But CareSource’s phenomenal revenue growth was no match for the increase in total compensation for Chief Executive Pamela Morris, whose pay more than tripled — from $877,000 in 2005 to $2.9 million in 2008, according to IRS filings.
CareSource officials say Morris’ pay hike, which included a $1.2 million incentive payout in 2008 from her supplemental retirement plan, is in line with salaries paid top executives with similar experience at its for-profit competitors. Morris is 61 and has been with CareSource for 24 years.
But with health care costs climbing faster than inflation and the number of uninsured Americans higher than ever, consumer advocates argue the time has come for the health care industry to quit modeling itself on corporations.
“They are moving farther and farther away from their core mission as a public service,” said Cathy Levine, executive director of the Universal Health Care Network of Ohio, a grass-roots advocacy group. “I don’t believe the compensation for nonprofit executives should mimic the corporate world, not when 1.3 million Ohioans and 46 million Americans are going without health care.”
CareSource is entirely funded with taxpayer dollars, receiving money from the state-federal Medicaid program for each client who meets its poverty guidelines and enrolls in the HMO.
Recent national studies show that the pay for top executives at the largest nonprofit organizations has climbed in recent years even as the compensation for top corporate executives has declined.
According to Guidestar, a nonprofit watchdog that collects information from 990 forms, chief executives at the nation’s biggest nonprofit organizations (with budgets of $50 million or more) saw their pay increase in 2007 by a median of 6.3 percent, meaning half got bigger raises and half got smaller. Inflation was almost zero that year.
Meanwhile, a survey for The New York Times by Equilar, a California firm that studies corporate compensation, found that the total pay for chief executives at the top 200 for-profit firms declined in 2008 by a median of 9 percent.
CareSource officials did not report Morris’s compensation on its IRS 990 forms for 2006 and 2007. Morris said that’s because all CareSource employees were paid that year through its for-profit arm, which was dissolved in 2008. For-profit companies do not have to file 990 financial statements with the IRS.
The Ohio Department of Insurance also collects information on executive compensation at HMOs. Morris’ cash compensation was reported to the insurance department in 2006 and 2007, but not her deferred compensation. In cash compensation, she earned $1.1 million in 2006 and $1.6 million in 2007, ODI records show.
However, a financial statement provided by CareSource to the Dayton Daily News shows that Morris earned a total cash payment of $1.7 million in 2007 and $1.5 million in 2006. The cash payment in 2007 included a $963,000 incentive payout from her retirement plan and in 2006 a $819,000 payout. The last payout from the five-year plan will come in 2010, the statement said.
For tax year 2008, the IRS began requiring nonprofits to report executive compensation from all sources, non-profit or for-profit.
Tarlton Thomas, chief financial officer for CareSource, declined to provide the deferred compensation paid to Morris in 2006 and 2007. “You have the transparency you need in the 2008” IRS 990 filing, he said.
In 2008, Morris earned $859,359 in deferred compensation, which was included in the $2.9 million total reported to the IRS.
Ellen Leffak, chairwoman of the CareSource board, said a separate committee of the board sets the top executive salaries with the help of a consultant. The committee monitors what is being paid at both for-profit and non-profit competitors.
Leffak said Morris is worth her multimillion-dollar compensation.
“We don’t want to lose her” to another HMO, Leffak said. “She has provided outstanding service to the organization and we think she should be adequately compensated.”
On one recent national performance ranking, CareSource trailed many of its competitors.
In America’s Best Health Plans for 2009-2010 — a survey conducted by U.S. News & World Report and the National Committee for Quality Assurance (NCQA) — CareSource ranked 72nd in patient satisfaction and quality of care among 82 HMOs participating in the study. It was the lowest ranking among the four participating Ohio Medicaid plans.
Morris said the rankings were misleading and skewed toward HMOs accredited by NCQA, a national health care accreditation agency. CareSource instead has its accreditation through another national agency, URAC, whose measures are more in line with state and national standards, she said.
For six consecutive years, Morris said, CareSource has earned an “excellent” rating from the Ohio Department of Job and Family Services.
Morris said CareSource could have earned up to an extra 15 points in the 100-point America’s Best Health Plans survey if it had been NCQA accredited. Adding all 15 points would have improved CareSource’s score to 80.3 and its ranking to 44th — first among the four HMOs in Ohio participating in the survey.
But NCQA spokesman Andy Reynolds said NCQA-accredited HMOs earn their extra points by disclosing more complete information about their performance and because NCQA requires them to monitor more quality measurements more often.
“Any organization that subjects itself to frequent and open disclosure (of its quality measures) is likely to score higher” in our rankings, he said.
Morris said CareSource is applying for accreditation through NCQA in addition to its URAC accreditation.
Contact this reporter at (937) 225-2437 or jdebrosse@DaytonDailyNews.com.
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