The state’s largest health insurer will once again pay its part-time board members, this time up to $54,500 for some, despite continued criticism of the practice, Robert Weisman reports in today’s Boston Globe.
Blue Cross Blue Shield of Massachusetts halted payments in March 2011, facing intense scrutiny of the fees paid to board members and $11 million in compensation and severance paid to the nonprofit’s departing leader.
Current chief executive Andrew Dreyfus said the board pay is necessary to attract the best candidates and that the insurer is taking steps to add to the board’s health care expertise. Not all agreed with the decision, Weisman writes:
Attorney General Martha Coakley, who criticized the directors’ pay in 2011, said in a statement Thursday that “We are encouraged by several changes and improvements made by the board in response to our concerns, but we continue to disagree with the decision to reinstate compensation for board members.
“Voluntary service by board members is a hallmark of charitable organizations.”
Paying directors creates conflicts of interest, Coakley said, and the money could be put to better use in an organization classified as a charity.
Board members attend up to about 14 meetings a year, including five full board meetings. Deirdre Cummings, legislative director for Massachusetts Public Interest Research Group, told Weisman that paying the part-time board members what for many people would be a full-time wage “seems excessive.”
Dreyfus said in 2011 that the suspension of board pay could be temporary. Weisman wrote at that time:
The suspension of directors’ compensation will last at least until the end of the year, giving Blue Cross time to conduct a “public conversation’’ on its legal classification, and the fee won’t be made retroactive if it is reinstated, Dreyfus said. “If at the end of that conversation, the community expectations are that our board should not be paid, then I’m willing to accept that,’’ he said. He said Blue Cross is reassessing its structure because, while classified as a nonprofit public charity, it pays state and federal taxes, doesn’t accept donations or grants, and operates like a complex business with nearly 3 million members and $7 billion in annual revenue.
“There’s a basic dissonance between what the community expects of us as a not-for-profit public charity and what we have to do in order to be successful and compete often with national for-profit insurance companies,’’ he said. For instance, he said, Blue Cross vies with national insurers for big business accounts and executive hires.
The insurer issued refunds to policyholders in late 2011 totaling the amount of the severance package paid to former executive Cleve L. Killingsworth and announced that it would not seek to change its designation as nonprofit.