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Doughnut Hole Checks Reach 750,000 Medicare Enrollees

By John Reichard, CQ HealthBeat Editor

August 10, 2010 -- Although polling shows that seniors in general aren't well-informed about how the health care overhaul law improves their Medicare benefits, at least 750,000 are well aware of at least one tangible benefit — the $250 checks they get this year if they reach the gap in drug coverage called the "doughnut hole."

That's how many have received the checks so far, the Centers for Medicare and Medicaid Services announced Tuesday. "More beneficiaries will be receiving checks in the coming months as they enter the coverage gap," the agency added in a news release about the milestone.

The agency isn't shying away from opportunities to build public awareness of these and other Medicare improvements in the law. CMS also distributed Tuesday customized state press releases breaking out the number of beneficiaries per state receiving the checks. Releases were prepared for "the vast majority" of states, a CMS spokesman said.

The spokesman said that about eight million Medicare beneficiaries can be expected to reach the threshold of prescription drug outlays that reaches the doughnut hole, in which they must pay the full cost of a prescription. When that happens a significant number of seniors stop taking drugs, the agency says, putting them at risk for complications if the drugs are for chronic conditions like high blood pressure or diabetes, for example.

About half of the eight million receive the "low-income subsidy," which pays almost all prescription drug costs—so in their case at least, there's not a problem with loss of access to medications. But the other four million do not get the subsidy and are on the hook for all prescription costs in the doughnut hole, the spokesman said.

That suggests many more Medicare enrollees will be getting checks by the end of the year. The checks arrive automatically in the mail when enrollees reach the doughnut hole; there is no requirement that they sign up to get them. CMS is warning seniors not to give out any personal information to fraudsters suggesting they need to sign up.

A recent poll by the Kaiser Family Foundation found that only about one-third of Medicare enrollees knew that the overhaul law ends out-of-pocket charges in Medicare for preventive services such as mammograms, certain colon cancer tests, and a yearly physical. About half were aware of provisions of the law to gradually close the doughnut hole.

Brand name drug makers who want to continue in the Medicare Part D prescription drug program next year must sign agreements by Sept. 1, 2010, saying they will provide 50 percent discounts in 2011 for products prescribed to Medicare enrollees in the doughnut hole; generic drugs will be covered in the doughnut, CMS says. Each year thereafter, the coverage gap will gradually be narrowed further until it is eliminated in 2020.

CMS takes the opportunity in the press release issued Tuesday to remind seniors of other Medicare improvements in the overhaul law, such as its increased coverage of preventive care. It also says "seniors can expect to save on average almost $200 per year in premiums compared to what they would have paid without the new law."

Republicans and Democrats are at odds over what the Obama administration is saying about Medicare changes under the overhaul law, which in addition to improved benefits includes cuts to health plans and other providers and a Medicare payroll tax hike on affluent Americans.

Democrats say that seniors need to be educated about the benefits available to them under the law and that GOP "misinformation" about the law's impact on seniors must be corrected. But Republicans say Democrats have crossed the line into political campaigning on behalf of the overhaul law, charging that use of taxpayer funds for a recent ad featuring the actor Andy Griffith is illegal.

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