A federal inspector general chastised Medicare on Monday for failing to follow its policies in auditing claims by the medical equipment industry and he ordered fixes to help stop hundreds of millions of dollars in annual losses due to fraud, waste and abuse.

The inspector general at the U.S. Department of Health and Human Services instructed the giant agency to confirm in its audits that doctors actually prescribed equipment, providers delivered it and patients received it.

Inspector General Daniel R. Levinson took Medicare to task for telling its auditors to check on equipment providers' paperwork in 2006, but to skip verifying medical and patient records -- violating policies that had been adopted by Congress in 2002.

Medicare officials ''orally instructed [auditors] to deviate from written policies by making determinations based primarily on the limited medical records available from [equipment] suppliers, not the full medical records available from physicians,'' Levinson wrote.

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