Exchange boss wants pay hike

By Katie Kerwin McCrimmon

Patty Fontneau, the CEO and executive director of Colorado’s health exchange, has asked for a raise and could receive a pay hike plus a bonus by year’s end.

Any debate over Fontneau’s salary will happen behind closed doors. A spokeswoman for the exchange said executives requested that any compensation discussions happen in executive session. Those sessions are not open to the public, but Fontneau’s salary and any increases will be public.

Colorado’s exchange board meets today, but it’s unclear how soon they’ll review Fontneau’s performance.

She is paid $190,550 a year and received a 10 percent bonus last December. The exchange’s other executives, Chief Operating Officer Lindy Hinman and Chief Financial Officer Cammie Blais, both are paid $164,800 a year and each also received a 10 percent bonus last year.

Discussions of executive compensation come at a time when Colorado’s health exchange has had a rocky start and enrollments are below the exchange’s own lowest projections.

According to the latest numbers that exchange managers released, Colorado’s exchange enrolled 6,001 people in private health plans from Oct. 1 — when the exchange launched — through Nov. 16.  During October, 3,408 enrolled in private health plans while about 2,593 bought private plans during the first two weeks of November.

Source: Connect for Health Colorado. (Click on image to enlarge.)

Source: Connect for Health Colorado. (Click on image to enlarge.)

Pre-launch exchange projections show that the low estimate for October was about 3,600 while the low projection for all of November is 11,108. To keep pace with a mid-level projection for November, the exchange would have to sell more than 20,000 plans this month and another 40,000 next month. (Click here to see projections through December, 2014.)

While sign-ups are lagging, Fontneau and her team have won kudos for launching a more successful exchange than the botched federal system,

One Republican lawmaker suggested during a legislative oversight hearing on Friday that Fontneau should have run the federal system and that Connect for Health should share its software with the federal government.

“I am an opponent of the Affordable Care Act. I was at best ambivalent about SB 200 (the bill that authorized Colorado’s exchange)…but I have been incredibly pleased with the work that you have done,” said Rep. Bob Gardner, R-Colorado Springs. “Our system does seem to be working.”

Connect for Health Colorado is a nonprofit public entity known as an “instrumentality” of the state rather than a state agency. Taxpayer money is funding the exchange. So far, the exchange has received $177 million in federal grants and will get millions of dollars from Colorado’s unclaimed property fund that used to go to Cover Colorado, an insurance fund for people who couldn’t get health insurance elsewhere. Now insurance carriers cannot bar people with preexisting conditions, so high-risk patients can buy through the exchange and Cover Colorado will no longer exist.

Eventually, user fees are supposed to make Connect for Health self-sustaining.

In terms of salaries for public employees, Colorado’s governor earns $90,000 per year.

A state website shows that Gov. John Hickenlooper’s cabinet directors get paid more than the governor, but much less than Fontneau. Most get paid between $146,000 and $150,000 a year. Sue Birch, the state’s Medicaid director, who has been a key partner in launching Colorado’s health exchange, receives $150,000 a year, according to the website.

In Washington, the state exchange’s CEO recently got a 13 percent pay hike, bringing his salary to $177,400 a year. (Click here to read more.)

In Colorado, it’s unclear whether exchange board members will support a raise and bonuses for Fontneau and her team. Most state employees did not receive any raises during the recession and bonuses are rare for public employees.

Board member Ellen Daehnick is concerned about Connect for Health’s enrollment data so far and what lagging numbers could mean for long-term financial viability.

“I want as many Coloradans to have access to health insurance as possible whether they receive financial assistance from the government or not to get it,” said Daehnick, owner of a small business in Lakewood.

“The best outcome would be that the rate of enrollments increases dramatically. I am rooting for the exchange to win,” Daehnick said. “But I don’t believe the record so far supports outstanding performance. In fact there might be room for discussion about whether the leadership (of Connect for Health Colorado) has met expectations.”

Others say enrollments are disappointing, but don’t necessarily blame Fontneau for problems.

“I think a lot of the low numbers are out of Connect for Health’s control,” said Dr. Mike Fallon, an exchange board member and opponent of the Affordable Care Act.

“The law is flawed in general and there are a lot of people who don’t want to participate based on that and there’s a modest amount of sticker shock,” Fallon said.

He also expects people to procrastinate and hopes there will be a “huge uptick in the next three weeks.”

“My gut feeling is that the numbers will improve, but they will not improve as much as we would like or as much as we have projected,” Fallon said. “It’s a challenge to sell this product right now based on many factors. It’s disappointing, but not surprising.”

Fallon said he hasn’t yet scrutinized Fontneau’s contract or evaluated her salary, but expects that compared to other leaders of nonprofits, there will be room for a raise.

“The staff was asked to produce a system to sell health care insurance via several different ways. If you look at how she and her crew have done, she’s done a pretty good job. From a startup standpoint, we asked her to have a system available and she’s been able to do that. I would like our numbers and financial projections to be better. But a lot of that is out of our control,” Fallon said.

Exchange board chair Gretchen Hammer, who also runs the Colorado Coalition for the Medically Underserved, declined to discuss her views on executive salaries. With respect to enrollments, she said it’s important to note that customers have until March to sign up for health plans.

“I have a longer-term view on these numbers,” she said.

“It should pick up,” Hammer said. “ We anticipate that people will begin to shop more seriously as we move much closer to the time that they will have the benefits.”

Customers must purchase health insurance by Dec. 15 in order for their coverage to start on Jan. 1. The federal government has extended that deadline to Dec. 23 and Fontneau said Friday that the exchange is discussing a similar extension with Colorado carriers as well. People who do not buy health insurance by March 31, 2014 will face federal tax penalties that start low and increase every year.

Sharon O’Hara, an exchange board member who works with many people with chronic illnesses as executive vice president for the Colorado-Wyoming chapter of the National Multiple Sclerosis Society, said early numbers don’t mean much yet since buying insurance is such a big decision.

“I did not expect that there would be big numbers right out of the gate,” O’Hara said. “A fair number of these people have preexisting conditions and didn’t have insurance before or are underinsured. They really need to take their time.”

In fact, her group has encouraged members to mull decisions carefully before signing up.

“We’re encouraging them to do a fair amount of window shopping,” O’Hara said.

With respect to executive compensation, O’Hara said she thinks most exchanges around the country have had a “bumpy start.”

She said Colorado’s board made a commitment to review Fontneau’s performance and salary.

“She asked for the review after the launch. We committed to do that,” O’Hara said.

In the meantime, as the December deadline approaches, O’Hara said she’s not hearing panic from her constituents.

“They seem to be relatively pleased and the timeline does not seem to be one that they’re feeling any pressure on,” O’Hara said.

That’s why she expects enrollments to rise.

“I’d be more upset if a lot of people signed up too quickly. We have a lot of choices for folks in this state. I’m lucky. My employer gives me a choice of three (plans). If I was sitting out there by myself, I’d be overwhelmed. You want people who sign up to be happy and I don’t think you can do that quickly.”

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3 thoughts on “Exchange boss wants pay hike

  1. I am unclear as to why her pay is being compared to other public employees. Connect 4 Health Colorado is not a public employer. They are a non-profit and salaries should be benchmarked against other non-profits of similar size, industry and geographic region.

  2. Patty Fontneau wants a pay raise? For what performance does she deserve a pay raise?

    Enrollment statistics are abysmal. She’s lucky that she isn’t being terminated for cause.

    Pay raise? Total arrogance.

  3. Thanks for amending the article to clarify the type of business entity for Connect 4 Health Colorado. However, I still think it is somewhat of a red herring to make a comparison to the salaries of the governor and his cabinet directors. Lots of people, regardless of their industry or type of business entity, have a higher salary than the governor, including myself – and I work for a non-profit. Also, I am not sure how salaries are determined for his cabinet directors, but Sue Birch, to use your example, was appointed by the governor. Patty was hired in a competitive applicant process and I believe the exchange would’ve had a difficult time recruiting a CEO at a much lower salary. I’m not arguing yay or nay about a pay raise, but just trying to say that apples should be compared to apples.

    Of course, the fact that C4C is an instrumentality of the state and not a state agency has, in my opinion, a great deal to do with why topics like this are so tricky and why many of the well-documented articles Health Policy Solutions has written this year needed to be written.

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