WINhealth perseveres and develops growth strategy

The Affordable Care Act (ACA) has made remarkable strides in getting America health insurance coverage. With over 11 million Americans signing up through the exchanges and over 21,000 in Wyoming alone, there is no doubt the law has been successful in its infancy.

CHEYENNE, WYO - The Affordable Care Act (ACA) has made remarkable strides in getting America health insurance coverage. With over 11 million Americans signing up through the exchanges and over 21,000 in Wyoming alone, there is no doubt the law has been successful in its infancy. With that many people getting coverage, the health insurance industry had no choice but to make massive changes. From new reimbursement models, to new regulations, to entirely new strategies to keep up with new demands, the healthcare industry has had to be nimble and on their toes at all times.

Despite the great successes of the law, it has also posed many challenges, especially to payers. Not only have payers had to reinvent their business models, but the financial implications have not necessarily been recorded in black ink. For example, although 21,000 individuals in Wyoming signed up for coverage through the exchanges, not all of those paid. In fact, only 18,228 of them were considered effectuated as of March 31, 2015. Effectuated simply means that an individual has paid for their coverage and still has an active policy. It has proven to be a challenge to not only get people through the process of signing up, but also paying. For many of the 18,228 newly insured in Wyoming, the ACA allowed them to finally get that knee replacement or Hepatitis C treatment they have been waiting for. This has resulted in claims significantly higher than expected and significantly higher than the premiums coming in. To top it off, the young, healthy population has been slower to sign up, opting to pay the penalty instead. This young demographic is critical, as they tend to have lower health care costs and offset the high utilizers.

One Wyoming-grown health insurance company has been no exception to the trends. WINhealth opened its doors in 1996 out of a joint venture between Cheyenne Regional Medical Center, a county-owned 222 bed hospital located in Cheyenne, WY, and Southeast Wyoming Preferred Physicians (SWPP), an Independent Practice Association (IPA) consisting of approximately 180 physicians and other healthcare professionals in Laramie County, WY. Since its inception, WINhealth has been focused on improving healthcare options for Wyoming residents. Superior service, competitive rates, and an ever-expanding network of healthcare providers have led to the growth and success of the company.

Background - The 3Rs

As the ACA began to unfold, so too did the potential opportunities. The ACA presented great prospects for WINhealth, but the company knew that these opportunities came with great risk and uncertainty. To encourage issuers to participate in the ACA, the Act created three risk mitigation programs to protect issuers during the early years of the ACA. These have become known as the 3Rs, and consist of:

  • Transitional Reinsurance Program
  • Risk Corridor
  • Risk Adjustment

The Transitional Reinsurance Program provides issuers with reinsurance when the paid claims of an individual member that enrolled in an ACA compliant policy exceeds a threshold. In 2014 the reinsurance will reimburse the issuer for 80% of the claims paid on behalf of an individual in excess of $45,000 up to a maximum $250,000. As a result of this, as of December 31, 2014, WINhealth is owed approximately $11,000,000 from the Federal Government.

The Risk Corridor was created to protect either the issuer, in the event that its paid claims greatly exceed its premiums, or the Federal Government, should premiums greatly exceed paid claims. This concept recognized the tremendous uncertainty faced by issuers in developing premiums in the absence of any historical data. As of December 31, 2014, WINhealth is due approximately $3,000,000 from the Federal Government through the Risk Corridor portion of the 3Rs.

The Risk Adjustment was created to protect an issuer from enrolling a significantly sicker group of members in comparison to other issuers operating in the same market. In WINhealth’s case, no determination has been made as to whether they owe a risk adjustment or if they will receive a risk adjustment payment.

All told, the amount due to WINhealth as of December 31, 2014 is approximately $14,000,000 from the Federal Government.

An Opportunity to be seized

With such a large receivable hanging on the balance sheet, WINhealth’s working capital has been challenged, as the company has continued to pay claims on behalf of those members who enrolled through the Federally Facilitated Marketplace and whose claims experience qualified under the three R’s. WINhealth doesn’t expect to receive the $14 million until September 2015. To assist WINhealth in continuing to pay claims on behalf of their members over the course of the next few months, Cheyenne Regional Medical Center, which has a 50% interest in WINhealth, has agreed to a short-term loan in the amount of $6 million to be repaid when the receivable is collected by WINhealth from the Federal Government.

Although this has certainly been a challenge for WINhealth to navigate, it has also presented an opportunity. While the short-term working capital issue has been resolved, WINhealth has also undertaken a strategic restructuring and planning initiative to position the Company for continued growth and success into the future.

WINhealth’s President and Chief Executive Officer, Stephen Goldstone, said “It is not at all uncommon for a company the size and age of WINhealth to look into long-term capital strategies. WINhealth wants to continue to grow and prosper, and strategies are currently being formulated to do so.”

As both WINhealth and CRMC have begun to take a deep dive into their long-term strategies, the two organizations are on diverging paths. It has been determined that it is in the best interests of both organizations for CRMC to divest their interest in WINhealth. For WINhealth, a new partner would bring about great opportunity for new resources and industry expertise that could propel WINhealth forward. For CRMC, divesting allows them to get back to their core business.

“Cheyenne Regional has been considering separating from WINhealth for a few years, and this seems to be the right time.  Health care in a reforming era has become more and more complicated and demands intense focus on the core business of healing and care delivery transformation to meet the needs of our community,” says Margo Karsten, CEO of Cheyenne Regional.  “We will continue to be a provider in the WINhealth network and look forward to working with them for many years,” says Karsten.


For now, it’s business as usual for WINhealth. WINhealth recognizes that it is critical that it continues to participate on the exchange in Wyoming. Without competition, premium prices could soar. It makes for a healthier economic environment on the exchange if WINhealth continues to participate.

“WINhealth provides much needed competition and is a large economic presence in the state of Wyoming. We will continue to work hard for our members, provider partners, broker partners, and communities. We are working to build an even stronger WINhealth with a solid long-term strategy in place”, stated Goldstone.

One thing is for certain, uncertainty is the new normal for the health insurance industry. Operating in an industry that has been completely disrupted and turned on its head can be incredibly confusing and challenging, but with great challenge comes the opportunity for great growth. WINhealth is prepared to take this opportunity by the reins.