-for-service system totaled an estimated $12.6 billion during Fiscal Year 1998. This year's estimate of improper payments is $7.7 billion less than last year's estimate of $20.3 billion and $10.6 billion less than the previous year's estimate of $23.2 billion. This decline in improper payments is attributable to several factors: (1) the Health Care Financing Administration's (HCFA) efforts under the Medicare Integrity Program, (2) fraud and abuse initiatives, (3) improved provider compliance with Medicare reimbursement rules, (4) HCFA/OIG outreach efforts emphasizing Medicare documentation requirements, and (5) implementation of HCFA's corrective action plan. Although significant progress has been made, recommendations call for HCFA to continue its diligence in reducing past identified problems and to keep abreast of those issues that could negatively affect future error rates. The HCFA generally concurred with our findings and recommendations.