The pay of Hawaii Medical Service Association's three top executives jumped by 13 percent last year as they earned incentives for meeting certain performance goals.

The state's largest health insurer yesterday released compensation totals showing it paid Chief Executive Robert Hiam $1.31 million in 2008, or $148,900 more than the year before. The insurer also said Hiam had asked for a pay cut this year.

Hiam has been among the highest paid local nonprofit executives, and his most recent compensation package is sure to raise complaints from physicians and others who feel HMSA's reimbursement rates are too low. Hiam's pay was made public yesterday as HMSA reported a $35.8 million net loss for the year.

Pay of HMSA's top executives has sparked debate on compensation of nonprofit executives and is sure to generate discussion given the state's economic downturn. HMSA is the dominant health insurer in the state, providing coverage for more than 700,000 residents.

"As I have said before, this is a very complex organization," said state Insurance Commissioner J.P. Schmidt.

"They do have to pay what's comparable with what comparable companies are paying."

But one HMSA critic called the pay increase an outrage and said Hiam should be relieved of his position.

"During a deep recession, Mr. Hiam is getting paid 27 times the average salary for a family of four in Hawai'i to run a nonprofit," said Dr. Josh Green, a Kona emergency-room physician who also serves as vice chairman of the state Senate's Health Committee.

"This is an outrage. His board should fire him and hire someone with a conscience."

HMSA took almost one page of a five-page press release on its year-end results to discuss why Hiam and others received the bigger paychecks. The insurer said the pay was set by its board of directors' Compensation Committee, which uses a national consulting firm to set salaries.

It said Hiam and two other executives' compensation jump was in part based on the meeting of strategic goals for 2005 through 2007.

Besides Hiam, the pay of Michael Gold, executive vice president and chief operating officer, climbed by more than $100,000 to $965,219, while Chief Financial Officer Steve Van Ribbink's compensation rose to $636,660, up about 13.4 percent from the previous year.

Yesterday, Van Ribbink said some of the compensation goals were related to keeping member dues as low as possible while reasonably reimbursing healthcare providers. HMSA has had the task of trying to raise doctor reimbursements to stop physicians from leaving the Islands, while trying to keep rate increases from rising too much for employers and residents.

Van Ribbink said the board felt the executives had met those goals while maintaining a record of paying out 93 percent or more of member dues to healthcare providers, one of the highest ratios in the nation. He said the insurer boosted payouts to physicians during the year to the point that some had received an increase of more than 13 percent.

This year, the pay will be reduced for the top three executives, though.

Van Ribbink said he is taking a 9 percent pay cut this year, while Hiam and Gold will take pay cuts of more than 10 percent. HMSA said the board has authorized a salary freeze for Hiam in light of the economic downturn.