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Restructuring and Separation Costs | 9 Months Ended
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Sep. 30, 2018
Restructuring and Related Activities [Abstract] |
Restructuring and Separation Costs | Restructuring and Separation Costs Restructuring and separation costs are reported by the same name in the accompanying consolidated statements of operations. IT Restructuring Following the 2017 Restructuring Plan noted below, our new executive team has focused on a margin recovery plan that includes identification and implementation of various profit improvement initiatives. To that end, we have begun to implement a plan to restructure our information technology department (the IT Restructuring) in the third quarter of 2018. Expected Costs In addition to $3 million incurred in the third quarter of 2018, we expect to incur approximately $6 million for the IT Restructuring in the fourth quarter of 2018. We expect such costs to consist primarily of one-time termination benefits and other costs in the Other segment. We will update the total estimated costs for the IT Restructuring in our 2018 Annual Report on Form 10-K. Costs Incurred We have incurred expenses under the IT Restructuring as follows:
| Three and Nine Months Ended September 30, 2018
| One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
|  | Consulting Fees |  | Contract Termination Costs |
| (In millions)
Other | $ | 2 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 3 |
Reconciliation of Liability For those restructuring and separation costs that require cash settlement (one-time termination benefits and consulting fees), the following table presents a roll-forward of the accrued liability, which is reported in “Accounts payable and accrued liabilities” in the accompanying consolidated balance sheets.
| One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
Accrued as of December 31, 2017 | $ | — |  |  | $ | — |  |  | $ | — |
Charges | 2 |  |  | 1 |  |  | 3 |
Cash payments | — |  |  | — |  |  | — |
Accrued as of September 30, 2018 | $ | 2 |  |  | $ | 1 |  |  | $ | 3 |
2017 Restructuring Plan Following a management-initiated, broad operational assessment in early 2017, our board of directors approved, and we committed to, a comprehensive restructuring and profitability improvement plan in June 2017 (the 2017 Restructuring Plan). Key activities under this plan to date have included:
• | Streamlining of our organizational structure to eliminate redundant layers of management, consolidate regional support services, and other staff reductions to improve efficiency and the speed and quality of decision making;
• | Re-design of core operating processes such as provider payment, utilization management, quality monitoring and improvement, and information technology, to achieve more effective and cost-efficient outcomes;
• | Remediation of high-cost provider contracts and enhancement of high quality, cost-effective networks;
• | Restructuring, including selective exits, of direct delivery operations; and
• | Partnering with the lowest-cost, most effective vendors.
Costs Incurred In our 2017 Annual Report on Form 10-K, we reported that we had incurred substantially all of the costs associated with the 2017 Restructuring Plan in 2017, amounting to $234 million. In the nine months ended September 30, 2018, we incurred an additional $35 million in such costs, primarily as a result of our further evaluation and write-off of a utilization and care management project terminated because of its inconsistency with the goals of the 2017 Restructuring Plan. We also recorded nominal amounts for one-time termination benefits, true-ups of certain lease contract termination costs, and consulting fees recorded in 2017. As of September 30, 2018, we had incurred $269 million in total costs under the 2017 Restructuring Plan. We expect to complete all activities under the 2017 Restructuring Plan in 2018, with the exception of the cash settlement of lease termination liabilities. We expect to continue to settle those liabilities through 2025, unless the leases are terminated sooner. The following tables present the major types of such costs by segment. Current and long-lived assets include current and non-current capitalized project costs, and capitalized software determined to be unrecoverable.
| Three Months Ended September 30, 2018
| One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
|  | Write-offs of Current and Long-lived Assets |  | Consulting Fees |  | Contract Termination Costs |
| (In millions)
Health Plans | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |  |  | $ | 2 |
| $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |  |  | $ | 2 |
| Nine Months Ended September 30, 2018
| One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
|  | Write-offs of Current and Long-lived Assets |  | Consulting Fees |  | Contract Termination Costs |
| (In millions)
Health Plans | $ | — |  |  | $ | (1 | ) |  | $ | — |  |  | $ | 10 |  |  | $ | 9 |
Other | 5 |  |  | 20 |  |  | 1 |  |  | — |  |  | 26 |
| $ | 5 |  |  | $ | 19 |  |  | $ | 1 |  |  | $ | 10 |  |  | $ | 35 |
| Three Months Ended September 30, 2017
| Separation Costs - Former Executives |  | One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
|  |  | Write-offs of Current and Long-lived Assets |  | Consulting Fees |  | Contract Termination Costs |
| (In millions)
Health Plans | $ | — |  |  | $ | 27 |  |  | $ | 6 |  |  | $ | — |  |  | $ | — |  |  | $ | 33 |
Molina Medicaid Solutions | — |  |  | — |  |  | 8 |  |  | — |  |  | — |  |  | 8 |
Other | — |  |  | 23 |  |  | 35 |  |  | 16 |  |  | 3 |  |  | 77 |
| $ | — |  |  | $ | 50 |  |  | $ | 49 |  |  | $ | 16 |  |  | $ | 3 |  |  | $ | 118 |
| Nine Months Ended September 30, 2017
| Separation Costs - Former Executives |  | One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
|  |  | Write-offs of Current and Long-lived Assets |  | Consulting Fees |  | Contract Termination Costs |
| (In millions)
Health Plans | $ | — |  |  | $ | 27 |  |  | $ | 6 |  |  | $ | — |  |  | $ | — |  |  | $ | 33 |
Molina Medicaid Solutions | — |  |  | — |  |  | 8 |  |  | — |  |  | — |  |  | 8 |
Other | 35 |  |  | 23 |  |  | 35 |  |  | 24 |  |  | 3 |  |  | 120 |
| $ | 35 |  |  | $ | 50 |  |  | $ | 49 |  |  | $ | 24 |  |  | $ | 3 |  |  | $ | 161 |
As of September 30, 2018, we had incurred cumulative restructuring costs under the 2017 Restructuring Plan as follows:
| Separation Costs - Former Executives |  | One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
|  |  | Write-offs of Current and Long-lived Assets |  | Consulting Fees |  | Contract Termination Costs |
| (In millions)
Health Plans | $ | — |  |  | $ | 33 |  |  | $ | 15 |  |  | $ | — |  |  | $ | 34 |  |  | $ | 82 |
Molina Medicaid Solutions | — |  |  | — |  |  | 8 |  |  | — |  |  | — |  |  | 8 |
Other | 36 |  |  | 39 |  |  | 57 |  |  | 45 |  |  | 2 |  |  | 179 |
| $ | 36 |  |  | $ | 72 |  |  | $ | 80 |  |  | $ | 45 |  |  | $ | 36 |  |  | $ | 269 |
Reconciliation of Liability For those restructuring and separation costs that require cash settlement (primarily separation costs, one-time termination benefits, consulting fees and contract termination costs), the following table presents a roll-forward of the accrued liability, which is reported in “Accounts payable and accrued liabilities” in the accompanying consolidated balance sheets. The adjustments are due to true-ups of costs recorded in 2017.
| Separation Costs - Former Executives |  | One-Time Termination Benefits |  | Other Restructuring Costs |  | Total
| (In millions)
Accrued as of December 31, 2017 | $ | 2 |  |  | $ | 11 |  |  | $ | 35 |  |  | $ | 48 |
Adjustments | — |  |  | (1 | ) |  | 10 |  |  | 9 |
Charges | — |  |  | 6 |  |  | 2 |  |  | 8 |
Cash payments | (2 | ) |  | (15 | ) |  | (15 | ) |  | (32 | )
Accrued as of September 30, 2018 | $ | — |  |  | $ | 1 |  |  | $ | 32 |  |  | $ | 33 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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