Fraudulent claims for eye and dental treatments have cost taxpayers in Northern Ireland £2.8 million.
Specialist investigators from the Health and Social Care Sector's Counter Fraud and Probity Service (CFPS) found thousands of people are cheating the system.
But, the unit which last year issued 2,072 fixed penalties only managed to re-coup £30,098 from patients who failed to pay up.
The figures are contained in an audit office report into the health and social care sector which is published today. It shows that the cost of fraud had jumped significantly on previous years up from £2.2 million in 2010/11.
It said more resources should be deployed to try and tackle the problem and suggested building a fraud referral and prosecution database
"Given the huge size of the healthcare budget and independent estimates that on dental and ophthalmic charges alone fraud/error is estimated to be £2.8 million, we recommend consideration is given to ensuring CFPS have the appropriate level of resources," the report said.
"Northern Ireland Audit Office considers that CFPS's work should be supported by IT resources that facilitate the operational and strategic management of its activity and performance as well as the management of individual fraud investigations. This should enable a shift from reactive to more proactive/targeted activity, with a likely increase in both the efficiency and effectiveness of CFPS's work."
Patient exemption fraud occurs when an individual claims exemption from paying statutory health service charges for dental or ophthalmic treatment, while knowing they are not eligible. Random and targeted checks were carried out to identify false claimants.
A further 104 referrals were made to the CFPS during 2011/12 by agencies including the UK Border Agency who identified 39 individuals suspected of being in Northern Ireland illegally and who were accessing free health care for which they should have paid.
A total of nine cases were passed to the PSNI. Two people were prosecuted.