PALMETTO GBA 2010 ANNUAL REPORT

PA L M E T T O G B A 2 0 1 0 A N N UAL REPORT
12

In today’s tumultuous health care
environment, success takes resilience,
leadership, achievement and a neverending
dedication to improvement. We
see this admirable set of traits every day
at Palmetto GBA workstations, offices
and divisions.
While others hesitate, we are not
content to wait. We provide solutions
that set standards for others to follow.
Our service helps make health care
administration more effective and
efficient for beneficiaries. Our solutions
help us exceed our clients’ expectations.
Our challenges drive our successes.
We believe there’s no question of
success for Palmetto GBA in 2011.
Together, we will rise to meet challenges;
to overcome obstacles and to succeed
like never before.

table of contents
President’s Letter...................................... 3
Company Overview................................... 4
Rising to Meet Challenges..................... 5
Rising Accomplishments........................ 6
Rising to Provide Solutions.....................7
Rising Corporate Responsibility.........12
Rising to Meet Critical Needs..............13
Leadership.................................................. 17
• Q&A
• Board of Directors
• Corporate Officers
By the numbers........................................30
• Report of Independent Auditors
• Balance Sheets
• Statements of Operations
• Statements of Changes
in Member’s Equity
• Statements of Cash Flows
• Notes to Financial Statements

PRESIDENT’S LET TER
3
Palmetto GBA’s annual report offers us
the opportunity to review and celebrate
our company-wide efforts for the past
year. This year’s report details hard-won
triumphs amid not just difficult economic
circumstances, but some of the
most turbulent times in our industry’s
existence.
In 2010, we saw the health care reform
debate become even more contentious.
Accessibility to health care and the right
to guaranteed medical insurance are
being examined on a greater level today
than ever before, but this we already
know: effective health care administration
is one of the most fundamental
tasks our nation must master in the 21st
century. Fortunately, our position is one
that will allow us to positively impact our
nation’s ability to meet this and other
difficult challenges.
Our job, already vital to the countless
beneficiaries we serve every day, has
become even more critical.
The coming years will present unforeseen
and unexpected obstacles. We
will have the chance to turn these
challenges into learning opportunities
that will enhance our ability to solve
problems. If we apply lessons learned in
more difficult times, we can continue to
realize our demanding goals.
Our organization has a foundation built
for success. Our proven track record
demonstrates our ability to face challenges
head-on, without hesitation
and with fortitude that sustains our
hard-won market position. Our thoughtful
innovations, ongoing exceptional
performance and attention to compliance
set us apart from our competitors.
Further, our workforce of motivated,
reliable Palmetto GBA associates brings
our corporate ideals to life each day.
As you enjoy this annual report, I hope
you share my pride. The following pages
are a reminder of our tremendous
resilience, cohesive strength and the
enormous significance of our shared
duty. The challenging times to come
will test our focus and commitment.
I believe we can and will rise to meet
these challenges in spite of an everchanging
marketplace.
Thank you for your persistent dedication.
I look forward to the accomplishments
we are sure to share in the
months ahead.
bruce w. hughes
President and COO

COMPANY OVERVIEW
4
Palmetto GBA is a leading provider
of technical, administrative and
contact-center services to the federal
government. Our primary business
is providing services to the Centers
for Medicare and Medicaid Services
(CMS), Medicare beneficiaries and
Medicare providers. Palmetto GBA is
one of only two Medicare contractors
with experience in all Medicare
business segments: Medicare Part
A, Medicare Part B, Durable Medical
Equipment and Regional Home Health
and Hospice. Palmetto GBA has
administered Medicare contracts for 45
years and currently serves 11.3 million
beneficiaries in all 50 states.
Palmetto GBA is comprised of more
than 2,000 associates in Georgia, Ohio,
Illinois and South Carolina as well as
additional staff support throughout
various jurisdictions. In 2010, Palmetto
GBA processed more than 179 million
Medicare claims and paid more than
$59 billion in benefits. An undisputed
reputation and commitment to
operational excellence have resulted in
ever-increasing customer satisfaction,
product performance and efficiency.

CLAIMS PROCESSED (in millions) BENEFITS PAID (in billions) BENEFICIARIES SERVED (in millions)
200
$60
12
150
100
50
117
117
98
120
181
179
$50
$40
$30
$20
$10
$27
$30
$29
$36
$54
$59
10
8
6
4
2
10.2
9.4
8.3
9.5
10.9
11.3
0
2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010
$0
0
2005 2006 2007 2008 2009 2010

Medicare Integrity Program
J1 A/B MAC PART A/RHHI PART B PART B
(SC)
(OH-WV)
RRB
Palmetto GBA protects the Medicare
Trust Fund against fraud and waste
with safeguards that result in
significant savings for Medicare.
Through September 2010, our efforts
resulted in the following savings:
BI
MSP
MR
TOTAL
N/A
$ 453,063,728
$ 242,970,369
$ 696,034,097
$ 258,508
$ 257,766,935
$ 53,401,420
$ 311,426,863
N/A
$ 22,248,912
$ 16,479,180
$ 38,728,092
N/A
$ 46,995,872
$ 10,716,329
$ 57,712,201
$ 26,297
$ 5,811,530
$ 11,389,830
$ 17,227,657
BI BENEFITS INTEGRITY MSP MEDICARE SECONDARY PAYER MR MEDICAL REVIEW

RISING TO MEET CHALLENGES
5
In spite of turbulent change and ongoing evolution in the health care arena,
Palmetto GBA is focused on providing leadership. We provide customers with
performance, integrity, attention-to-detail and a quick response to their needs.
That our associates share these values enables us to successfully navigate
even in a competitive, ever-changing environment.
Rising Success in New
Contracting Environments
Section 911 of the Medicare Prescription
Drug, Improvement, and Modernization
Act of 2003 mandated that the Secretary
for Health and Human Services
replace the current contracting authority
to administer the Medicare Part A
and Part B Fee-for-Service programs
with the new Medicare Administrative
Contractor authority (www.cms.gov/
medicareContractingReform/).
Prior to Medicare Contractor Reform,
fiscal intermediaries processed
claims for Medicare Part A and Part B
for health care facilities while carriers
processed claims for Medicare Part
B services from physicians, and other
outpatient services.
In 2006, the Centers for Medicare and
Medicaid Services (CMS) began to
award Medicare Administrative
Contracts (A/B MAC) through competitive
procedures with fifteen regional
jurisdictions, replacing the previous
fiscal intermediaries and carriers.
Currently nine A/B MAC contracts have
been implemented and CMS intends
to implement four additional contracts
in 2011. In July 2010, CMS announced
its intent to consolidate these fifteen
jurisdictions into ten jurisdictions
through a phased, multi-year approach
(www.fbo.gov).
Palmetto GBA has been awarded two
jurisdictions — Jurisdiction 1 and
Jurisdiction 11 — in the new contracting
environment. Our long-term track
record of providing innovative, best
value business solutions to our
customers positions us for more
success in the next phase of A/B MAC
competitions.

RISING ACCOMPLISHMENTS
6
Growth, differentiation and sustainability are significant drivers in Palmetto GBA’s
strategic framework. We believe these priorities were significant contributors to a
landmark year in business opportunities in 2010.
Business Development
Accomplishments 2010
• Awarded the Jurisdiction 11 A/B
Medicare Administrative Contractor
(MAC) contract. Encompassing North
Carolina, South Carolina, Virginia, and
West Virginia, the projected claims
volume for this contract is more than
$495 million. With more than 47,000
physicians and nearly 400 hospitals
providing care to more than 3.6 million
Medicare beneficiaries, Jurisdiction
11 contract implementation will
be complete in June 2011.
• Partnered with Noridian Administrative
Services (NAS) to expand operations
of the Healthcare Administration
Association of America, LLC (HAAA)
in China. NAS created HAAA to serve
as the third party administrator (TPA)
for the government-run medical
insurance program in the Chinese
municipality of Xinxiang. The contract
is the first of its kind between an
international company and a Chinese
government agency for the Chinese
health care reform program.
• Won a task order to provide systems
testing service for the newly
developed National Level Repository
(NLR) system. The system provides
payment administration for incentive
payments to providers in compliance
with the Health Information
Technology for Economic and Clinical
Health (HITECH) regulation under
the Health Reform legislation.
• Awarded an expanded Customer
Service Support Center (CSSC)
contract with CMS through our General
Services Administration GSA Schedule
70 contract. The contract expansion
includes development of a system
to collect and process encounter
data transactions from the Medicare
Advantage plans. Also included is
a Third Party Administrator (TPA)
service to support and coordinate
drug discount billings and payments
between drug manufacturers and
Medicare Prescription Drug plans.
• Won and implemented the Customer
Service for Medicare Modernization
(CSMM) Help Desk contract.
Through the contract, Palmetto
GBA operates the CSMM Help Desk,
which provides technical support
for administration systems of the
Medicare Advantage and Prescription
Drug programs to Medicare
Advantage plans across the nation.
• Awarded support of HIPAA 5010
processing for Pinnacle Business
Solutions, Inc. Palmetto GBA provides
Electronic Data Interchange (EDI)
translation and routing services for
Pinnacle’s Medicare contracts.
• Awarded the South Carolina
Department of Health and Human
Services (SCDHHS) contract to
perform SC Medicaid Third Party
Liability services in partnership
with BlueCross BlueShield of South
Carolina’s (BCBSSC) Medicaid Division.

RISING TO PROVIDE SOLUTIONS
7
At Palmetto GBA, commitment to ongoing operational excellence has equal footing
with new business development initiatives. Our willingness to be accountable for
performance, provide innovative solutions and operate with a lean cost structure led
to many corporate accomplishments in 2010.
Operational Accomplishments 2010
• Exceeded $236 million in revenue
and $7 million in pre-tax net income
through December 2010.
• Began third contract year for
Jurisdiction 1 A/B MAC Operations.
Option Year 3 began January 25, 2011.
There are more than 77,000 physicians
and 500 hospitals providing care
to more than 5.1 million Medicare
beneficiaries in Jurisdiction 1.
• Achieved CMS accreditation of the
Secure Provider Internet Portal, Online
Provider Services (OPS). OPS provides
a CMS 3-Zone compliant environment
in which providers can check the
status of claims, review electronic
remits, lookup beneficiary eligibility
and review financial data.
As of April 22, 2011, OPS has
53,665 Registered Users,
representing 31,426 Providers.
• Transitioned the Wisconsin Physicians
Service (WPS) Part A providers in the
Jurisdiction 1 A/B MAC (J1) geographic
area to the J1 contract. The additional
providers and workload will increase
the Part A workload by approximately
20% and add an estimated $12 million
in annual revenue. We had the unique
distinction of being the first contractor
to perform this workload migration
for CMS and set the standard
process for future migrations.
• Completed the Round 1 Rebid for the
Medicare Durable Medical Equipment
Prosthetics, Orthotics and Supplies
(DMEPOS) Competitive Bidding
Program through our Competitive
Bidding Implementation Contractor
(CBIC) contract. The effort included
extensive education and outreach
to key stakeholders, the evaluation
of thousands of bids, and the award
of contracts to eligible bidders
to meet beneficiary demand.
• Completed the three-year
recertification of the Palmetto GBA
Systems Division for Capability
Maturity Model Integration Level 2.
• Earned Customer Operations Performance
Center, Inc. (COPC) certification
of our Part A provider contact center.
• Enjoyed success in Healthcare
Integrated General Ledger Accounting
System (HIGLAS) Transition Support
and HIGLAS Training Contracts.
We provided support to one HIGLAS
Workload Manual Merge Transition,
four HIGLAS Workload Merge
Transitions, four A/B MAC Workload
Transitions, and the inaugural
Wisconsin Physician’s Services
(WPS) Legacy HIGLAS Merge
Transition to the J1 contractor.
• Launched a series of creative antifraud
initiatives to address growing
Medicare program abuse. Palmetto
GBA developed a customized risk
score for both specific geographical
areas and specific providers.
The sophisticated risk scoring
methodology factors in a number of
data elements and helps identify and
focus resources on problem areas.

obbie cassel
Systems and Support

anja bouphasavanh
Finance and Accounting
12
conetta rogers
Finance and Accounting
kelly grahovac
J1 A/B MAC

kathy bounds
Medicare Integrity Program
lucas dantzler
National Supplier Clearinghouse

antonio burkett
Finance and Accounting

RISING CORPORATE RESPONSIBILIT Y
12
Palmetto GBA associates make a profound impact on their communities in many
ways. As part of our corporate philanthropic culture, we support and applaud their
efforts for both major initiatives and local projects. Palmetto GBA associates give
generously year after year of time, talent and gifts and 2010 brought giving to its
highest level in our company history.
American Heart Association’s
Start! Heart Walk
The American Heart Association (AHA)
is committed to “building better lives
free of heart disease and stroke.” AHA’s
premier fundraising event — the annual
Start! Heart Walk — brings together
co-workers, friends and family members
to fight this country’s No. 1 and 3 killers.
The Start! Heart Walk promotes hearthealthy
living and physical activity. In
2010, Palmetto GBA associates raised
more than $6,664 in donations and
walker sponsorships to support this
life-saving organization.
United Way
United Way is a nonprofit organization
whose vision is to build a stronger
America by mobilizing communities to
build stronger lives. In 2010, BlueCross
associates contributed a record-high
$2 million to the United Way campaign,
including Palmetto GBA associates who
contributed more than $175,000 to the
corporate total.
The March of Dimes
The March of Dimes (MOD) is the
leading nonprofit organization for
pregnancy and baby health. MOD strives
to improve infant health by preventing
birth defects, premature birth and infant
mortality. In 2010, Palmetto GBA associates
contributed to the $62,151 that
BlueCross raised for the 2010 March of
Dimes Walk America campaign.

RISING TO MEET CRITICAL NEEDS
13
Palmetto GBA associates give generously of their time, talents and hearts for a vast
number of local nonprofit organizations. It’s a profound level of support that reaches
deeply into areas of need and yields positive effects in countless lives.
Children’s Health and Well-Being
Angel Tree
Camp Burnt Gin
Camp Kemo
Court Appointed Special Advocate
(CASA)
Epworth Children’s Home
Firefighters 4 Kids Toy Drive
Heart Warming Tree
Marine Toys for Tots Foundation
National Association of Black
Accountants Scholarships
Palmetto Pals
Palmetto Place Children’s
Emergency Shelter
Sacks of Love
School Supply Drives
World Vision
Disease Prevention and Management
AIDS Benefit Foundation of SC
American Cancer Society – Relay for Life
American Red Cross
Hospice of Portsmouth
Huntington Disease Society of America
Juvenile Diabetes Research Foundation
Ronald McDonald House
Shepeard Community Blood Center
Health and Human Services
Adopt-A-Family
Adopt-A-Troop
Angels House
Brookland Baptist Church Soup Kitchen
Columbia Museum of Art
Dillon High School Haiti Earthquake
Water Campaign
Extreme Makeover: Home Edition
Families Helping Families
Franklin Furnace Flood Victims
Harvest Hope Food Bank
Killian Community Club
Lutheran Family Services
MLK Day of Service
Manna House
McKissick Museum
Mid-Ohio Food Bank
Northwest Ohio Tornado Relief Fund
Oliver Gospel Mission
Safe Homes of Augusta
Salvation Army Red Kettle Campaign
Scioto County Homeless Shelter
Sistercare
Wm. Jennings Bryan Dorn
VA Medical Center
Animal Protection
Canine Collective
Greyhound Pets of America
PAALS – Palmetto Animals Assisted
Life Services
Sierra’s Haven

artley boswell
Projects and Planning
rocio montalvo
National Supplier Clearinghouse
garrett black
Document Control

kevin gaid
Finance and Accounting

ick newton
Document Control
timothy bumford
National Supplier Clearinghouse

leadership
Unwavering vision and firm resolve steady
Palmetto GBA in even the most uncertain
times. A group of our leaders shared their
current thoughts on how values, resiliency
and innovation enable our organization and
associates to rise to meet challenges and
foster continued growth.

17
leadership
Jean Catalano.....................................................19
Elaine Garrick .....................................................21
Ann Archibald.....................................................23
Sharon Cook-McEwen....................................25
Sheri Thompson................................................ 27
Board of Directors............................................28
Corporate Officers...........................................29

jean catalano
Assistant Vice President, Competitive Bidding
Implementation Program Manager

19
Q: How do you think our key strategic
goals interface with our rapidly
changing industry
A: I think our key strategic goals are
the right ones both for our internal and
external environment. To stay competitive
and succeed, we must remain
financially sound and focus on growth in
new and current markets. We do both by
delivering high value business partnerships.
The competition will continue
to get tougher and being ready means
quickly adapting to rapidly changing
customer requirements. Having the
right people in the key positions sets
us apart. The associates of Palmetto
GBA – many of whom have been here 10
years or even 20 years – have expertise
that enables us to meet the needs of a
rapidly changing industry. Combine that
resource with a deep commitment to
core values and success follows.
Q: How are we prepared to rise
to meet our primary issues and
opportunities
A: Increasing competition itself is a
challenge and opportunity. To address
the challenge, we evaluate technology
solutions, adapt service and product
offerings, and actively respond to
customers. While it’s our responsibility
to do what our customers have asked of
us, we have the opportunity to do more.
The ability to anticipate and resolve
problems before they arise takes a
significant investment in training and
cultivating innovation throughout the
organization. We’re continually investing
in our infrastructure and human
resources while inspiring performance
and establishing a culture of responsiveness.
Our systems help us accomplish
our goals, so at the end of the day you’re
prepared to meet challenges head on.

elaine garrick
Vice President, Customer Service Strategies

2 1
Q: What represents Palmetto GBA as
a company How are we unique
A: We represent different things to different
people. To customers, we represent
the utmost quality and exceptional
service. To associates, we represent
stability. To the communities in which
we do business, we represent care and
concern. That cultivation of relationships
with associates, customers and
communities sets us apart.
Q: How can we sustain growth and
ensure exceptional performance
A: Strategy. We’ve enjoyed a reputation
of being the go-to industry contractor
for a very long time. We must reinforce
this position in our customers’ eyes.
They must continue to rely on us for
innovative solutions. That means staying
plugged in to potential opportunities
and strategically aligned with effective
partnerships that yield opportunity.
Our performance is critical. Exceptional
performance does not occur by happenstance.
It’s achieved through an
organized, systematic action plan that
benchmarks and evaluates progress
each step of the way. And you have to
put the right resources behind that plan,
and ultimately hold yourselves accountable
to ensure your plan is working.

ann archibald
Vice President and Compliance Officer

23
Q: Our core values are Communication,
Responsibility, Integrity, Service,
People, Innovation and Quality. What
makes these values so important
A: These values represent what we
believe in and what we stand for as a
company. While they are the foundation
on which we have always operated, we
felt it essential to develop a structured
ethics program in 1997: Our Values.
Our Values states our commitment to
laws, regulations and policies as well
as outlines expectations and behaviors
all associates are expected to follow.
Our Values is a key element of our
compliance program and embodies our
philosophy for conducting business. The
program has been widely successful
because the people of Palmetto GBA
have embraced it as a part of our culture
and they believe that it is an imperative
part of our success.
Q: How do we embrace these values in
all we do
A: They’re evident in everything we do.
We refuse to compromise our integrity
and have a compliance program to
safeguard against it. A key component
of that program is our associates.
They share their concerns and trust
we’ll approach them with the utmost
priority to reach resolution. That speaks
volumes to how well a compliance
program works.

sharon cook-mcewen
Assistant Vice President, Part B Operations

25
Q: How do we demonstrate resiliency
in the midst of an extremely complex
industry
A: We foster the ability to adapt and
innovate even in the face of heavy challenges.
Our robust Quality Management
System supports ongoing evaluation of
our performance against our customer’s
needs and standards. One key component
of our resiliency is the longevity
of our associates. Their commitment
benefits both the company and the
beneficiaries we serve.
Q: As we ready ourselves for the
future, what challenges lie ahead
A: We will continue to be challenged
by the ongoing national debate about
health care funding and delivery. As we
work toward solutions, we must remain
open and prepared to be part of shaping
solutions for changes yet to be defined.
It’s imperative that we listen to customers
and adjust to meet their changing
needs. In today’s market, we cannot
rely solely on our past performance
as an indicator of a business partner’s
credibility. We must continue to do
the fundamental things that made our
partnerships successful while continuing
to identify and implement new ideas.
Demonstrating agility, responsiveness,
and excellence will move us forward.

sheri thompson
Assistant Vice President, Part A Operations

27
Q: How does Palmetto GBA communicate,
educate and foster associates’
innovation
A: At Palmetto GBA, I think the employees
are the company’s concrete
foundation and we have to consider
and evaluate them to tap into their true
motivations and desires. If a company
wants to reach its greatest potential, it
must work toward improvement rather
than perfection. Innovation is not necessarily
perfection; it’s working toward
improvement. We demonstrate an
innovation-rich culture through a variety
of programs that reward star performers,
foster creative learning and provide
comprehensive training and evaluation.
Q: How is innovation working for
Palmetto GBA
A: Our culture nurtures positive innovative
thinking, period. It begins with each
associate but ultimately becomes a
shared experience. Our environment
allows associates to freely contribute
ideas, both individually and collectively
via work groups. That level of encouragement
gives associates freedom
to think deeply and effectively about
what they do in their job. To gauge
innovation’s role in our successes, we
consider key elements: Did we apply
this across multiple lines of business
Did we share the deployments Did we
actively promote team participation Did
the innovation save time and money The
answers to those questions tell us that
innovation is working at Palmetto GBA.

BOARD OF DIRECTORS
28
PICTURED LEFT TO RIGHT
Col. Robert E. Shields
Retired, Humana Military Healthcare Services (TRICARE)
Bruce W. Hughes
President, Government Programs Division,
BlueCross BlueShield of South Carolina
M. Edward Sellers
Chairman, Board of Directors,
BlueCross BlueShield of South Carolina
Lelia Wright
Retired, Blue Cross Blue Shield of Texas
David Pankau
Chairman, Board of Directors, Palmetto GBA, LLC and
President/CEO BlueCross BlueShield of South Carolina
Ilene H. Nagel
Russell Reynolds Associates, Managing Director
T. Jeffrey Littlefield
Vice President, PGBA, LLC

CORPORATE OFFICERS
29
TOP ROW
Ann Archibald
Vice President and
Compliance Officer
Mike Barlow
Vice President,
A/B MAC Jurisdiction 1
Project Manager
Rex Brown
Assistant Vice President,
Quality and Training
Neal Burkhead
Vice President,
Medicare Integrity Program
and Part A Operations
Bruce Hughes
President and Chief
Operating Officer
Joe Johnson
Assistant Vice President,
EDI Systems
Elaine Garrick
Vice President,
Customer Service Strategies
BOTTOM ROW
Dickie Butler
Vice President,
Systems and Support
Jean Catalano
Assistant Vice President,
Competitive Bidding
Implementation Program
Manager
Sharon Cook-McEwen
Assistant Vice President,
Part B Operations
DeDee Rowe
Secretary
Robin Spires
Vice President, Part B
Operations and Training
Sheri Thompson
Assistant Vice President,
Part A Operations
Joe Wright
Vice President,
and Chief Financial Officer
NOT PICTURED
Bob Leichtle
Treasurer

12
by the numbers
Report of Independent Auditors..........31
Audited Financial Statements
Balance Sheets.............................................32
Statements of Operations....................... 33
Statements of Changes
in Member’s Equity..................................... 33
Statements of Cash Flows....................... 34
Notes to Financial Statements.............. 36

3 1
Board of Directors
Palmetto GBA, LLC
We have audited the accompanying balance sheets of Palmetto GBA, LLC as of December 31,
2010 and 2009, and the related statements of operations, changes in member’s equity, and
cash flows for the years then ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the
United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Palmetto GBA, LLC at December 31, 2010 and 2009, and the results
of its operations and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States.
February 23, 2011

BAL ANCE SHEETS (IN T HOUS A ND S)
32
Year ended December 31,
2010 2009
Assets
Current assets:
Cash and cash equivalents $ 18,774 $ 23,886
Accounts receivable, net 35,241 25,231
Accounts receivable from affiliates 1,403 940
Accrued revenue 33,580 38,147
Prepaid expenses 1,561 1,354
Deferred income taxes 3,505 2,116
Total current assets 94,064 91,674
Long-term Assets:
Fixed assets, net of accumulated depreciation
of $27,005 and $25,347 in 2010 and 2009, respectively 4,458 4,228
Long-term investments 4,207 —
Investments in affiliates 6,123 2,073
Deferred income taxes 286 346
Total long-term assets 15,074 6,647
Total assets $ 109,138 $ 98,321
Liabilities and Member’s Equity
Current liabilities:
Accrued payroll, taxes and benefits $ 13,092 $ 14,918
Payable to parent 8,282 7,294
Other liabilities 23,449 17,044
Deferred income taxes 208 218
Total current liabilities 45,031 39,474
Long-term liabilities:
Deferred income taxes 68 —
Total long-term liabilities 68 —
Member’s equity:
Contributed capital 28,461 28,461
Retained earnings 5,452 30,386
Accumulated other comprehensive income 126 —
Total member’s equity 64,039 58,847
Total liabilities and member’s equity $ 109,138 $ 98,321
PALMETTO GBA, LLC
(a single-member, limited liability company owned
by BlueCross BlueShield of South Carolina)
The accompanying notes are an integral part of
these financial statements.

STATEMENTS OF OPERATIONS (IN T HOUS A ND S)
33
Year ended December 31,
2010 2009
Revenues
Total revenues $ 236,156 $ 246,890
Expenses
Total expenses 230,172 242,325
Gain from operations 5,984 4,565
Investment income 1,086 491
Income before income taxes 7,070 5,056
Provision for income taxes 2,004 863
Net Income $ 5,066 4,193
Discontinued operations (Note 8)
Pre-tax income from discontinued operations 476
Pre-tax gain on sale of discontinued operations 139
Income tax expense 193
Income from discontinued operations, net of income taxes 422
Net Income $ 4,615
STATEMENTS OF CHANGES IN MEMBER’S EQUIT Y (IN T HOUS A ND S)
Accumulated
Other
Contributed Retained Comprehensive
Capital Earnings Income Total
Balance January 1, 2009 $ 28,596 $ 25,771 $ — $ 54,367
Net income — 4,615 — 4,615
Contribution of capital (135) — — (135)
Balance December 31, 2009 28,461 30,386 — 58,847
Net income — 5,066 — 5,066
Change in unrealized gain
on securities classified as
available-for-sale — — 126 126
Balance December 31, 2010 $ 28,461 $ 35,452 $ 126 $ 64,039
PALMETTO GBA, LLC
(a single-member, limited liability company owned
by BlueCross BlueShield of South Carolina)
The accompanying notes are an integral part of
these financial statements.

STATEMENTS OF CASH FLOWS (IN T HOUS A ND S)
3 4
Year ended December 31,
2010 2009
Cash flows from operating activities
Net income $ 5,066 $ 4,193
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation 1,594 1,003
Amortization on bonds 4 —
Realized loss on investments 127 —
Equity in income of affiliate 950 837
Deferred income tax provision (1,339) 144
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable (10,010) 5,143
(Increase)/decrease in receivables from affiliates (463) 13,417
Decrease /(increase) in accrued revenue 4,567 (5,304)
Increase in prepaid expense (207) (366)
(Decrease)/increase in accrued payroll, taxes and benefits (1,826) 339
Increase/(decrease) in payable to parent 988 (1,555)
Increase/(decrease) in other liabilities 6,405 (2,312)
Net cash provided from operating activities 5,856 15,539
Cash flows from investing activities:
Capital contribution to affiliate (5,000) —
Fixed assets purchased (1,824) (815)
Investments sold - available-for-sale 956 —
Investments purchased - held-to-maturity (1,547) —
Investments purchased - available-for-sale (3,553) —
Net cash used in investing activities (10,968) (815)
Cash flows from financing activities:
Capital contribution from parent — (135)
Net (decrease) increase in cash
and cash equivalents from continuing operations (5,112) 14,589
PALMETTO GBA, LLC
(a single-member, limited liability company owned
by BlueCross BlueShield of South Carolina)
The accompanying notes are an integral part of
these financial statements.

STATEMENTS OF CASH FLOWS (CONTINUED) (IN T HOUS A ND S)
35
Year ended December 31,
2010 2009
Cash flows from discontinued operations
Income of discontinued operations $ — $ 422
Cash flows from operating activities of discontinued operations — 560
Net increase in cash and cash equivalents from discontinued operations — 982
Net (decrease) increase in cash and cash equivalents (5,112) 15,571
Cash and cash equivalents from continuing operations, beginning of year 23,886 7,458
Cash and cash equivalents of discontinued operations, beginning of year — 857
Cash and cash equivalents from continuing operations, end of year $ 18,774 $ 23,886
Supplemental disclosures of cash paid during the year for:
Income taxes $ 2,072 $ 1,321
PALMETTO GBA, LLC
(a single-member, limited liability company owned
by BlueCross BlueShield of South Carolina)
The accompanying notes are an integral part of
these financial statements.

NOTES TO FINANCIAL STATEMENTS
36
NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Palmetto GBA, LLC (the Company) is a single-member limited liability company organized on
January 1, 1998. The Company’s sole member is Blue Cross and Blue Shield of South Carolina
(BCBSSC). The Company is engaged in the business of providing Medicare Administrative
Contractor Services, Medicare Part A fiscal intermediary services and Medicare Part B
carrier services in various states. These services include health insurance claims processing
and payment, customer service for Medicare beneficiaries and health care providers, and
payment safeguard functions designed to detect and prevent fraud and abuse in the Medicare
program. The Company provides services to Medicare beneficiaries residing in various
states, Puerto Rico and the U.S. Virgin Islands. The Company’s major customer is the Centers
for Medicare and Medicaid Services (CMS), the federal agency with fiduciary responsibility for
the Medicare program.
In 2009, the Company was notified that it was the successful bidder on the CMS Jurisdiction
11 A/B MAC. This jurisdiction includes the states of North Carolina, South Carolina, Virginia
and West Virginia. Under this five year contract, Palmetto GBA would perform all the Medicare
Parts A and B administration for the jurisdiction. The contract also encompasses Regional
Home Health and Hospice Intermediary (RHHI) for 16 states. Although the award of this contract
was protested, the protest was resolved in the Company’s favor in 2010. This contract
will result in annual revenue of approximately $66,000,000 beginning in 2011.
The financial statements have been prepared in accordance with accounting principles
generally accepted in the United States (GAAP). The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Cash equivalents
Cash equivalents represent certificates of deposit that have maturities of less than
three months at date of purchase and money market fund investments. Market risk for
cash and cash equivalents is limited to any one institution when deposits exceed federally
insured limits.
Financial instruments
The Company holds certain financial instruments including cash and accounts receivable.
Management believes that the carrying values of financial instruments approximate fair value
as required by Financial Accounting Standards Board (FASB) rules.
Subsequent events
Subsequent events have been evaluated through February 23, 2011, which is the date the
financial statements were available to be issued. The Company received a capital call from
Health Administration Association of America, LLC (HAAA) in February of an amount up to
$6,000,000. On February 18, 2011, the Company made an initial payment towards this
obligation of $2,000,000.
Asset valuation allowances
The Company recorded an allowance for uncollectible receivables in the amount of $3,000
and $3,000 at December 31, 2010 and 2009, respectively.
Fixed assets
Fixed assets are stated at amortized cost. Depreciation on new assets purchased is computed
using the straight-line method over the estimated useful lives of the respective assets:
four to eight years for furniture and fixtures, three to five years for data processing equipment
and software, and four years for automobiles. Leasehold improvements are depreciated over
the lesser of the remaining lease term or estimated useful life of the asset. Depreciation on
used assets purchased is computed by using the straight-line method over the estimated
remaining useful lives at the time of purchase of the respective assets.
Significant accounting policies and the methods of applying those policies are
summarized below.

37
Investment in affiliate
The Company has a 25% interest in TriCenturion, Inc. that is accounted for using the equity
method. The Company’s proportionate share of earnings or losses of this affiliate are
reflected in income as earned and dividends or distributions are credited against investment
in affiliate when received. The Company received dividends of $500,000 and $1,000,000 at
December 31, 2010 and 2009, respectively.
Assets, liabilities and results of operations for TriCenturion, Inc. were as follows:
Year ended December 31,
2010 2009
(in thousands)
Assets $ 10,427 $ 11,299
Liabilities $ 4,121 $ 3,551
Net income $ 558 $ 700
In 2010, the Company acquired a 50% interest in HAAA that is accounted for using the
equity method. The Company’s proportionate share of earnings or losses of this affiliate
are reflected in income as earned. The Company has received no dividends or distributions
related to this investment.
Assets, liabilities and results of operations for HAAA were as follows:
Year ended December 31,
2010 2009
(in thousands)
Assets $ 8,846 $ —
Liabilities $ 5,633 $ —
Net income $ (4,176) $ —
Investments
Investments are comprised of common stocks, bonds and money market mutual funds.
These assets are accounted for in accordance with FASB guidance which requires that fixed
maturities are to be classified as either “held-to-maturity”, “available-for-sale”, or “trading”.
Management determines the appropriate classification of its fixed maturity securities at
the time of purchase and reevaluates such designation as of each balance sheet date. Fixed
maturity securities are classified as held-to-maturity when the Company has the positive
intent and ability to hold them to maturity. Held-to-maturity securities are stated at amortized
cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such
amortization as well as interest earned is included in investment income.
Revenue recognition policies
The Company recognizes revenues based upon allowable costs incurred which are
reimbursable under the terms of the following contracts:
• Medicare Part A Fiscal Intermediary subcontract between the Company and the Blue Cross
Blue Shield Association (BCBSA) (this includes the Regional Home Health Intermediary
subcontract)
• Medicare Part B Carrier Services contract between the Company and CMS
• Railroad Retirement Board Part B Carrier contract between the Company and the Railroad
Retirement Board
The Company recognizes revenue on the DDI System Access, CSSC and various other
contracts when services are performed and billable.
The Company recognizes revenue on the Jurisdiction 1 A/B MAC, Jurisdiction 11 A/B MAC,
Single Testing Contractor, CBIC, NSC MAC and Train the Trainer contracts on cost plus a fixed
fee basis. Award fees, if applicable, for these contracts are recognized based upon historical
performance or management estimates if no historical data is available.

38
Reclassifications
Certain 2009 amounts have been reclassified on the Balance Sheet and Statement of Cash
Flows in order for them to be comparable with the 2010 amounts. These reclassifications
resulted in no change to net income or equity.
Income taxes
The Company adopted the authoritative guidance on accounting for and disclosure of
uncertainty in tax positions on January 1, 2009, which required the Company to determine
whether a tax position of the Company is more likely than not to be sustained upon examination,
including resolution of any related appeals or litigation processes, based on the technical
merits of the position. For tax positions meeting the more likely than not threshold, the tax
amount recognized in the financial statements is the largest benefit that has a greater than
fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing
authority. The tax position determination did not have a material effect on the Company’s
financial statements.
New accounting matters
The Financial Accounting Standards Board (FASB) issues FASB ASC effective for financial
statements issued for interim and annual periods after September 15, 2009. The ASC is an
aggregation of previously issued authoritative U.S. generally accepted accounting principles
(GAAP) in one comprehensive set of guidance organized by subject area. In accordance with
the ASC, references to previously issued accounting standards have been replaced by ASC
references. Subsequent revisions to GAAP will be incorporated in the ASC through Accounting
Standards Updates (ASU).
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which
it operates. In the normal course of business, the Company is subject to examination by
federal and state jurisdictions, where applicable. As of December 31, 2010, the tax years
2007 forward remain subject to examination by the federal tax jurisdiction under the statute
of limitations.
If applicable, the Company accrues interest and penalties that may be assessed by the taxing
authorities on any underpayment of tax. As of December 31, 2010, the Company had not
accrued any interest and penalties related to income tax accruals.
Fair value measurements
The Company adopted the provision of Accounting Standards Codification (ASC) 820 effective
2009. ASC 820 establishes a framework for measuring the fair value of assets and liabilities
recognized in the financial statements in periods subsequent to initial recognition. The
adoption did not impact the Company’s results of operations, cash flows or financial position.

39
NOTE 2 FIXED ASSETS
Fixed assets consist of the following:
Year ended December 31,
2010 2009
(in thousands)
Leasehold improvements $ 439 $ 438
Equipment, furniture & fixtures 24,041 23,021
Software 6,962 6,095
Automobiles 21 21
31,463 29,575
Accumulated depreciation (27,005) (25,347)
$ 4,458 $ 4,228
Depreciation expense was $1,594,000 and $1,003,000 for the years ended December 31,
2010 and 2009, respectively.
NOTE 3 INVESTMENTS
Long-term investments consist of the following:
Gross Gross
Amortized Unrealized Unrealized Fair
December 31, 2010 Cost Or Cost Gains Losses Value
Held-to-maturity securities:
Corporate bonds $ 1,543,000 $ 15,000 $ 4,000 $ 1,554,000
Available-for-sale securities:
Common stocks 2,470,000 280,000 86,000 2,664,000
Total long-term investments $ 4,013,000 $ 295,000 $ 90,000 $ 4,218,000
The fair value of available-for-sale securities with unrealized losses was $715,000 and $0 at
December 31, 2010 and 2009, respectively. The Company monitors investment securities for
other than temporary declines in fair value. In determining whether a decline in fair value is
other than temporary, consideration is given to the extent of the decline, the length of time fair
value has been below cost, and other relevant factors including estimated future cash flows.
None of the unrealized losses at December 31, 2010, were considered other than temporary.
The amortized cost and estimated market values of held-to-maturity debt securities, by
contractual maturity, at December 31, 2010, are as follows:
Book Value
Market Value
Held-to-maturity securities:
Due in one year or less $ — $ —
Due in one year through five years 503,000 509,000
Due in five years through ten years 1,040,000 1,045,000
Due after ten years — —
Total held-to-maturity $ 1,543,000 $ 1,554,000
There were gross realized gains of $16,000 and $0 for the years ended December 31, 2010
and 2009, respectively, and there were gross realized losses of $143,000 and $0 for the
years ended December 31, 2010 and 2009, respectively, that were included in net investment
income. Gross unrealized holding gains and losses on securities classified as available-forsale
are reported in accumulated other comprehensive income in the accompanying balance
sheets. No cash or assets are pledged or restricted for any purpose.
For available-for-sale investments in an unrealized loss position at December 31, 2010, the
aggregate amount of unrealized loss that had been in an unrealized loss position for less
than twelve months was $86,000 and the aggregate estimated fair value was $715,000.
No investments had been held for more than twelve months.
For held-to-maturity investments in an unrealized loss position at December 31, 2010, the
aggregate amount of unrealized loss that had been in an unrealized loss position for less than
twelve months was $4,000 and the aggregate estimated fair value was $515,000. There were
no held-to-maturity investments that had been held more than twelve months.

4 0
Fair value measurements
The Company’s financial assets carried at fair value have been classified, for disclosure
purposes, based on a hierarchy defined by FASB. The hierarchy gives the highest ranking
to fair values determined using unadjusted quoted prices in active markets for identical
assets and liabilities (Level 1) and the lowest ranking to fair values determined using
methodologies and models with unobservable inputs (Level 3). The levels of the fair value
hierarchy are as follows:
Level 1 - Values are unadjusted quoted prices for identical assets and liabilities in active
markets accessible at the measurement date.
Level 2 – Inputs include quoted prices for similar assets or liabilities in active markets, quoted
prices from those willing to trade in markets that are not active, or other inputs that are
observable or can be corroborated by market data for the term of the instrument. Such inputs
include market interest rates and volatilities, spreads and yield curves.
Level 3 – Certain inputs are unobservable (supported by little or no market activity) and
significant to the fair value measurement. Unobservable inputs reflect the Company’s best
estimate of what hypothetical market participants would use to determine a transaction price
for the asset or liability at the reporting date.
Fair Value of assets and liabilities measured on a recurring basis at December 31, 2010,
are as follows:
December 31, 2010 Level 1 Level 2 Level 3 Total
Held-to-maturity securities:
Corporate bonds $ — $ 1,554,000 $ — $ 1,554,000
Available-for-sale securities:
Common stocks 2,664,000 — — 2,664,000
Total $ 2,664,000 $ 1,554,000 $ — $ 4,218,000
The Company measures certain assets at fair value on a nonrecurring basis. These assets are
recognized at fair value when they are deemed to be other-than-temporarily impaired. During
the year ended December 31, 2010, the Company did not record any other-than-temporary
impairments on those assets required to be measured at fair value on a nonrecurring basis.

NOTE 4 INCOME TAXES
41
The Company’s operations are included in the consolidated federal income tax return of
BCBSSC. Under a written tax-sharing agreement, BCBSSC allocates the tax provision to each
company within the consolidated group based upon the company’s proportionate share of the
consolidated federal income tax liability computed on a stand-alone basis, multiplied by the
total consolidated federal income tax return liability.
The Company had income tax payables to BCBSSC of $1,870,000 and $239,000 at
December 31, 2010 and 2009, respectively, which are included in net payables to the parent.
The Company made payments to BCBSSC for income taxes of $2,072,000 and $1,321,000
during the years ended December 31, 2010 and 2009, respectively.
The Company recognized a provision for income taxes as follows (in thousands):
Year ended December 31,
2010 2009
Deferred tax assets and liabilities are classified as current and long-term based on the
classification of the related asset or liability, as follows (in thousands):
Year ended December 31,
2010 2009
Deferred tax assets:
Current $ 3,505 $ 2,116
Long-term 286 346
3,791 2,462
Deferred tax liabilities:
Current 208 218
Long-term 68 —
276 218
Net deferred tax asset $ 3,515 $ 2,244
Current $ 3,343 $ 720
Deferred (1,339) 143
Provision for income taxes /
continuing operations 2,004 863
Provision for income taxes /
discontinued operations — 193
Total income taxes incurred $ 2,004 $ 1,056
Unrealized gains on investments credited directly to equity have been reduced by deferred
income tax expense of $68,000 for the year ended December 31, 2010.
The provision for income taxes differs from the amount computed by applying the federal
statutory tax rate of 35% to income before income taxes primarily due to changes in the
tax contingency reserve, investment in subsidiaries, the dividends received deduction, and
benefits derived from filing on a consolidated basis versus separate company basis. The
temporary differences that give rise to deferred tax assets and liabilities are primarily related
to accrued expenses, fixed assets, and prepaid expenses. There was no valuation allowance
at December 31, 2010 and 2009.

42
NOTE 5 RELATED PARTIES
The Company is a single-member limited liability company owned by BCBSSC. Certain offices,
other facilities and services are provided by BCBSSC pursuant to an administrative services
agreement. Expenses associated with the administrative services agreement allocated from
BCBSSC to the Company totaled $63,332,000 and $70,419,000 for the years ended December
31, 2010 and 2009, respectively. The Company paid $84,559,000 and $91,705,000
during the years ended December 31, 2010 and 2009, respectively, to BCBSSC for expenses
paid on behalf of the Company.
BCBSSC made capital contributions related to the job tax credit to the Company of $0 and
($135,000) during the years ended December 31, 2010 and 2009, respectively.
There are certain administrative services provided by the Company to BCBSSC and its
subsidiaries. The Company received $9,335,000 and $14,781,000 from various subsidiaries
for these services during the years ended December 31, 2010 and 2009, respectively.
NOTE 6 COMMITMENTS AND CONTINGENCIES
A financial guarantee has been issued by BCBSSC, which equals the Company’s estimated
annual net operating expenses multiplied by 8.33%, less current capitalization. This guarantee
is estimated to be $0 at December 31, 2010. BCBSSC has also executed an indemnification
agreement, pursuant to minimum reserve and other requirements established by the
Blue Cross and Blue Shield Association (“BCBSA”). BCBSSC is therefore liable to the Company
to the extent of its financial guarantee and to the BCBSA to the full extent of its assets for any
claims asserted against the BCBSA resulting from the contractual and financial obligations of
the Company arising out of its Medicare Part A subcontract with the BCBSA.
In consideration of the novation of the fiscal intermediary and carrier contracts from BCBSSC
to the Company, BCBSSC has issued a financial guarantee which equals 20 percent of the
administrative costs of the contracts contained in the Notice of Budget Approval, less current
capitalization. This guarantee is estimated to be $0 at December 31, 2010. The financial
guarantee agreement remains in effect until both the contracts and intermediary agreement
expire, are non-renewed or are terminated.
In addition, BCBSSC has executed a statutorily required financial guarantee of $75,000 on
behalf of the Company in order for the Company to obtain a Third Party Administrator’s license
pursuant to the South Carolina insurance laws.
The Company recorded an estimated contingent liability for potential repayments of costs
claimed on its contracts with CMS. The liability was $4,895,000 and $2,645,000 at
December 31, 2010 and 2009, respectively.
The Company is obligated for additional capital contributions of up to $726,000 and
$6,750,000 to its affiliates TriCenturion, Inc and HAAA, respectively.
The Company has entered into certain non-cancelable operating leases in excess of one year
as of December 31, 2010. The future minimum lease payments required under these leases
are as follows (in thousands):
Year
Amount
2011 $2,265
2012-2015 —
$2,265
Total rent expense was $3,523,000 and $7,243,000 during the years ended December
31, 2010 and 2009, respectively. The majority of the Company’s leases are guaranteed by
BCBSSC. The Company’s main facility was purchased by BCBSSC in December 2009.
In the ordinary course of business, there are various legal proceedings pending against the
Company. Management believes the aggregate liabilities, if any, arising from legal actions
would not have a material adverse effect on the financial position of the Company.

4 3
NOTE 7 EMPLOYEE BENEFIT PLANS
NOTE 8 DISCONTINUED OPERATIONS
The Company’s employees are part of the 401(k) plan sponsored by BCBSSC. Eligible
employees may defer up to 50% of their salary and the Company matched 50% of the first
6% deferred in 2010 and 2009. For employees hired after January 1, 2003, there is a 2-year
cliff-vesting schedule on the match contribution. For certain employees not covered by the
BCBSSC defined benefit pension plan, the Company makes a discretionary contribution to
the 401(k) plan which is 50% vested for employees with one year of service and fully vested
for employees with two years of service. Employees must be employed on the last day of the
year to be eligible for the discretionary contribution, unless terminated during the year due to
retirement (age 55 and 5 years of service), death or disability. The discretionary contribution
for 2010 and 2009 was 6% of salary.
The cost of providing the 401(k) contribution was $3,370,000 and $3,992,000 for the years
ended December 31, 2010 and 2009, respectively. The pension expense allocated to the
Company under the BCBSSC pension plan was $5,601,000 and $5,135,000 for the years
ended December 31, 2010 and 2009, respectively.
In 2009, the Company sold Q2 Administrators for $1,500,000 in net cash proceeds and
recorded a gain of $139,000 on the sale.
The following table reflects net revenue, pre-tax income from discontinued operations,
pre-tax gain on sale of discontinued operations and income taxes for 2009:
Year ended
December 31, 2009
Net Revenue $ 6,768
Pre-tax income from
discontinued operations 476
Pre-tax gain on sale of
discontinued operations 139
Income tax expense (193)
Income from discontinued
operations, net of income taxes $ 422

RISING TOGETHER
As we look beyond a successful 2010, we rise together to meet 2011.
Our unwavering commitment and sound strategic focus prepare us for
the challenges of an ever-changing marketplace and prime us for even
greater success in the coming year.
PO Box 100190
Columbia, SC 29202
palmettogba.com
BlueCross and BlueShield are registered marks of the Blue Cross and Blue Shield Association,
an association of independent Blue Cross and Blue Shield Plans.
The Palmetto GBA logo and Partners in Excellence are registered marks of Palmetto GBA, LLC.
COPC-2000® is a registered trademark of the Customer Operations Performance Center, Inc.