Select slides from Elevar's Academy Session in Boston on October 25, 2014

1. Elevar Labs: Boston
Enterprise Academy: Session 1 – The Real Deal on Health Insurance
October 2014 BOSTON, MA

2. Our leadership team
Confidential and Proprietary – Elevar
Chris is CEO of Elevar, a digital innovation lab.
Chris has worked with 20+ major health organizations. Chris specializes in digital strategy and
health innovation. He is an advisor for multiple health IT startups. Chris was previously a
consultant at Booz & Co. and Deloitte Consulting.
Chris received an MPA from Harvard, an MBA from Yale and a BA from UC San Diego.
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CHRIS
EDELL
CEO
Casey is President and COO of Elevar, a digital innovation lab.
Casey was previously in Booz & Co.’s strategy practice, working extensively with a number of
health clients, including Pfizer, Optum, BCBSNC, Horizon, WellPoint, BCBSKC, Wellmark,
Regence as well as other national plans.
Casey received an MBA from Columbia University and a BA from UC Berkeley.
CASEY
LE JEUNE
PRESIDENT
AND COO
Avtar is CFO of Elevar, a digital innovation lab.
Prior to Elevar, Avtar was a consultant at Booz & Co.’s health strategy practice, working with a
number of health clients, including Wellmark, BCBSMA, Kaiser Permanente, Cigna and Aetna.
Avtar received a BSE in Bioengineering from Duke University.
AVTAR
VARMA
CFO
BIOGRAPHY:
INNOVATION
ADVISOR:
Alek is an Engagement Manager at Elevar, a digital innovation lab.
In his 10 years of management consulting experience, he has worked with leading providers,
payers and life sciences organizations on a variety of strategic and operational issues.
Alek received an MBA from NYU Stern and a BA from UC Berkeley.
ALEK
BITUIN
ENGAGEMENT
MANAGER

3. Why are we here?
Confidential and Proprietary – Elevar
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• To learn about health plans and enterprise!
Prepared by Elevar
• What goes on inside a health plan?
• How does their business model work?
• How do they fit in the greater context of the industry?
• What should I look out for as I build a relationship with a health
plan?
• How do I get my startup an opportunity that will blow the socks off
of my co-founders, potential investors, and potential customers?
• To learn the specific innovation areas of interest for BCBS MA

4. Today’s Topics:
Confidential and Proprietary – Elevar
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Understanding
Health
Insurance
Understanding
Blue Cross Blue
Shield
Navigating
Enterprise
BCBS MA
Problem
Statements
Prepared by Elevar

5. Health insurers (payers) work with patients, providers and
employers to facilitate payment of care
Co-pay, Deductible,
$ Prepared by Elevar
Co-Insurance Contracted Payment
Confidential and Proprietary – Elevar
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Health Insurance Flow
Health Care
Services
Monthly Premium
Employer Share of Premium
Monthly Premium from
Employee
$
$
$
$
$
“Payer” / Health Plan
Monthly Premium

6. Payers serve individuals, as well as employer-based customers
who are typically segmented by the number of lives covered
Confidential and Proprietary – Elevar
6
Health Insurance Market Segments
Overall Market
Elevar
National
by Accounts
Prepared Local Large
(500+)
Local Mid
(100-499)
Local Small
(2-99)
Under 65
Over 65
Contracts
Health Plan
Market
Segments
Group Individual

7. Three primary types of payers exist: managed care organizations,
self-funded employer groups and government payers
Elevar
by Government Payors
Prepared 3
Confidential and Proprietary – Elevar
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Managed Care
Organizations
Self-Funded Employer
Groups
Payer Types
 Health insurance plans pay health care claims incurred by
members; employers typically share the burden of costs
 Government pays health care claims for specific
populations
 Employers pay health care claims incurred by employees
and their dependents
 Employers typically outsource administrative management
1
2

8. Premium revenue less medical and administrative costs yields
core health plan operating income
100
80
60
40
20
$100
Confidential and Proprietary – Elevar
8
0
$10
Operating Income
Elevar
by Prepared $10
Admin Expense
$80
Claims
(Medical Loss)
Premium
Health Plan Economics
Note:Medical Loss Ratio (MLR) = Claims/Premium

9. There are three overarching trends facing payers today
Trend Description
3
Prepared by Elevar
Confidential and Proprietary – Elevar
• Driven largely by an aging population and greater incidence of chronic
illnesses (~75-80% of total costs)
• Significant growth expected across all key cost components, led by home
health (7.2% CAGR: 2008-18)
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Significant
Focus
on Cost
Savings
Concerns
About
Irrelevance
Engaging
Members
(Current and
Future)
• Large employers are re-examining their role as the paternalistic payer:
• Caterpillar disintermediated the health plan and the PBM to contract
directly with Wal-Mart and Walgreens as the preferred retail partner for
drug purchase and distribution to manage its drug spend
• Tailored products to meet different consumer needs across different
segments
• New channels and formats to distribute the product and engage
patients to enhance compliance
• New provider transparency and decision-support tools
1
2

10. Today’s Topics:
Confidential and Proprietary – Elevar
10
Understanding
Health
Insurance
Understanding
Blue Cross Blue
Shield
Navigating
Enterprise
BCBS MA
Problem
Statements
Prepared by Elevar

11. The Blue Cross Blue Shield Association is MASSIVE, covering nearly
100 million members in the US (1 out of every 3 people) – (1/3)
Confidential and Proprietary – Elevar
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Humble
Beginnings
 Health plans did not exist before Elevar
the 1930s, when Blue Cross and
Blue Shield first originated as separate ‘startups’
 Blue Shield: Started by doctors to help teachers in Texas get
adequate coverage
by  Blue Prepared Cross: Started by hospitals in the Pacific NW for lumberjacks
and minors to pool together resources to get them coverage

12. The Blue Cross Blue Shield Association is MASSIVE, covering nearly
100 million members in the US (1 out of every 3 people) – (2/3)
Confidential and Proprietary – Elevar
12
BCBS
Evolution
Prepared by Elevar
 Grew over time and evolved separately
o State-by-state regulation led to state /region specific evolution
o Created different plans in different states
 Historically, most Blues plans were not-for-profits, though some Blues plans
have moved to a for-profit model
 Some states have combined the plans, while others remained separate
 The Blues “brand” does not necessarily have a defined meaning
o Each of the plans are related, but have little influence over one another
 Blue Cross Blue Shield Association work similarly to the University of
California system

13. The Blue Cross Blue Shield Association is MASSIVE, covering nearly
100 million members in the US (1 out of every 3 people) – (3/3)
Confidential and Proprietary – Elevar
13
Today
Prepared by Elevar
 The Blues System is comprised of:
o 37 independent and locally operated BCBS companies
o An overarching BCBS Association
 Provide healthcare coverage for nearly 100 million people — one-third
of all Americans — in all 50 states, DC and Puerto Rico.
 Over 96% of hospitals and 91% of providers contract directly with
the Blues
 Currently serve 85% of Fortune 100 companies and 76% of Fortune
500 companies
 The Blues have enrolled more than half of all U.S. federal workers,
retirees and their families

14. BCBS of Massachusetts is the 9th largest plan* out of 37 BCBS plans
Confidential and Proprietary – Elevar
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Top 20 Largest Blues Plans Membership
(‘10-’11 Data)
Prepared by Elevar
WellPoint, Inc. 40.0M
Health Care Services Corporation 12.4M
Blue Cross Blue Shield of Michigan 4.6M
Highmark, Inc. 4.1M
Independence Blue Cross 3.6M
Blue Cross and Blue Shield of Alabama 3.6M
Care First Blue Cross Blue Shield 3.3M
Blue Shield of California 3.1M
Blue Cross Blue Shield of Massachusetts 3.0M
Blue Cross and Blue Shield of Florida, Inc. 2.9M
Horizon Blue Cross Blue Shield 2.8M
Blue Cross and Blue Shield of N. Carolina 2,8M
BlueCross Blue Shield of Tennessee 2.5M
Blue Cross Blue Shield of Minnesota 2.4M
The Regence Group 2.2M
Wellmark, Inc. 1.8M
Premera, Inc. 1.6M
Blue Cross Blue Shield of Arizona 1.2M
Blue Cross Blue Shield of Louisiana 1.1M
Capital Blue Cross 1.0M
*Based on 2011 data

15. Today’s Topics:
Confidential and Proprietary – Elevar
15
Understanding
Health
Insurance
Understanding
Blue Cross Blue
Shield
Navigating
Enterprise
BCBS MA
Problem
Statements
Prepared by Elevar

16. The BIG Elevar takeaways about enterprise:
Confidential and Proprietary – Elevar
16
Takeaways
 If you want your startup to land a deal, you’ve got to become the solution to an
opportunity they are willing to finance
Prepared by Elevar
 These opportunities need to align to a charter initiative that will be backed and
supported by top leadership
 You DON’T simply sell a solution, plug it in and collect the check - too many political
factors are at play and you’ll never get it sold (or implemented)
 You must build a long-term relationship with an enterprise client and build alliances
over an extended period of time – if you are not ready to handle this, we suggest you
become a B2C company
 No decision is made by a single stakeholder in a large company, but the higher the
rank, the higher the likelihood of consensus if they approve
 Enterprise executives are usually very good people in a very complex political climate –
understanding their own challenges will go a LONG way in building the relationship
 Don’t worry if this sounds scary – that’s why Elevar is here – to help you!

17. Today’s Topics:
Confidential and Proprietary – Elevar
17
Understanding
Health
Insurance
Understanding
Blue Cross Blue
Shield
Navigating
Enterprise
BCBS MA
Problem
Statements
Prepared by Elevar

18. The Elevar Labs Boston program is broken into four components –
with the next phase being Enterprise Challenge
Prepared by Elevar
Program Components Details to date
Confidential and Proprietary – Elevar
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Elevar Labs: Boston
• Thursday, October 2, 2014
• 6:00 – 8:30 pm EST
• Friday, November 7, 2014
• 10:00 – 6:00 pm EST
• Friday, November 14, 2014
• 12:00 – 4:00 pm EST
Reverse Pitch Day
Semi Finalists
Day
LOI Day
Iteration Sessions
• November 17, 2014 – January 9, 2015
• Weekly (excluding vacation weeks)
• Six 20-30 minute phone calls per LOI team
Innovation Day
• January 2015 – TBD
A
B
Enterprise
Challenge
C
D
Focus of today’s conversation

19. Each startup team should align themselves to one of the problem
statements that were pitched during Reverse Pitch Day
1 • BCBSMA is interested in new health innovations that will create greater BCBSMA
Confidential and Proprietary – Elevar
Prepared by Elevar
• BCBSMA is interested in innovative ways to engage the ‘millennial generation’
• Traditionally, health plans have had limited success connecting with this segment and
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incentivizing them to become more proactive about their health insurance and
health/wellness options
• This is a segment that shows the greatest potential for long-term member retention and
growth
• What new tools and technologies would allow BCBSMA to become a more accessible and
open health plan with millennials?
Engaging Local
Communities
Presenter: Sarah Iselin
engagement with local communities (i.e. Boston, Worchester, etc.)
• In particular, BCBSMA is looking for innovative tools and technologies that can allow the
health plan to support local businesses and/or healthy communities, in a broad initiative
to showcase BCBSMA’s commitment to Massachusetts
• Parallels to health and wellness information, healthy food/locations tracking, and/or
community resources would be a plus, but is not required
Engaging Seniors and Baby
Boomers
Presenter: Sheila Buckley
3
Engaging the ‘Millennial
Generation’
Presenter: Linda Williams
2
• BCBSMA is interested in innovative ways to engage Baby Boomers / Seniors who have not
yet qualified for Medicare (i.e. the pre-65 age group)
• This is a group that will qualify for Medicare at age 65 and will face a decision to either buy
a BCBSMA plan or retain their current BCBSMA plan
• In addition, most of the technology geared to Seniors today are towards the children of
65+ and those engaged in caregiving. While BCBSMA is excited to see these technologies,
particular interest will be given to technologies aimed at the Seniors themselves
Problem to finalize

20. Prepared by Elevar