TRANSMITTAL LETTER FOR BOARD MEETING OF JULY 17, 2025
COMMITTEE ON PROCUREMENT
Mr. John P. Murray, Acting Executive Director
Title
Authorization to enter into an agreement for Contract 25-RFP-01 Medicare Advantage Plan, with Humana Insurance Company for a three-year period, effective January 1, 2026, to December 31, 2028, Account 101-25000-601250
Body
Dear Sir:
Authorization is requested to enter into an agreement with Humana Insurance Company (Humana) to provide a fully insured group Medicare Advantage Plan including prescription drug coverage (MAPD) for Medicare-eligible retirees. The program will be a national PPO plan as it is currently. The plan design including the deductibles, co-insurance, and annual maximum out-of-pocket limit will remain the same as under the current program. The prescription drug co-payments will be revised to match the structure for the active employee plans that became effective January 1, 2025 as a result of the collective bargaining process. The agreement will be for the period from January 1, 2026 through December 31, 2028.
On March 12, 2025, Request for Proposal 25-RFP-01 Medicare Advantage Plan was publicly advertised. Three hundred thirty-three (333) firms were notified and fourteen (14) requested proposal documents. On April 11, 2025, the District received three (3) responsive proposals from the following vendors: Blue Cross Blue Shield of Illinois, a division of Health Care Service Corporation; Humana Insurance Company; and Sierra Life and Health Insurance Company (a UnitedHealthcare underwriting company).
The proposals were evaluated by Deloitte Consulting, LLP and staff of the Human Resources and Procurement and Materials Management Departments. The criteria for these evaluations were outlined in Request for Proposal 25-RFP-01 and included: organizational stability; experience with group MAPD Plans; ability to match the current District plan design; network access, size, and quality; claims administration performance; member service performance; administrative performance; Center for Medicare and Medicaid Services (CMS) star rating; and financial considerations.
Following the preliminary evaluation of proposals, excluding cost, all three proposers were deemed to be finalists and were invited to interviews conducted June 3, 2025, and June 9, 2025. On June 23, 2025, a solicitation was sent to the finalists requesting an unqualified “best and final” offer. The “best and final” offers were returned to the Director of Procurement and Materials Management on June 27, 2025.
Based on the evaluation of the proposals using the criteria described above and the pricing provided in the “best and final” offer, it is recommended that a contract be awarded to Humana to provide a fully insured group MAPD Plan for Medicare-eligible retirees. Humana is one of the most experienced Medicare Advantage providers in the market covering 5.2 million members, with 618,000 of these members covered by employer group MAPD Plans. It provides services to nearly 54% of the Medicare eligible population. It has the largest provider network in the Chicagoland area with more than 25,000 providers and has more than 719,000 contracted providers nationally.
The group MAPD plan offered by Humana has received an overall Center for Medicare and Medicaid Services (CMS) star rating of 4.5 out of 5.0 stars. This is an industry-leading ranking and the highest rating among the vendors submitting proposals to the District. This rating allows the MAPD plan to maximize the financial subsidies available from CMS and ensures that the District retiree population receives a high-quality retiree health plan. Humana will match the current plan design offered to District retirees. It makes no changes to the deductibles, co-insurance, maximum out-of-pocket limits, pharmacy co-pays, or other key elements of the plan. The plan offered by Humana will also offer additional programs to retirees just as the current plan does. These include in-home and well-being assessments by a clinician; a post-hospitalization support program including meals, transportation and personal home care; telemedicine services; a wellness rewards program; membership in the SilverSneakers fitness program; a hearing aid discount program; discounts on vision services; and a discount on dental services (new under this plan). The plan also includes care management and clinical support programs for retirees dealing with short-term and long-term health issues. These programs include chronic condition management; chronic kidney disease; oncology quality management; transplant management; and end-of-life care services. Clinical programs also screen for behavioral health concerns and social determinants of health such as food insecurity, social isolation and loneliness and help direct retirees to resources under the plan and in the community.
Humana’s proposal includes a thorough implementation plan to ensure a successful implementation by January 1, 2026. A core component of the plan is a robust retiree communication strategy. This will include announcement letters, mailed enrollment kits, open enrollment meetings (virtual, in-person and on-demand), and a call center that will go live several months prior to January 1st. All materials will be co-branded to eliminate confusion among the retiree population. The plan also includes post-enrollment member engagement to answer any follow-up questions retirees may have after the plan is in place.
The implementation plan also includes strategies to manage any provider disruption. Humana provides retirees with a transition letter that can be taken to a health care provider’s office helping the retiree communicate the change to their doctor. Humana has also committed to contacting all highly utilized providers under the plan that are not currently in the network or do not have experience processing Medicare Advantage claims with Humana.
The prescription drug component of the program offers a broad nationwide network of pharmacies including all the major retail chains. The prescription drug program will continue to offer a mail order program and a 90-day retail program as it does under the current plan. The formulary drug list is a strong match to the current drug list with unfavorable disruption (i.e., drug moving to a more costly co-pay tier) of approximately 2.0%. However, this will be partially offset by approximately 1.2% of retirees that will see a favorable (i.e., less costly co-pay tier) change in their current prescription cost. Humana’s strategy for managing the transition of retiree’s current prescriptions includes working with the current provider to transition existing prescriptions wherever possible and allowing a transition refill to provide additional time for retirees, and their providers, to update prescription records.
The proposed premium rates (monthly rate per retiree) provided by Humana represent approximately a 4% decrease from the current rates for the same plan offered today and are the most cost effective over the three-year term of the contract. The 2026 rate would result in a total projected savings of $200,000 to be shared by retirees and the District. The proposed pricing includes not-to-exceed rates for 2027 and 2028 providing some visibility into the cost of the retiree health plan over the next few years. The proposal also includes performance guarantees around key implementation, provider disruption, customer service and administrative metrics.
The Diversity Section reviewed the request for proposal to determine if Affirmative Action Ordinance Revised Appendix A and Appendix V goals will apply. The Diversity Section noted that the services being solicited would typically need to be performed by a single insurance carrier who will provide essential coverage and services to be delivered under the plan. As such, the contract does not provide practical opportunities for subcontracting. Therefore, Appendix A and Appendix V were not included in this request for proposal.
In view of the foregoing, it is requested that the Director of Procurement and Materials Management be authorized to enter into an agreement with Humana to provide a fully insured group Medicare Advantage Plan including prescription drug coverage for Medicare-eligible retirees for a three-year period from January 1, 2026 through December 31, 2028. Funds for 2026, 2027 and 2028 are contingent on the Board of Commissioners’ approval of the District’s budget for those years.
Requested, Thaddeus J. Kosowski, Director of Human Resources, TJK:JEF
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Precious Brady-Davis, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for July 17, 2025
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