business

N.Y. Blues' plan directors bump up their own salaries

The board of the nonprofit raised directors' pay an average 37% even as the insurer saw a loss on its underwriting business in 2009.

By Emily Berry — Posted April 21, 2010

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Members of the board of directors for Excellus BlueCross BlueShield gave themselves substantial pay raises in 2009, even as the company raised premiums for members and lost money on its core business, according to recently filed documents.

Excellus BlueCross BlueShield is a nonprofit based in Rochester, N.Y., and covers 1.7 million people. It is the largest subsidiary of Lifetime Healthcare Companies, which also includes another health plan and various other health services. Board members serve as leadership for both Excellus and Lifetime.

In a unanimous March 2009 vote, the company's directors increased compensation for their work on behalf of the company, and those new rates took effect April 1, 2009, company spokesman Jim Redmond said.

The amount of payment depended on each director's responsibilities, but on average, directors made about 37% more in 2009 than in 2008.

Raises ranged from 9% to 94%. The highest pay for 2009, annual compensation of $114,475, went to the board's then-chair John Doyle Jr., who received a 60% raise. (In April, Doyle was succeeded by Randall Clark, president and CEO of Dunn Tire.) Joseph Kurnath, MD, a past chair, received the largest increase, nearly doubling his pay from $31,568 to $61,393 for the year.

Those numbers came from figures filed with the state in 2010, numbers published in the Syracuse, N.Y., Post-Standard and confirmed by Redmond.

Redmond said the company hired consultants with Towers Watson to review the directors' pay levels, and the board voted to accept the consultants' recommendations. The board members' last raise came in 2007.

Many nonprofits, however, do not pay their directors, and the news of the raise for Excellus' board -- as well as its executives, who also received raises in 2009 -- did not sit will with physicians and other critics.

"Anytime you divert monies away from patient care and health care services to patients, you have to be very judicious in the use of those monies," said David Hannan, MD, a family physician who is president of the Medical Society of the State of New York and practices in Marion, N.Y., near Rochester.

Dr. Hannan said Excellus has "monopoly-like power" in the Rochester area that has left no room for negotiating reimbursement rates.

"Suffice it to say physicians have seen nowhere near the increases in pay that the executives and directors have seen," Dr. Hannan said.

According to its annual report for 2009, Excellus lost $6.6 million in its core underwriting business, but that was offset by $74.8 million in investment income for 2009 compared with a $32 million investment loss the year before.

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