Restructuring and Separation Costs

Restructuring and separation costs are reported by the same name in the accompanying consolidated statements of operations.

IT Restructuring Plan

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 began the implementation of a plan to restructure our information technology department (the “IT Restructuring Plan”) in the third quarter of 2018. On February 4, 2019, we entered into a master services agreement with Infosys Limited pursuant to which Infosys will manage certain of our information technology infrastructure services including, among other things, our information technology operations, end-user services, and data centers.

Expected Costs

In addition to $9 million incurred in the last half of 2018, we expect to incur approximately $11 million for the IT Restructuring Plan in 2019. We expect such costs to consist primarily of one-time termination benefits and other costs in the Other segment. We expect the IT Restructuring Plan to be completed by the end of 2019.

Costs Incurred

We have incurred expenses under the IT Restructuring Plan as follows:



	Year Ended December 31, 2018
	One-Time Termination Benefits		Other Restructuring Costs		Total
	One-Time Termination Benefits		Consulting Fees		Total
	(In millions)
Other	$	7	$	2	$	9

Reconciliation of Liability

For those restructuring costs that require cash settlement (such as 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
	(In millions)
Accrued as of December 31, 2017	$	—		$	—		$	—
Charges	7			2			9
Cash payments	(2		)	(1		)	(3		)
Accrued as of December 31, 2018	$	5		$	1		$	6

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 approximately $234 million of costs associated with the 2017 Restructuring Plan in 2017. In the year ended December 31, 2018, we incurred an additional $37 million in such costs, primarily resulting from a write-off of costs associated with a terminated utilization and care management project that was inconsistent with the goals of the 2017 Restructuring Plan. We also recorded nominal amounts for one-time termination benefits, and true-ups of certain lease contract termination costs recorded in 2017. As of December 31, 2018, we had incurred $271 million in total costs under the 2017 Restructuring Plan. We completed 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 table presents 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.



	Year Ended December 31, 2018
	Separation Costs - Former Executives		One-Time Termination Benefits		Other Restructuring Costs							Total
	Separation Costs - Former Executives		One-Time Termination Benefits		Write-offs of Current and Long-lived Assets			Consulting Fees		Contract Termination Costs		Total
	(In millions)
Health Plans	$	—	$	—	$	(1	)	$	—	$	12	$	11
Other	—		5		20			1		—		26
	$	—	$	5	$	19		$	1	$	12	$	37



	Year Ended December 31, 2017
	Separation Costs - Former Executives		One-Time Termination Benefits		Other Restructuring Costs						Total
	Separation Costs - Former Executives		One-Time Termination Benefits		Write-offs of Long-lived Assets		Consulting Fees		Contract Termination Costs		Total
	(In millions)
Health Plans	$	—	$	33	$	16	$	—	$	24	$	73
Other	36		34		45		44		2		161
	$	36	$	67	$	61	$	44	$	26	$	234

As of December 31, 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
	Separation Costs - Former Executives		One-Time Termination Benefits		Write-offs of Current and Long-lived Assets		Consulting Fees		Contract Termination Costs		Total
	(In millions)
Health Plans	$	—	$	33	$	15	$	—	$	36	$	84
Other	36		39		65		45		2		187
	$	36	$	72	$	80	$	45	$	38	$	271

Reconciliation of Liability

For those restructuring and separation costs that require cash settlement (primarily separation costs not including equity incentives, termination benefits, consulting fees and contract termination costs), the following table presents a roll-forward of the accrued liability, which is reported primarily in “Accounts payable and accrued liabilities” in the accompanying consolidated balance sheets. Certain contract termination cost accruals are non-current, recorded in “Other long-term liabilities.”



	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		)	11			10
Charges	—			6			2			8
Cash payments	(2		)	(15		)	(31		)	(48		)
Accrued as of December 31, 2018	$	—		$	1		$	17		$	18