The commission warned that not enough health authorities and trusts have strategies in place to fight fraud and corruption, although investigating it should be a priority.
Its report, which looked at England and Wales, found that detected fraud rose from pounds 1.4m in 1996-97 to pounds 2.6m in 1997-98. All but pounds 20,000 of this was in England. However, the figures were low compared with the annual pounds 34bn NHS budget and the risk of fraud in some areas.
Cases now being investigated "point to more significant levels of fraud, with some individual cases involving very large sums", the report said. The indication of a much higher actual level is further supported by surveys published by the Healthcare Financial Management Association, which estimated a total of pounds 14m last year.
The commission said detection had improved - the amount uncovered is up from pounds 400,000 in 1992-93 - but more must be done. The total number of detected NHS fraud cases also rose from 243 in 1996-97 to 252 in 1997- 98 (of which 14 were in Wales).
The report urged tighter regulation of the "complex and confusing" system for reimbursing treatment fees and better monitoring processes.
"Some progress has been made by NHS bodies on both fraud prevention and detection," said Andrew Foster, controller of the Audit Commission. "However, there is a risk in both England and Wales that the currently reported level of fraud does not represent the actual level... Investigating this should be a priority."
On Monday, the Health minister Alan Milburn announced that he was setting up squads of "fraud-busters" to tackle crime by a "small minority" of patients and staff. The Government accepts prescription fraud alone costs the NHS pounds 150m a year.Reuse content