The absence of financial controls and accountability for money spent on the medical card scheme has been sharply criticised in a new report.
The review of the scheme and others, such as the Drugs Payments Scheme, which are administered by the former General Medical Services (Payments) Board, found their costs had risen sixfold from €493 million to €1.4 billion in 2003.
The main factors driving up costs, according to the report by Deloitte & Touche, have been increased rates of prescribing, increases in the cost of drugs and the handing out of medical cards to all over-70s regardless of their means.
This initiative alone cost €126 million in 2002, the first full year of its operation.
At the time of its introduction in July 2001 it was estimated that an additional 39,000 people would become entitled to a medical card.
However, this soon proved to be "significantly in error" as by December 2001 some 63,000 new over-70s had registered.
The extension of the scheme to all over-70s had come at a significant cost, the report said, and was likely to increase in coming years as the population of elderly people grew.
The report points out that GPs get paid three times more, some €462 a year, for treating these new over-70 non-means-tested patients.
The reason for this is that the Government announced the extension of the scheme to over-70s before agreeing fees with the Irish Medical Organisation to treat them, leaving "the public sector in the weakest of negotiating positions, a matter which was exploited by the contractor unions".
It called for an evaluation of the costs/benefits of extension of the scheme to over-70s to see if there were improved health outcomes as a result.
The report said the GMS system needed to undergo urgent reform. Deloitte & Touche, which completed its report in 2003, even though it was published only yesterday by the Department of Health, said the reform should be accorded the highest priority.
The report found several structural weaknesses in the system, the main one being that there was no one party responsible for its overall management.
It said annual payments to doctors under the Indicative Drug Target Scheme should be capped, and the current arrangement under which pharmacists receive part of their pay by way of a 50 per cent mark-up on products prescribed under the Drugs Payment Scheme (DPS) and Long Term Illness Scheme (LTI) should be discontinued.
There was also a need to establish protocols for drug-prescribing and to look at making savings through greater use of cheaper generic drugs, the report added.
"We are concerned that as the system currently operates there is no requirement for participants in the GMS system to prescribe cheaper but equally effective drugs and medications. Furthermore, retail pharmacies negotiate discounts with wholesalers for drugs supplied under the GMS, DPS or LTI, which results in a situation where pharmacists may benefit financially from the prescription of higher-cost drugs and medical products," it said.
In addition there was a need for a central client eligibility index, and it pointed out that "lack of data integrity has resulted in payments being made by the GMSPB which are invalid and also increases the risk of fraud".
The GMSPB, it said, estimated that poor data gave rise to overpayments to GPs of at least €12 million a year.