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More Seniors in Coverage Gap Likely to Get Help, Study Shows

By Dena Bunis, CQ HealthBeat Managing Editor

September 29, 2010 -- Some seniors are likely to get relief from the dreaded prescription drug "doughnut hole" next year as the number of drug plans that say they will cover at least some brand-name drugs will triple—from 35 to 106—according to an analysis released Wednesday by Avalere Health, a private research firm.

"Increased gap coverage offered by plans will greatly improve beneficiaries' access to affordable medications in 2011—and significantly lessen the impact of the donut hole experienced by many seniors, particularly those with multiple chronic illnesses," Avalere Health CEO Dan Mendelson said in a statement. "On average, beneficiaries will have a choice of 11 different plans that offer gap coverage.''

According to Avalere, the 106 prescription drug plans will offer gap coverage for a "few" or "some" brand-name drugs. The Centers for Medicare and Medicaid Services (CMS) defines "few" as covering 0 to 10 percent of drugs and "some" as covering up to 65 percent of formulary drugs.

For those medicines that are not covered by these plans, Medicare beneficiaries caught in the doughnut hole can turn to the new 50 percent discount for brand-name drugs provided for under the health law.

The doughnut hole—which affects an estimated 4 million Medicare beneficiaries each year—is scheduled to be eliminated under the health law by 2020. In the meantime, the coverage gap will be narrowed each year through a series of discounts.

In 2011, the coverage gap will begin after Medicare beneficiaries and their insurance plans have spent $2,840 on medications. After that, seniors will have to pay the next $3,600 before coverage picks up again.

Even for those whose plan gives them coverage for an increased number of drugs, Medicare will continue to use the full retail price to compute people's total medication costs. So that means some seniors will pay less to get through the doughnut hole.

The Avalere study says that the number of plans available to low-income Medicare beneficiaries will increase for the first time since the drug benefit began in 2006. There will not only be more plans available to the 9 million low-income beneficiaries, but more people who want to remain on their current plans will be able to do so.

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