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TO: Mayor Richard C. Irvin
FROM: Alisia Lewis, Chief Human Resources Officer
DATE: August 27, 2024
SUBJECT:
A Resolution Authorizing an Agreement with Humana to administer a Medicare Advantage Plan for Medicare Eligible Retirees for the Period of January 1, 2024, through December 31, 2025.
PURPOSE:
To authorize an agreement with Humana to administer a Medicare Advantage Plan for Medicare eligible retirees.
BACKGROUND:
January 1, 2022, the City of Aurora moved the Post-65 Medicare retirees from the Aetna Medicare Advantage plan over to Humana's Medicare Advantage Plan. Under the Humana Medicare Advantage Plan the City saved 43.3%, or approximately $835,730. The below is the rate history since 2019:
2020: $343.35 Per Retiree Per Month
2021: $314.84 Per Retiree Per Month
2022: $178.55 Per Retiree Per Month
2023: $199.98 Per Retiree Per Month
2024 $214.86 Per Retiree Per Month
DISCUSSION:
Humana's renewal for 2025 is a 16.2% increase. The main factors generating the increase are the notable revisions CMS is making to the Medicare Advantage program starting in 2025. The revisions impacting the plan are:
Ratebook resulted in CMS MA payment reductions.
The change in Risk Score Normalization: At a high level, CMS is moving from a single five-year linear regression methodology to a multiple year regression methodology. The result of this regulatory change (linear to multiple year) for risk normalization is a lower paid risk score, i.e., revenue from CMS.
Part D (RX) has been restructured. While the City members pay the cost share as defined by their custom prescription plan design, all Medicare Advantage carriers are required to track where a member is on CMS' Defined Standard Benefit for Part D plans. The changes to Part D are as follows:
Members will have a $2000 maximum out of pocket. CMS is defining the maximum out of pocket as: member cost share plus any benefit plan enhancement. The actual cost share a member will pay for their Part D m...
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