The Government has announced a new flat fee of €290 for GPs for medical cards held by people aged 70 and over.
It claims it will achieve some €16 million in savings, in addition to the €20 million the State will save because higher earners over 70 will no longer be eligible to hold a card.
At its weekly meeting this morning the Cabinet accepted the recommendation made by Eddie Sullivan, a former senior official with the Department of Finance, that the new capitation fee be set at that mark.
The Government is now expected to legislate to give effect to the fees. Section 4 of the Competition Act will be amended to ensure that any discussions or agreement do not fall foul of competition laws.
The new single fee will replace what was effectively two sets of fees for medical cards for over 70s: an average of €161 paid to general practitioners for those who qualified on grounds of low means; and an average of €640 per annum paid to GPs for medical cards awarded on the grounds of age.
However, it also represents the compromise reached after the Government last week reversed its Budget day decision to withdraw the automatic entitlement of the over-70 card.
After rowing back from the original decision, the Government announced that any over-70 earning under €35,000 per annum would be entitled to a card. However, that was predicated on a lower fee than the €640 paid by the State for so-called 'gold cards'.
Mr Sullivan, the current chairman of the Public Appointments Service, was asked only a week ago to recommend a new capitation fee that would be paid to all patients over 70 without distinction as to status.
The Government said that the new fee would result in savings of €16 million.
Some 140,000 people qualified for age-related medical cards at an average of €640 per annum while there are 215,000 patients who hold mean-related medical cards for which the State pays an average of €161 each year.
In addition, a Government spokesman said that a further €20 million in savings would be achieved by the fact that 20,000 people would no longer qualify for medical cards as their annual earnings are in excess of €35,000 for an individual or €70,000 for a couple.
The original Budget measure predicted a saving of €100 million. According to the Government, the €64 million shortfall in savings will be made up by changes in prescription policies, with a substantial shift towards the prescribing of cheaper generic drugs.
The Minister for Health Mary Harney, responding to the decision, described it as a fair and sustainable use of scare taxpayer's resources.
Welcoming the single fee, she said: "The unintended inequity in the present arrangements, whereby different GP practices receive different fees for the same number of patients over 70, will end.
"The new fee will represent a better balance between all GP practices and, therefore, balance between all patients aged 70 and over," she said.
"I note Mr Sullivan's report highlights that the growth in automatic medical cards has been more than twice that of total medical cards among people aged 70 and over. This is not sustainable in the economic context we face in the coming years."
She argued that the remaining savings would be achieved through economies in drug usage, based on recommendations from a group being established under the chairmanship of Dr Michael Barry.
"I welcome the fact that, in its submission to Mr Sullivan, the IMO has identified savings of €80m that could achieved in drugs costs," she said.
Dr Barry's group has been asked to report by December 1st and the Government tonight said it would move quickly to implement its recommendations.