Mass. turns spotlight on insurance executives' pay

Compensation for nonprofit health system executives and directors will be under a higher-powered microscope from now on, the Massachusetts attorney general told the state's biggest hospitals and insurers.

Attorney General Martha Coakley on Sept. 2 presented a letter to four health plans and the Massachusetts Hospital Assn. informing them that her office will require nonprofit hospitals and health plans to expand their public reporting of pay for board members and executives (link).

Coakley also asked the insurers -- Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Care, Tufts Health Plan and Fallon Community Health Plan -- to justify their compensation to their board members, given that paying directors is "extraordinarily rare" among other charitable organizations.

Marylou Buyse, MD, president of the Massachusetts Assn. of Health Plans, said the justification is that hospitals and health plans are substantially different than other charities. She also said she didn't think compensating board members creates a conflict of interest.

"That is not a valid argument," she said. "I don't think any of these board positions are paid enough to compromise themselves or their judgments."

The attorney general's letter also expressed concern that boards that want to reward top executives by paying them "above average" compensation are driving up that average every year.

Tim Gens, executive vice president of the Massachusetts Hospital Assn., said he expected a fair process from the attorney general's office, but he stressed that evaluating compensation should be done "in context," taking into account the enormous responsibilities hospital executives take on.

"There are opportunities, there are responsibilities, there are liabilities," Gens said.