Mr. Seamus McCarthy:

The medical card scheme was established under the Health Act 1970. The scheme currently helps in providing medical support to an estimated 43% of the population.

The cost of the scheme in 2012 was €1.7 billion, accounting for approximately 12.5% of the Health Service Executive's total expenditure. The scheme's costs increased from €937 million in 2003 to €1.7 billion in 2012, an increase of 85%. The number of cards in issue increased by more than 70% in that period and the estimated average cost of a card increased by about one fifth.

Eligibility for a medical card is, in the main, determined by a means test based on the applicant's income, taking account of certain relevant household outgoings. The HSE also has discretion to award a card if not doing so would result in undue hardship. Medical cards are normally valid for three or four years. Subject to continuing eligibility, cards are renewed upon expiration. Eligibility is determined either by way of a full case review by the HSE or through self-assessment by the card holder.

Our examination was carried out to assess the adequacy of controls over the initial award of cards and the process of review of cards in issue. The level of ineligible card holding was also examined. Shortcomings were identified in the application of controls in 8% of a sample of 2012 medical cards approved. In 4% of cases, medical cards had been approved in circumstances where the available evidence suggested that the applicant had not satisfied eligibility criteria. In the other cases, no documentation or inadequate documentation of outgoings had been provided. Additional guidance and staff training, as well as more formal supervisory reviews of medical card approvals, should ensure that prescribed controls are applied.

Approximately 5% of new cards are awarded on discretionary grounds, taking account of the individual's economic and social circumstances and the level of illness and related costs. A review of cards awarded on a discretionary basis identified opportunities for improving the information supplied by general practitioners, GPs, to allow the HSE to assess the individual's normal medical costs.

Administration of medical card scheme processing was centralised in June 2011. A significant backlog in the processing of applications and renewal notices had emerged by the end of 2011. The HSE introduced a number of initiatives to deal with the backlog and to prevent further backlogs from occurring. This included extending the self-assessment basis for the renewal of cards, allowing GPs to amend the medical card database in certain circumstances and extending eligibility for one year for some categories of card holders due for renewal in 2012.

In 2012, the HSE issued approximately 366,000 renewal notices. In 70% of cases, the applicant was asked only to confirm that the relevant circumstances had not changed. In the remaining cases, a full review of eligibility, comparable with an initial application, was conducted.

Overall, 10.7% of card holders had not responded to the renewal notices by May 2013 and their medical cards had lapsed as a result. A further 1.9% of cards were not renewed because it was found the card holders had died. Of the remainder, more than 94% had their eligibility confirmed as before or were awarded full medical cards instead of their previous GP visit cards. Some 1.7% had their eligibility reduced from a full medical card to a GP visit card and 4% were deemed not to have eligibility for either form of card.

During 2012, the HSE also reviewed 40,000 cards where card holders had not accessed medical services for periods of 12 months or more. Eligibility was removed in just under 40% of these cases. While these cases had not recently resulted in payments for prescriptions or other items, capitation payments to their GPs would have been incurred.

Overall, the available evidence suggests there is a material level of ineligibility of card holding in the medical card system. However, the financial implication of that ineligibility has not been established. In 2012, the HSE engaged consultants to review excess payments within the medical card scheme. They estimated that excess expenditure could be in the range of €65 million to €210 million per year. However, that review was limited in scope as it was conducted on the basis of a review of reports, rather than a detailed analysis of the database. The review concluded that a more reliable estimate would require detailed analysis of the medical card database.

The HSE has not yet developed an estimate of the level of excess payments in the medical card system. Based on our examination findings, I have recommended that the HSE initiate a cyclical programme of reviews of eligibility in respect of random samples of card holders. This would allow a reliable baseline estimate of the scale of excess payments to be identified. Tracking changes in the levels of excess payments would allow the HSE to evaluate the effectiveness of its overall control strategy and to identify the key drivers of excess payments.