Tufts, Harvard Pilgrim to keep paying directors

Tufts Health Plan and Harvard Pilgrim will keep paying their board of directors five-figure annual fees despite objections from the Massachusetts attorney general and an inquiry into directors' compensation at nonprofit health plans.

The two insurers bucked the trend set by a pair of rivals, Blue Cross Blue Shield of Massachusetts and Fallon Community Health Plan, which recently opted to suspend board fees. In separate statements, Tufts and Harvard Pilgrim said the directors' expertise is critical to running their complex and high-risk businesses, reports the Boston Globe.

Payments to board members last year ranged from $19,500 to $82,500 at Tufts, and from $21,900 to $68,100 at Harvard Pilgrim.

Tufts spokeswoman Patti Embry-Tautenhan said its board elected to continue payments because, "unlike the directors of other nonprofits, they are subject to distinct regulatory considerations." Additionally, compensation for time, commitment and skill for top talent encourages directors who can bolster Tufts' efforts to provide better services to customers, reports Forbes.

"We rely on them to apply their specialized experience and skills in the areas of medicine, accounting, finance and law, to support our company and its mission," Harvard Pilgrim said. "Good governance is advanced by the recruitment and retention of experienced, independent, reasonably compensated directors." The insurer added that in 2010, its board worked more than 2,000 hours, according to the Boston Herald.

Attorney General Martha Coakley criticized the Harvard Pilgrim and Tufts boards, saying they failed to adequately explain their decisions to continue to accept annual stipends and meeting fees. "We are disappointed with this decision, and do not believe that these two organizations have justified why their boards should be compensated in contrast to the overwhelming majority of board members who volunteer their time and expertise at public charities," Coakley said. Her office is completing its review of director compensation and will be issuing its full findings and recommendations soon, the Globe notes.

To learn more:
- read the Boston Globe article
- see the Forbes story
- view the Boston Herald piece

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