With the New Rural Cooperative Medical Care System continuing to extend its coverage to more people and pay out more for services, the nation's top audit body said on Wednesday that abuses of the massive insurance scheme and instances of graft are also growing.

In its latest report, the National Audit Office (NAO) said five counties and districts had misappropriated 27.4 million yuan ($4 million) from rural medical funds and used the money for other things, including pension payments.

The NAO's analysis of the system also found that institutions operating it in six counties and districts had fabricated 4,925 insurance policies to gain 373,000 yuan from local governments.

The extended inspection also found 47 community clinics out of 97 that were checked had abused outpatients' information and faked 2,447 hospital logs to get extra compensation.

The audit covered 45 counties and districts in nine provinces and mainly looked at the way money was raised and spent. It also studied the management of funds between January 2009 and May 2010, said the NAO.

Apart from "a few undisciplined issues", an official said in a public letter attached to the report that "the system basically achieved full coverage in rural areas and ensured that farmers were less likely to become poor because of illness".

He said: "It also improved health service quality in the countryside."

According to the latest figures released by the Ministry of Health, 835 million people in China's rural areas - or about 95 percent of the people who live there - had joined the medical care system by mid-December.

The premiums paid by local governments and rural residents to each insured person have risen from 30 yuan in 2005 to 150 yuan in 2010. Compensation paid to hospitalized patients has risen to about 60 percent of their total bills.