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Healthcare Horizons identified overpayments due to missed multiple procedure reductions caused byfragmented billing. When multiple surgical procedures are performed in the same operative session, it is industrystandard to allow the primary procedure at the full fee schedule rate and secondary procedures at a reduced rate(usually 50% of the full fee). These reductions are taken since the primary procedure payment accounts forpatient preparation and other services. Healthcare Horizons often finds that payers fail to implement systems tocombine procedures across claims when payments are processed on different claims for the same surgical case.Audit items 91, 93, and 95 were agreed as overpaid for a total of 1,100.62 due to fragmented billing by theproviders. As all potential errors were submitted in the sample selection, no additional claims were delivered toOptima for review.Optima Response: Agreed, feedback and refresher training has been provided to the responsible claimsprocessors.Healthcare Horizons’ Final Comment: Optima should initiate recovery on these claims. HealthcareHorizons will track the overpayment collections activity on behalf of the group.A single outpatient claim was billed and paid in error due to a subsequent same-day inpatient admission.Providers should generally not submit separate outpatient bills when a patient is subsequently admitted on thesame day since the inpatient case rate or per diem reimbursement covers all services for the day. Audit item 102was agreed as overpaid by 1,977.19 as all services rendered should have been included on the inpatient claim.The root cause of this overpayment can be attributed to a provider billing error.Optima Response: Agreed, for the one error received; feedback and refresher training has been providedto the responsible claims processor.Healthcare Horizons’ Final Comment: Optima should initiate recovery on this claim. Healthcare Horizonswill track the overpayment collection activity on behalf of the group.A minimal number of pre-admission testing claims were paid in error as the provider contract prohibitsseparate payment of this testing prior to a planned inpatient admission. It is common for hospital contracts tostate that pre-admission testing services (such as lab, X-ray, or EKG) are not paid separately from the subsequentinpatient reimbursement (based on case rate or per diem). Healthcare Horizons identified three claims paid inerror for this issue for a total of 1,072.09 (audit items 104, 106, and 108). Note that all potential errors weresubmitted in the sample selection.Optima Response: Agreed, Optima agrees with the assigning of these errors as pre-op was within the 10day window of the facility charges. We will continue to work with Operations in identifying possible systemenhancements that may address this issue and or lessen the likelihood of it occurring.City of Virginia Beach - Optima Claims Audit ReportSeptember 29, 2020 Page 6

Healthcare Horizons’ Final Comment: Optima should initiate recovery on these claims. HealthcareHorizons will track the overpayment collections activity on behalf of the group.Similar to prior audits, overpayments were identified for ambulatory surgical centers due to the incorrectpayment of secondary surgical procedures. For certain facilities, the Optima contract only allows payment for theprimary surgical procedure with all other lines denied for payment. Healthcare Horizons identified fifteenoverpayments totaling 48,696.51 for this issue (audit items 133, 134, 135, 136, 137, 138, 141, 142, 143, 144, 145,147, 148, 149, and 150). As this issue has been present in prior audits, we request that Optima address anyplanned root cause correction to prevent future overpayments.Optima Response: Agreed, for the claims identified Optima worked collaboratively with OperationsAugust 2020 to update policy to be more reflective of the current practices in the processing of theseclaims. Additionally, system enhancements were made to add a warning to the system notifying the claimsprocessors to refer to the specified policy that is applicable to this claim type and scenario. Education ofthis update has been provided to the Claims department in an effort to reinforce and remediate futureerrors of this type.Healthcare Horizons’ Final Comment: Optima should initiate recovery on these claims. HealthcareHorizons will track the overpayment collections activity on behalf of the group.City of Virginia Beach - Optima Claims Audit ReportSeptember 29, 2020 Page 7

Disputed FindingsHealthcare Horizons requests a second review for duplicate payments caused by providers billing underdifferent identification numbers. For audit items 4, 6, 16, 24, 26, 32, 44, 50, 60, 66, 72, and 74 (currently disputedat 2,761.56), the provider name on the duplicate combinations were equal, however, the provider number,vendor number, and/or tax identification numbers were not equal. In each instance, Optima disagreed with anerror as the system did not flag the claims as duplicates due to different identification numbers. We request asecond review on these claims as they are likely recoverable on behalf of the group. In addition, Optima maychoose to utilize these examples in order to modify its duplicate logic.Optima Response: Optima disagrees with the assigning of these errors. Optima Health agrees the claimsare recoverable, but does not agree with assigning this as an error, due to it being a provider billing error.Optima‘s position is that these amounts are recoverable and will wait on direction from the group beforeproceeding with recovery efforts.Healthcare Horizons’ Final Comment: We appreciate the updated response from Optima in that theclaims are recoverable. As such, we will update all applicable charts to reflect these dollars as recoverableon behalf of the group. We recommend that the group instruct Optima to recover these overpayments asthere will be no adverse impact to its members.Healthcare Horizons requests a second review for duplicate payments processed on both medical and mentalhealth systems. For audit items 22, 42, 58, and 70 currently disputed at 1,502.22, Optima responded that theclaims were processed on different systems (medical and mental health), therefore, no duplicate claim edits wereapplicable. We request a second review on these claims as they are likely recoverable on behalf of the group. Inaddition, Optima may choose to utilize these examples in order capture duplicate payments across these claimsprocessing systems.Optima Response: Optima disagrees with the assigning of these errors however Optima agrees the claimsare recoverable. Due to existing restraints within the system the claims did not flag as duplicates,therefore the claims processor followed normal policies and procedures. Shared Services will work withOperations in reviewing claim edits and will make recommendations for system enhancements, and orrevisions to manual procedures to lessen the likelihood of these scenarios from occurring.Healthcare Horizons’ Final Comment: We appreciate the updated response from Optima in that theclaims are recoverable. As such, we will update all applicable charts to reflect these dollars as recoverableon behalf of the group. We recommend that the group instruct Optima to recover these overpayments asthere will be no adverse impact to its members.City of Virginia Beach - Optima Claims Audit ReportSeptember 29, 2020 Page 8

Healthcare Horizons requests clarification on the physician evaluations submitted during the surgery globalperiod. For many surgical procedures, the professional fee is inclusive of any visits that occur between one dayprior to the surgery and up to 90 days after the surgery for follow-ups. For audit items 114, 116, 118, 120, and 122currently disputed at 857.46, Optima responded that “there is one day of preoperative care, so the global periodstarts the day prior to the surgery.” As the evaluation and management examples provided by HealthcareHorizons were all on the day prior to surgery, our impression is that these claims are recoverable. Note that thisissue has resulted in agreed overpayments in prior audits.Optima Response: Optima disagrees with the assigning of these errors. At the time of the audit, nosurgical claims were on file, identifying services were global. Optima does agree these claims are nowrecoverable. Shared Services will evaluate current policies to determine if efforts can be made from aprocessing perspective to mitigate these scenarios. Once we receive approval from Virginia Beach, we willforward the recommended claims for review and recovery.Healthcare Horizons’ Final Comment: We appreciate the updated response from Optima in that theclaims are recoverable. As such, we will update all applicable charts to reflect these dollars as recoverableon behalf of the group. We recommend that the group instruct Optima to recover these overpayments asthere will be no adverse impact to its members.Healthcare Horizons identified out-of-network claims not limited to the Allowable Charge limitation as outlinedin the plan document. Regarding the Allowable Charge limit for out-of-network claims, the Benefit InformationGuide states the following:Doctors, hospitals, and other healthcare professionals who do not have a signed agreement withOptima Health are considered non-Plan, or out-of-network providers. Typically, Plan membersenrolled in a POSA or POS plan have out-of-network benefits. When they receive covered servicesfrom out-of-network providers, Optima Health will pay a set percentage, or an allowable charge,of the amount paid to in-network providers for the same service. The member will pay the rest. Ifthe out-of-network provider charges more than what Optima Health pays, the provider may billyou, the member, for the difference between the two amounts.When You use Out-of-Network benefits from Non-Plan Providers the Allowable Charge may be anegotiated rate; or if there is no negotiated rate the Allowable Charge is Optima’s In-Networkcontracted rate for the same service performed by the same type of Provider or the Provider’sactual charge for the service, whichever is less.Medically Necessary Covered Services provided by a Non-Plan Provider during an authorizedAdmission to a Plan Facility, will be covered under In-Network Benefits. Emergency Care You getCity of Virginia Beach - Optima Claims Audit ReportSeptember 29, 2020 Page 9

Out-of-Network from a Non-Plan Provider will be covered at the In-Network Copayment orCoinsurance level. Cost Sharing amounts You pay out of pocket for Out-of-Network EmergencyCare will accumulate toward Your Plan’s In-Network Deductible and Maximum Out-of-Pocketamounts. However, you may have to pay the difference between what the Non-Plan Providercharges and the Plan’s Allowable Charge in addition to your in-network copayment, coinsuranceand deductible amounts. Participants should notify Optima immediately if a balance bill isreceived.All other Covered Services You receive from Non-Plan Providers will be Covered under Out ofNetwork Benefits. However, You may have to pay the difference between what the Non-PlanProvider charges and the Plan’s Allowable Charge in addition to Your Out-of-NetworkCopayment, Coinsurance and Deductible amounts. When You use an Out-of-Network Provider,the Allowable Charge is the lesser of the usual and customary rate for the service as determinedby the Plan. Amounts You pay as a result of balance billing will not accumulate toward anyDeductible and Maximum Out-of-Pocket amounts.In testing claims for this issue, Healthcare Horizons selected a number of out-of-network claims allowed at fullbilled charges and requested that Optima address the Allowable Charge limitation described above. For eachclaim presented in the PHCS Pricing and Out-of-Network Allowable Charge categories, Optima stated thatpayment at full billed charges was appropriate based on the following rationale: PHCS priced at billed (100%) – We request clarification from Optima on claims with PHCS pricing returnedat 100%. Specifically, is this indicative of no available PHCS contract and unsuccessful fee negotiation? Wesuggest plan intent clarification for the application of Allowable Charge when PHCS returns 100% of billedpricing (audit items 156, 157, 159, and 160).Optima Response: Optima disagrees with the assigning of these as errors. According to the plans SPD :When You use Out-of-Network benefits from Non-Plan Providers the Allowable Charge may be anegotiated rate; or if there is no negotiated rate the Allowable Charge is Optima’s In-Network contractedrate for the same service performed by the same type of Provider or the Provider’s actual charge for theservice, whichever is less.When the claim is repriced, PHCS sends Optima the allowable fees. PHCS is an extended network for theCity of Virginia Beach and all claims requiring repricing have been reimbursed per PHCS’s agreement, asfurther supported by the plans benefit documents PHCS is an extension of our in-network providers.Healthcare Horizons’ Final Comment: We recommend further clarification of plan intent for this scenarioas PHCS did not return a usable allowable fee on these claims – full billed charge was allowed in eachinstance.City of Virginia Beach - Optima Claims Audit ReportSeptember 29, 2020 Page 10

Fee negotiation unsuccessful – Based on our interpretation of the Allowable Charge limitation, if feenegotiation is unsuccessful, the paid amount should be limited to typical reimbursement for in-networkproviders for the same service. We suggest plan intent clarification for the application of AllowableCharge when fee negotiation is unsuccessful (audit items 158, 172, 173, 174, and 177).Optima Response: For Audit 158 Optima disagrees with the assigning of this error. The claim was notrepriced, cost share would be limited to the member’s in-network benefit level and processing using 100%of charges, balance billing will not apply.For Audit 172 Optima disagrees with the assigning of this error. The claim was processed at charges per anappeals decision at the request of the member. Per the plans documents the member contacted the HealthPlan to notify of balance billing where directives were then given to the Claims Department to reprocessthe claims accordingly relieving the member of additional cost not associated with their normal cost share.For Audit 173,174, and 177 Optima disagrees with the assigning of these errors. Per the SPD MedicallyNecessary Covered Services provided by a Non-Plan Provider during an Emergency at a Plan Facility, orduring an authorized Admission to a Plan Facility, will be covered under In-Network benefits. Per claimsprocessing guidelines Non-Par Anesthesia Physicians performing services in a PAR facility or Emergentservices in a Non-Par facility are processed at the in-network benefit level and members are not subject tobalance billing.Healthcare Horizons’ Final Comment: Plan intent verification is required for audit items 158, 173, 174,and 177 as our interpretation of the plan document does indicate that member balance billing isapplicable. Based on the member appeal and subsequent decision by Optima, we are removing thedisputed finding for audit item 172 as the plan document does appear to grant this flexibility. Authorized for in-network benefit – Our understanding is that the Allowable Charge limitation still applieswhen an in-network benefit exception is granted for out-of-network providers. We suggest plan intentclarification for the application of Allowable Charge when in-network benefit exceptions are granted(audit items 175, 176, and 178).Optima Response: Optima disagrees with the assigning of these errors. For audits 176 & 178 at the timethe services were authorized, per the Clinical Department, under coverage rules pertaining to themember’s participation in a clinical trial. Coverage includes participation in the approved clinical trial andcoverage for routine patient costs for items and services furnished in connection with participation in theclinical trial therefor claims processing procedures are applied at the in network benefit level.Healthcare Horizons’ Final Comment: Plan intent verification is required for audit items 176 and 178 asthere is no exception to the out-of-network allowable charge for clinical trials noted in the plandocument.City of Virginia Beach - Optima Claims Audit ReportSeptember 29, 2020 Page 11

Emergent claim – The Allowable Charge language specifically includes emergency services. We suggestplan intent clarification for the application of Allowable Charge when emergency services are involved(audit items 169).Optima Response: Optima disagrees with the assigning of this error. This error type was assigned in the2019 audit and was removed subsequent to clarification from the group. As of 4/2019, Optima receivedclarification from the group and documents were updated effective 1.1.19 to reflect the group’s intent.Please refer to the below language:ALLOWABLE CHARGEMedically Necessary Covered Services provided by a Non-Plan Provider during an authorized Admission toa Plan Facility, will be covered under In-Network Benefits. Emergency Care You get Out-of-Network from aNon-Plan Provider will be covered at the In-Network Copayment or Coinsurance level. Cost sharingamounts you pay out of pocket for Out-of-Network Emergency Care will accumulate toward Your Plan’s InNetwork Deductible and Maximum Out-of-Pocket amounts. However, you may have to pay the differencebetween what the Non-Plan Provider charges and the Plan’s Allowable Charge in addition to your innetwork copayment, coinsurance and deductible amounts. Participants should notify Optima immediatelyif a balance bill is received.All other Covered Services you receive from Non-Plan Providers will be covered under Out of NetworkBenefits. However, you may have to pay the difference between what the Non-Plan Provider charges andthe Plan’s Allowable Charge in addition to Your Out-of-Network Copayment, Coinsurance and Deductibleamounts. When you use an Out-of-Network Provider, the Allowable Charge is the lesser of the usual andcustomary rate for the service as determined by the Plan.Healthcare Horizons’ Final Comment: Plan intent clarification is required as the language above providedby Optima supports an out-of-network allowable charge limit

Healthcare Horizons Consulting Group, Inc. 2220 Sutherland Avenue, Knoxville, TN 37919 (800)