A lack of national leadership and accountability for poor performance has led to thousands of avoidable deaths from complications, according to a report from the House of Commons public accounts committee.
The parliamentary group said the DH's strategy for diabetes had made 'depressingly poor' progress in improving standards over the past decade. Fewer than half of patients receive all nine basic diabetes checks that can reduce the risk of complications.
MPs called on the department to scrap separate QOF targets for diabetes checks, worth around 76 points, and replace them with a single indicator for completing all nine tests.
The report said: 'Although the QOF for GPs initially improved diabetes outcomes in primary care, there has been little improvement lately and the current payment system is not driving the required outcomes. GPs are paid for each individual test they carry out rather than being rewarded for ensuring all nine tests are delivered.'
NICE is currently examining whether such a move would encourage greater provision of all nine checks.
Former GP Dr Brian Karet, clinical lead for commissioning at NHS Diabetes, said: 'An aggregate marker like this is probably a good idea.'
QOF is 'heavily weighted' towards particular checks such as HbA1c, he said, meaning GPs are forced to allocate resources away from areas with fewer points, such as foot checks.
A single, bundled indicator would give them time and resources to pursue the full range of checks and help reduce the 'unacceptable' variations in amputation rates, he said.
NHS faces spiralling costs
Despite the department's 2001 national service framework introducing clear clinical standards, quality of NHS services remains a 'postcode lottery', MPs said. Around 24,000 people die from avoidable complications each year because their diabetes is not managed effectively.
Despite a consensus on good diabetes care, 'progress in delivering the recommended standards of care and in achieving treatment targets has been depressingly poor'.
'There is no strong national leadership, no effective accountability arrangements for commissioners, and no appropriate performance incentives for providers,' the report said.
MPs also warned that they had seen no evidence the DH would address these issues in the new NHS structure. In future, commissioners should be held to account over poor performance, they said.
Committee chair Margaret Hodge MP (Lab, Barking) said: 'The number of people with diabetes is set to rise from 3.1m to 3.8m between now and 2020 and unless care improves significantly the NHS will face ever-increasing costs.'
In response, a DH spokeswoman said: 'We do not accept the conclusion that services are 'depressingly poor' as there has been progress - an extra 750,000 people got all nine diabetes checks over the last four years. But we know there has been unacceptable variation and we are determined to put that right.'
Barbara Young, chief executive of Diabetes UK, said: 'Given all the increasingly strong evidence of inadequate care, we simply cannot understand why the NHS has sleepwalked into this situation.'
In 2009/10 there were 2.3m adults diagnosed with diabetes in England and a further 800,000 people with diabetes who remained undiagnosed. Diabetes costs the NHS £3.9bn a year, but 80% of this is spent treating avoidable complications.