The Government is to introduce legislation early in the new year to prevent older people with medical cards from becoming automatically entitled to free private nursing home care.
The Attorney General has advised the Minister for Health, Ms Harney, that older people with medical cards could successfully argue that they are entitled to free private nursing home care under the terms of the 1970 Health Act, which entitles card-holders to free in-patient treatment.
If a case was successful in court, it could entitle most of the 16,400 people in private nursing homes to free care and expose the State to an annual bill of up to €400 million, according to industry sources.
A spokesman for Ms Harney confirmed that officials were examining the legislation and measures would be taken shortly to "regularise" the situation.
The Irish Nursing Homes Organisation said the issue raised the "wholly inadequate" level of nursing home subvention available to older people and their families.
"When you take the subvention into account, there is a shortfall of up to €500 a week, which penalises older people and their families. There needs to be an increase of around 300 per cent in subvention levels to bring it up to an adequate level," the organisation's chief executive, Mr Paul Costello, said.
Mr Paul Murray, of Age Action Ireland, said it was time for the Government to address issues regarding eligibility and entitlement to nursing home subvention.
"There is far too much confusion and upset among both older people and their relatives in this area. The subvention system is in a mess and is allocated patchily throughout the country.
"We would regret, however, if the Government, in its efforts to prevent successful claims, did not address the hardship caused by the current subvention regime."
A Government-appointed working group is examining the issues around eligibility and entitlement to nursing home subvention and is expected to report to Ms Harney next year.
Government officials say there is no official estimate on what costs the State would be exposed to if there was a successful case seeking free nursing home care for older people with medical cards.
However, industry sources estimate it would be in the region of around €400 million. The cost could also be greater, given that all people over the age of 70 are entitled to a free medical card since the 2002 budget.
While care in public nursing homes is typically free, the Government pays €115 million annually in nursing home subvention for around half of older people in private homes.
This form of support contrasts with Britain where all medical care is paid for by health authorities.
In Scotland all residential care is paid for on a needs basis.
