HSE to review cost overruns on refund schemes

HSE chief executive Prof Brendan Drumm has ordered an immediate review of expenditure on demand-led schemes, including the drug payment scheme which subsidises the cost of medicines for families, amid fears that over-spending in this area could reach almost €100 million this year.

Senior HSE management have warned the board of the organisation that current spending levels on the demand-led schemes were "unsustainable".

In an internal report, seen by The Irish Times, management said the potential overrun on the demand-led schemes was "the single biggest financial issue in the organisation and will have a significant impact on the HSE's ability to deliver commitments in its service plan if it is to be funded from within current resources".

Expenditure on such schemes has soared by more than 25 per cent over the past two years.

The management report said the HSE could be facing a financial overrun in this area of €80-€98 million, if the level of expenditure experienced in the demand-led schemes in the first seven months continued until the end of the year.

"The current expenditure level is not sustainable within a budget of €11.29 billion. There is pressure of €80-€90 million in demand-led schemes which include the drug payment scheme under which families pay no more than €85 per month for drugs, medicine for diabetes, multiple sclerosis, etc as well as expensive medicines for conditions such as HIV," the report says.

The report says Prof Drumm has instigated a comprehensive expenditure review of demand-led schemes to include "consideration of key trends in price, volume, population effect and other significant variables".

It is understood that one of the areas being examined is the differential in price charged to the State for medication provided under the medical card scheme and under other schemes such as the long-term illness scheme.

In a statement yesterday, the HSE said it was projected that expenditure this year on what are referred to as demand-led schemes would be in the region of €2.204 million, an increase of almost 10 per cent over the 2005 level.

It said this would represent an increase of almost 26 per cent over the 2004 expenditure level.

"The projected 2006 expenditure for the demand-led schemes represents approximately 33 per cent of the projected expenditure for the entire primary, community and continuing care directorate and approximately 20 per cent of HSE revenue expenditure.

"Clearly, expenditure on demand-led schemes is a very significant component of HSE expenditure and the combination of the demand-led nature of the services involved and upwards cost trends means that it is becoming increasingly difficult for the HSE to contain expenditure within the core budgets for the schemes," it said.

"Because demand-led schemes consume such a significant proportion of overall HSE expenditure, cost pressures in this area impact significantly on overall HSE budgetary performance," the HSE said.

"It is against this background that the HSE is currently reviewing the demand-led schemes with a view to identifying options to manage the increasing cost pressures being experienced year on year within a value-for-money context.

"The schemes in question are, in the main, of a statutory nature and in seeking to manage costs, it is not the HSE's intention to reduce the level of services available to the eligible population," it stated.