Execs well-paid even as CO-OPs struggle

Though consumer operated and oriented health plans (CO-OPs) around the country have struggled and even folded, some of their leaders appear to have been well-compensated.

The Louisiana Health Cooperative, for example, announced in late July that it would discontinue selling coverage to the 17,000 residents it serves at the end of the year. But before announcing that it will close, the Louisiana CO-OP paid $3.6 million to businesses linked to its founders in 2013, the New Orleans Times-Picayune reports.

That includes $3 million to the Atlanta consulting firm Beam Partners, which the CO-OP's first CEO, Terry Schilling, formed in 2004, and $672,000 to Georgia-based firm Kearney Street Consultants, whose president appears to be the same man listed as a principal for Beam Partners, David H. Smith. Two other consultants who filed the CO-OP's incorporation papers in 2011 also are listed as associates for Beam Partners, according to the article.

Neither Shilling nor Smith responded to the Times-Picayune's requests for comment.

It's not illegal for the CO-OP to hire board members as contractors as long as it is disclosed, Louisiana Insurance Commissioner Jim Donelon tells the publication. "As we dig deeper in the oversight of the CO-OP, if we see inappropriate payments, we will certainly address it all the way up to and including criminal penalties, if needed," Donelon says. "But so far we see no impropriety."

In South Carolina, meanwhile, the president of the Consumers' Choice Health Plan paid its two top executives $458,196 and $351,710 in 2013, according to the New York Times. And the Nevada CO-OP paid its top executive $340,000 that same year.

Yet Jerry W. Burgess, president of the South Carolina CO-OP, told the Times he isn't overpaid. "My compensation is similar to that at nonprofit healthcare enterprises of similar size," he says.

A recent Office of Inspector General report found that 21 of the country's 23 CO-OPs incurred net losses, and 13 of the CO-OPs' enrollment figures were significantly lower than expected. The report suggested that the Centers for Medicare & Medicaid Services increase its oversight of struggling CO-OPs.

To learn more:
- read the Times-Picayune article
- here's the New York Times report

Related Articles:
OIG report finds CO-OPs underperformed, didn't reach enrollment goals
Louisiana Health Cooperative becomes latest CO-OP to bite the dust
Tennessee CO-OP freezes enrollment
Iowa's CO-OP pulls out of marketplace despite first-year success

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