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CMS: Doughnut Hole Coverage Reduces Enrollee Costs by $1.2 Billion

By Nellie Bristol, CQ HealthBeat Associate Editor

November 4, 2011 -- More than 2.2 million Medicare Part D enrollees each received prescription drug discounts averaging $550 during the first nine months of this year as part of the health care overhaul's efforts to close the program's coverage gap, Centers for Medicare and Medicaid Services officials announced. In total, beneficiaries saved more than $1.2 billion in drug costs.

Release of the figures is part of the Obama administration's efforts to bolster public support for the overhaul to counter congressional Republican efforts to weaken or repeal the law. CMS officials have been making such data public on a monthly basis.

A state-by-state breakdown of the figures shows beneficiaries in New Jersey received the greatest average gap discount, totaling $686. Average discounts in Hawaii were the lowest, at $274.

The law (PL 111-148, PL 111-152) closes by 2020 the drug program's coverage gap—known as the "doughnut hole"—between the initial benefit limit and the level where catastrophic support begins (at $4,550 in out-of-pocket payments in 2011). In the first year, beneficiaries received a $250 rebate.

CMS is now phasing in percentage discounts for both brand-name and generic drugs. Once an enrollee's drug costs put him in the doughnut hole, he receives a 50 percent discount for brand-name drugs in 2011 and 2012. Coverage increases incrementally until enrollee payments are lowered to 25 percent of costs by 2020. Enrollees pay 93 percent of costs in 2011 for generic drugs, a rate that also drops incrementally to 25 percent by 2020.

In addition to lowering costs for drugs, the health overhaul has provided at least one free preventive benefit for more than 22.6 million Medicare beneficiaries, CMS reported.

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