Continuing the journey

2014 ANNUAL REPORT

Continuing the journey

2014 PGBA, LLC ANNUAL REPORT

Letter from the President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

PGBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

TRICARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Bureau of Prisons and Veterans Choice . . . . . . . . . . . . . . . 12

Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Technology and Innovation . . . . . . . . . . . . . . . . . . . . . . . . . .20

Honor Flight of South Carolina . . . . . . . . . . . . . . . . . . . . . . . 22

Charitable Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Community Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

2014 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

The PGBA journey began in 1981 . Every step of the way we have built our reputation on performance excellence . We strive every day to provide the highest level of service in all that we do . In 2014, we stayed true to this course and once again excelled in every area . Our overall success continues to be fueled by the determination and effort of the entire PGBA team .

As we supported all three TRICARE managed care support regions in 2014, we weren’t just processing claims or answering telephone calls . We were also providing our valued customers with exceptional service . Out of 1,370 performance opportunities in 2014, we met or exceeded standard for 1,364 or 99 .6 percent of the opportunities . It was a truly stellar performance .

PGBA fully understands the importance of diversification and growth . Our management team provides forward leadership to not only succeed in our current business, but to also expand and grow with new opportunities . This leadership strategy provides the framework for our future in an ever-changing health insurance environment . It also lays the path for our journey to continue .

Serving members of the armed services and their families in our daily jobs is our primary focus . In addition, we also have an impact on the communities where we live and work by supporting numerous worthwhile causes . We are extremely proud to participate in efforts that recognize those who served our country, such as the Honor Flight — a program that provides veterans an opportunity to travel to Washington, D .C . These heroes are the backbone of our great country, and it is our privilege to honor their service .

Our journey is far from over . Our plans have been solidified with yet another year of strong performance and excellent service in 2014 . As we move forward in 2015, our next destination will be driven by our commitment to excel and to deliver exceptional performance .

Sincerely,

Michael J. Skarupa President and Chief Operating Officer

Letter From the President

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PGBA

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Michael J. Gurrera Vice President, CFO and Contracting Officer

Angela D. Rowe Assistant Vice President, Senior Deputy General Counsel and Secretary

Headquartered in Florence, SC, PGBA employs more than 2,200 professionals in four locations across the state to serve more than 9 million beneficiaries . Throughout our history, PGBA has provided an array of administrative services specializing in high-volume claims processing, contact center operations and contract performance management services for government and private health care payers . With our technology and people, we deliver quality services that consistently surpass our customers’ expectations .

Our customers are prime contractors for the Department of Defense (DoD), Health Net Federal Services (HNFS), Humana Government Business and United Healthcare Military & Veterans . Also for HNFS, we provide claims processing and customer service support for Veterans Choice . In addition, we administer inmate health care claims processing for the Department of Justice’s Bureau of Prisons .

Tricare

PGBA is proud and privileged to have more than three decades of continuous experience supporting DoD health care programs, military members and their families . PGBA’s history documents a commitment to continuous improvement and exceptional performance .

As the subcontractor for claims processing and related administrative services for the three current TRICARE T3 contracts, PGBA employs a seasoned leadership team well versed in managing all aspects of TRICARE claims processing and related services .

In 2014, PGBA processed more than 55 million TRICARE claims nationwide for 5 .3 million distinct beneficiaries . These claims transactions were supported by nearly 1 .8 million active provider records maintained in the PGBA provider file . Our performance is the result of day-to-day focus on providing the highest quality of service to our customers while adhering to the rules and regulations of our industry .

Despite our proven success, we never stop looking for ways to improve . One innovative way we demonstrate this is through the PGBA web presence, www .myTRICARE .com . This site has the second-highest Google return for the search word “TRICARE,” following only the official www .TRICARE .mil site . With more than 570,000 registered members nationally — providers, beneficiaries and government agents — more than 7 .9 million www .myTRICARE .com transactions were completed in 2014 . That’s just one example of how we continue our journey of service and excellence .

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Kay L. Andrews Vice President, Operations

T. Jeffery Littlefield Vice President, Operations

Tricare

Providing exceptional service has always been a cornerstone for PGBA . In 2014, we continued to excel in performance in all operational areas . For example, we achieved the highest performance levels in our history for these key metrics:

• Electronic Claim Submission Rate: 89 percent — 27 percent increase since 2007• Auto Adjudication Rate: 73 percent — 15 percent increase since 2007• Customer Service Inquiry Rate: 8 percent — 27 percent reduction since 2007• Self-Service Transactions: 22 .9 million — 230 percent increase since 2007• Electronic Payment or Remittance Advice Utilization: 61 percent — 336 percent increase since 2007

Total North South West

Total Claims Processed 55,890,679 18,353,348 20,876,169 16,539,433

Claims Processed in 30 Days 55,463,627 18,217,102 20,750,604 16,374,793

Claims Processing Payment Accuracy 99 .86% 99 .93% 99 .89% 99 .79%

Percentage of Claims Processed in 30 Days 99 .2% 99 .3% 99 .4% 99 .0%

Total Electronic Claims Processed 47,115,324 15,381,136 18,609,131 13,026,620

Total Written Communication Processed 947,966 250,860 407,977 289,088

Correspondence Processed Within 15 Days 931,225 248,628 407,184 275,372

Total Calls Handled by PGBA Associates 3,505,448 1,150,226 1,210,374 1,114,512

Calls Answered Within 30 Seconds 3,476,877 1,155,123 1,195,860 1,125,894

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Jamie O. Watson Vice President, Operations

bureau of prisons and veterans

choice

PGBA has served as the sole Medical Claims Adjudication Services contractor for the Federal Bureau of Prisons (FBOP) since the program’s inception in 2008 . In that time, PGBA has grown with the program from supporting one correctional institution to 24 and having processed more than 200,000 medical claims . Our superb levels of performance in 2014 have supported the FBOP’s goals for ongoing prompt payment and Statements of Federal Financial Accounting Standards (SFFAS) compliance .

Total Claims Processed 87,484

Percentage of Clean Claims Processed within 4 Business Days 99 .28%

Percentage of Unclean Claims Processed within 7 Calendar Days 99 .75%

Total Good Faith Estimate Inquiries Completed 16,421

Percentage Good Faith Estimate Inquiries Completed within 3 Business Days 99 .93%

Total Telephone Calls Answered 336

Percentage of Telephone Calls Closed within 1 Business Day 100%

Total Callbacks Completed 26

Percentage of Callbacks Completed within 3 Business Days 100%

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Mark A. MacDougal Vice President, Operations

Jordan D. Evans Assistant Vice President, Operations

In August 2014, the Veterans Access, Choice and Accountability Act was signed into law, creating the Veterans Choice Program . This program allows veterans to seek care outside of the VA system to improve access to quality care .

We were selected by our longtime partner Health Net Federal Services to provide claims processing and customer service for its portion of the Veterans Choice contract . We are proud to offer our nation’s veterans the same outstanding quality and unmatched level of service we provide to our TRICARE customers .

Our customers rely on the financial stability we provide . A solid fiscal base, coupled with uncompromising financial responsibility, allowed us to continue to serve our customers in an unparalleled manner . The achievements throughout PGBA in 2014 would not have been possible without this financial strength and commitment . In 2014, PGBA Finance again processed transactions in record volumes, including:

• 933,450 recoupments, with 100 percent completed within 30 days .• 248,382 refunds, with 100 percent processed within one day .• 1,132,961 credit adjustments, with 100 percent finalized within 30 days .

And in 2014, PGBA increased the number of providers who accept both electronic payments and remittance advices to 36 .7 percent .

FINANCE

Allen R. Jones Assistant Vice President, Finance

TRICARE Benefits Paid by Contract

North Region $3 .3 Billion

South Region $4 .1 Billion

West Region $3 .4 Billion

Grand Total

PGBA Total Benefits Paid $10 .8 Billion

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QUALITY

PGBA successfully achieved our company-wide ISO certification for our Quality Management System (QMS) in 2014 . PGBA received several praises, was noted as having no non-conformances and two opportunities for improvement . Achievement of this certification was the result of months of hard work by the management team at all sites . Between November 2013 and October 2014, the leadership team and QMS team followed an aggressive timeline that included:

• Revising documents that define the QMS structure• Training management and associates• Reviewing all processes and related work instructions• Implementing ongoing document review processes• Conducting comprehensive internal ISO audits

This extraordinary work effort was successful due to the dedication and determination demonstrated by the entire management team at all levels and the associates who actively engaged in implementing the changes .

The value of ISO certification and our mature QMS structure is evident in the ongoing quality of service provided in all performance metrics .

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Myriam G. Alonso, Ph.D. Assistant Vice President, Operations Training & Development

COMPLIANCE

PGBA’s robust, comprehensive compliance program has a constant focus on process improvements and enhancements so that we may serve our nation’s military families with the highest ethical standards . Our compliance program incorporates the seven elements of an effective compliance program from the US Sentencing Guidelines and is designed using the CMS guide for Medicare Compliance programs . Each PGBA employee attends compliance training upon hire and every year thereafter to refresh them on the importance of compliance, using real-life examples and interactive discussion .

In 2014, our compliance team:

• Conducted 69 risk assessments• Responded to 82 direct contacts• Reviewed 1,088 Conflict of Interest forms• Conducted 25 Management Internal Control Reviews• Conducted 2,520 certifications• Averaged 1,413 participants per Quest Quiz employee education program

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Cindy Cooper Government Programs Compliance Officer

Katherine H. Norton Vice President, Compliance Officer

technology and

innovation

Looking for new and better ways to do business is a critical part of continuing our journey of excellence in quality and service at PGBA . Our focus on implementing innovative technologies demonstrates our commitment to industry leadership . The speed and accuracy with which claims are processed and our beneficiaries’ questions are answered is a result of our never-ending quest to find a better way to serve .

In addition to ISO 9001:2008 compliance, the PGBA IS area has maintained Capability Maturity Model Integrated (CMMI) Level 3 certification since 2010 . CMMI is an industry best practice model designed to institutionalize process improvement into an information technology area’s software development processes . The model is designed to improve schedule and budget predictability, improve time-to-market, increase productivity, reduce defects, increase return on investment, and reduce cost . Our commitment to achieve CMMI Level 3 and retain certification ensures our customers that PGBA IS processes follow industry best practice . Very few IS organizations are rigorous enough to meet the demands of CMMI Level 3 .

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Ron L. Rushton Vice President, Information Systems

Cynthia E. Connelly Assistant Vice President, Information Systems

HONOR FLIGHT OF

SOUTH CAROLINA

PGBA once again was privileged to be an integral part of the Honor Flight program . This program makes it possible for World War II veterans from South Carolina to visit the World War II memorial in Washington, D .C . They also enjoy a tour of D .C . and visits to the Korean, Vietnam and Iwo Jima memorials and monuments . The veterans are special guests at Arlington National Cemetery and observe the changing of the guard at the Tomb of the Unknown Soldier .

PGBA and InStil Health sponsored two Honor Flight trips in 2014 . These trips were at no cost to the veterans . 192 veterans were included on these flights, along with 67 volunteer guardians . It is with heartfelt thanks to those who have so bravely served our great country that PGBA continues to support the Honor Flight Program .

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charitable activities

One of the most rewarding parts of PGBA’s journey is seeing how committed our employees are to giving back to our communities . By giving our time and providing financial support, we do what we can to help those who are hungry, sick or in need . To do this out of concern for those who need our support, we are strengthening our communities .

In 2014, PGBA supported these organizations in the communities where we work and live:

Alzheimer’s AssociationAmerican Cancer SocietyAmerican Diabetes AssociationAmerican Heart AssociationAmerican Red CrossBelle W . Baruch FoundationBlue Star MothersBoys & Girls ClubsBrookgreen GardensCamp Pee Dee Pride Canine AngelsChildren’s Miracle Network HospitalChristian Community MinistriesCoastal Carolina University Educational Foundation Community Museum Society Family Justice Center of Georgetown County

Family Resource Center Fisher HouseFlorence Area Literacy CouncilFranklin G . Burroughs-Simon B . Chapin Art MuseumGrand Strand Down Syndrome SocietyHouse of Hope of the Pee DeeHumane SocietiesJuvenile Diabetes Research FoundationKids Chance of South CarolinaLighthouse Ministries, IncMake A Wish FoundationManna HouseMarch of DimesMcLeod Health FoundationMercy Medicine ClinicMyrtle Beach Military DaysNAACP

Pawley’s Island Festival of Music & ArtPee Dee Coalition Against Domestic & Sexual AssaultPillows for PatriotsRonald McDonald House of CharlestonSenior Citizens AssociationSouth Carolina Special OlympicsSt . Jude Children’s Research HospitalTeach My PeopleThe Alpha CenterThe Long Bay SymphonyThe Naomi Project, IncThe Salvation ArmyThe School Foundation of Florence Toys for TotsUnited WayWounded Warrior FoundationYMCA

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Community impact

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organizationssupported directly

by employeesin Surfside

organizationssupported directlyby employees inFlorence and Camden

Veterans sponsored to Washington, D.C.,through Honor Flight

athletes with Special Olympics of South Carolina supported

22,593

medical and dental patient visits sponsored through Mercy MedicineFree Clinic

2,700

items donated to Lighthouse Ministries

and Manna House

5,350greeting cards

donated toSt. Jude’sRanch forChildren

2,728 school supplies for kids

3,000More than

forBlue StarMothers

$2,156

raised by employeecontributions

$428,270

organizationssupported directly

by employeesin Surfside

organizationssupported directlyby employees inFlorence and Camden

Veterans sponsored to Washington, D.C.,through Honor Flight

athletes with Special Olympics of South Carolina supported

22,593

medical and dental patient visits sponsored through Mercy MedicineFree Clinic

2,700

items donated to Lighthouse Ministries

and Manna House

5,350greeting cards

donated toSt. Jude’sRanch forChildren

2,728 school supplies for kids

3,000More than

forBlue StarMothers

$2,156

raised by employeecontributions

$428,270

organizationssupported directly

by employeesin Surfside

organizationssupported directlyby employees inFlorence and Camden

Veterans sponsored to Washington, D.C.,through Honor Flight

athletes with Special Olympics of South Carolina supported

22,593

medical and dental patient visits sponsored through Mercy MedicineFree Clinic

2,700

items donated to Lighthouse Ministries

and Manna House

5,350greeting cards

donated toSt. Jude’sRanch forChildren

2,728 school supplies for kids

3,000More than

forBlue StarMothers

$2,156

raised by employeecontributions

$428,270

organizationssupported directly

by employeesin Surfside

organizationssupported directlyby employees inFlorence and Camden

Veterans sponsored to Washington, D.C.,through Honor Flight

athletes with Special Olympics of South Carolina supported

22,593

medical and dental patient visits sponsored through Mercy MedicineFree Clinic

2,700

items donated to Lighthouse Ministries

and Manna House

5,350greeting cards

donated toSt. Jude’sRanch forChildren

2,728 school supplies for kids

3,000More than

forBlue StarMothers

$2,156

raised by employeecontributions

$428,270

organizationssupported directly

by employeesin Surfside

organizationssupported directlyby employees inFlorence and Camden

Veterans sponsored to Washington, D.C.,through Honor Flight

athletes with Special Olympics of South Carolina supported

22,593

medical and dental patient visits sponsored through Mercy MedicineFree Clinic

2,700

items donated to Lighthouse Ministries

and Manna House

5,350greeting cards

donated toSt. Jude’sRanch forChildren

2,728 school supplies for kids

3,000More than

forBlue StarMothers

$2,156

raised by employeecontributions

$428,270

organizationssupported directly

by employeesin Surfside

organizationssupported directlyby employees inFlorence and Camden

Veterans sponsored to Washington, D.C.,through Honor Flight

athletes with Special Olympics of South Carolina supported

22,593

medical and dental patient visits sponsored through Mercy MedicineFree Clinic

2,700

items donated to Lighthouse Ministries

and Manna House

5,350greeting cards

donated toSt. Jude’sRanch forChildren

2,728 school supplies for kids

3,000More than

forBlue StarMothers

$2,156

raised by employeecontributions

$428,270

organizationssupported directly

by employeesin Surfside

organizationssupported directlyby employees inFlorence and Camden

Veterans sponsored to Washington, D.C.,through Honor Flight

athletes with Special Olympics of South Carolina supported

22,593

medical and dental patient visits sponsored through Mercy MedicineFree Clinic

2,700

items donated to Lighthouse Ministries

and Manna House

5,350greeting cards

donated toSt. Jude’sRanch forChildren

2,728 school supplies for kids

3,000More than

forBlue StarMothers

$2,156

raised by employeecontributions

$428,270raised by employeesfor human services

$370,264 raised by employees formilitary and veteran programs

$5,584

raised by employeesfor health and

medical research

$50,280

raised by employeesfor human services

$370,264 raised by employees formilitary and veteran programs

$5,584

raised by employeesfor health and

medical research

$50,280

raised by employeesfor human services

$370,264 raised by employees formilitary and veteran programs

$5,584

raised by employeesfor health and

medical research

$50,280

full boxes ofbooks donated toOperation Paperback30

1,611

pieces of socks,underwear and

t-shirts donated forMyrtle Beach Stand Down

full boxes ofbooks donated toOperation Paperback30

1,611

pieces of socks,underwear and

t-shirts donated forMyrtle Beach Stand Down

2014 Board of directors

Pictured (left to right): Robert W . Johnson, Michael J . Skarupa, William R . Horton, M . Edward Sellers, David S . Pankau (chairman), Joseph F . Sullivan, Bruce W . Hughes and Stephen K . Wiggins

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P.O. Box 4307 | Florence, SC 29502-4307