Reprinted with permission from the Palm Beach Post
For all the talk about lower costs and efficiency in a new era for health care, compensation for at least 14 officers and directors at non-profit insurer Florida Blue has rocketed past the $1 million mark, documents obtained by The Palm Beach Post show.
Topping the list: Chairman and CEO Patrick Geraghty’s pay of $6.8 million in 2012.
Florida Blue directors were paid at an average of more than $180,000, more than double the pay of directors at Blue Cross in Massachasetts that touched off a public firestorm there over lavish compensation for part-time work in a charitable organization. Director pay in Massachusetts was suspended entirely in 2011 and reintroduced in March at a lower amount, less than $55,000.
More money-making opportunities could lie ahead. Florida regulators will convene a hearing Thursday in Miami to consider a reorganization plan for Florida Blue that could let officers and directors gain from future stock ventures.
Many don’t seem to be doing too badly already. Four of six board members of subsidiary OptaComp received at least $1 million in 2012 compensation. That money included “long-term incentive plan awards” and retirement contibutions, records submitted by the company to state regulators show.
OptaComp is the trade name for CompOptions, which has a five-year, $31 million contract to process the State of Florida’s worker’s compensation claims and provide case management services.
The four OptaComp board members are Florida Blue executives who serve that role as part of their paid duties, company spokesman Paul Kluding said. They received no additional compensation for their service on that board, he said.
Overall, Florida Blue’s executive compensation takes into account the size and complexity of a $9 billion statewide company, Kluding said.
“To increase the affordability of our products and services, our executives have led initiatives that have reduced costs for our members by over $2 billion over the past five years,” he said. “This is significant because approximately 85 percent of every premium dollar is used to reimburse doctors, hospitals, pharmacies and other care providers on behalf of our members. Approximately 0.35 percent of any premium dollar collected is used to pay our executives.”
In addition, he said it is not fair to compare Florida to Massachusetts because of the “fundamental differences in plan sizes, scope and markets.”
At the time of the controversy, though, Blue Cross in Massachusetts had larger revenues than Florida Blue, about $13 billion, reports show.
The fuss in Massachusetts, inflamed by an executive’s $11 million severance package, was such that the state’s attorney general launched an investigation.
“The board really wanted to move the discussion back to talking about health care affordability, and this issue really had become too much of a distraction,” Massachusetts Blue Cross CEO Andrew Dreyfus explained about the suspended director pay in 2011. “They really wanted to send a message that there’s a new era of Blue Cross and we are going to be more modest in our compensation practices.”
For its part, Florida Blue has “been leading the way in changing the way health care is delivered by working with providers to lower costs and increase quality of care,” Jason Altmire, the company’s senior vice president of public policy, government and community affairs, said in May.
But if there’s a new world of belt-tightening, it’s easy to get other ideas from a glimpse at the pay window of Jacksonville-based Florida Blue.
Total compensation jumped by half a million dollars or more between 2011 and 2012 for more than half the officers and directors who were paid at least $1 million.
In 2010, as CEO and trustee of Blue Cross and Blue Shield of Minnesota, Geraghty had earned significantly less, $1.5 million, according to The Minneapolis Star Tribune. The newspaper called him the highest-paid non-profit leader in that state.
Florida Blue handles a significant amount of government work. Through subsidiaries First Coast Service Options and Novitas Solutions, it is the Medicare claims administrator for Florida, Puerto Rico and the Virgin Islands plus Pennsylvania, New Jersey, Deleware, Maryland and the District of Columbia.
Big pay at non-profit insurer Florida Blue
*Chairman and CEO Patrick Geraghty got $6.8 million vs. $2.1 million for partial year in 2011
*At least 14 officers and directors passed the $1 million mark
*Four of six directors at subsidiary OptaComp were paid more than $1 million
Source: Florida Office of Insurance Regulation
The Million Dollar Club
What Florida Bluepays officers and directors
Officer or Director /2012/ 2011
Patrick J. Geraghty, chairman and CEO $6.8 million $2.1 million
Robert I. Lufrano, retired chairman and CEO $4.9 million $6.1 million
R. Chris Doerr, EVP, chief administrative officer, CFO $3.3 million $2.6 million
Steve Booma, EVP, strategy and diversification $3.2 million $3.5 million
Joyce Kramzer, SVP, business operations $2.9 million $1.6 million
Charles S. Joseph, SVP, general counsel $2.6 million $2 million
Dr. Jonathan B. Gavras, VP, delivery system, CMO $2.2 million $1.3 million
Craig A. Thomas, SVP, govt & consumer markets $2.2 million $1.2 million
James C. Modaff, GVP, finance $1.8 million $1.3 million
Robert Wall, SVP & chief human resources officer $1.3 million n/a
Deanna McDonald, OptaComp board member $1.3 million n/a
Darnell Smith, OptaComp board member $1.3 million $911,102
John Urbanek, OptaComp board member $1.3 million $811,486
Elana Schrader, OptaComp board member $1 million $722,670
Source: Florida Office of Insurance Regulation
What Board Members Get
Florida Blue board member/ 2012 director’s compensation
Robert M. Bealll II, chairman, Beall’s Inc. $174,500
Catherine P. Bessant, executive, Bank of America Corp. $185,500
Steven T. Halverson, CEO, The Haskell Co. $175,500
Leerie T, Jenkins, Jr., chairman, Reynolds, Smith and Hills, Inc. $175,500
Tracy A. Leinbach, retired chief financial officer $190,500
John B. Ramil, President,CEO, TECO Energy Inc. $184,500
Frank P. Scruggs Jr., attorney, Berger Singerman $184,500
Barbara S. Thomas, retired CEO $185,500
Gonzafo F. Valdes-Fauli, chairman, Broadspan Capital LLC $175,500
Source: Florida Office of Insurance Regulation
