Exec pay raises eyebrows after Maine CO-OP's financial downswing

Salary increases for two senior executives who oversaw the implementation of Maine's once-burgeoning consumer operated and oriented plan (CO-OP) are  being scrutinized after the plan lost millions last year, leading to administrative cuts and premium hikes, according to the Portland Press Herald.

Maine's Community Health Options CEO Kevin Lewis and Chief Operating Officer Robert Hillman made a combined $715,819 in 2014, a significant boost from their 2012 salaries that totaled more than $311,000, according to the newspaper. The pay bump came after the plan emerged as one of the only successful CO-OPs in the country, enrolling 40,000 members in 2014.

But over the first nine months of 2015, Maine's Community Health Options lost more than $17 million despite a profitable 2014. All told, the CO-OP lost $31 million in 2015 because of a large influx of unanticipated medical claims, according to the Press Herald. Plan officials said they are cutting administrative expenses--such as marketing--by $11 million to make up for the shortfall. Lewis plans to take a 10 percent pay cut, and other top managers have agreed to take pay cuts or forgo bonuses.

Although Lewis' pay aligns with that of other nonprofit CEOs, CO-OP executives have faced backlash because of financial failures that led to premium hikes. However, Lewis remains optimistic, telling the Press Herald the CO-OP has learned valuable lessons from its 2015 downturn.

Last year, Lewis attributed the start-up's initial success to its partnership between members and providers and a broad PPO network. Blame-shifting for CO-OP failures has consumed the first several months of 2016, after more than half of the plans shut down at the end of 2015. Last week, a report from the Government Accountability Office indicated that four of the remaining 11 CO-OPs have failed to enroll at least 25,000 members. 

To learn more:
- read the Portland Press Herald article

Related Articles:
Execs well-paid even as CO-OPs struggle
As remaining CO-OPs struggle with enrollment, Maryland's start-up flourishes
How the Maine CO-OP surpassed its own expectations
Maine Community Health Options CEO: 'We had a desire to do things differently'
Maine CO-OP, once model for success, losing millions
Lawmakers slam oversight of failing CO-OP

Suggested Articles

A New Jersey physician has pleaded guilty to his role in one of the largest healthcare fraud cases ever investigated by the federal government. 

Employers are rethinking their approach to health benefit design to curb costs—and to stay competitive in a tight job market, a new report shows.

Rebates for Part D drugs grew from 2011 to 2015 but not enough to offset price spikes, a study found.