ECLARATION OF LAURIE A, BRUBAKER Pursuant to and in accordance with 28 U.S.C. § 1746, Thereby declare the following: 1, My name is Laurie A. Brubaker and Iam the Chairman of the Board of Directors and the President of Aetna Better Health Inc., which does business as Aetna Better Health of Mlinois (“Aetna Better Health”). More broadly, I am also the Chief Executive Officer of the ‘Actna Medicaid business unit. 2. [am authorized to submit this Declaration by virtue of my above-described positions at Aetna Better Health 3. Tam providing this Declaration to supplement and update the previous affidavit and previous dectaration of Debra Bacon, dated April 18, 2017 and May 22, 2017, respectively, to reflect premium activity and other developments since then BACKGROUND ON AETNA BETTER HEALTH 4, Aetna Better Health is health maintenance organization operating pursuant 0 & Certificate of Authority issued by the Illinois Department of Insurance on March 22, 2011. As a Medicaid managed-care organization (MCO), Aetna Better Health coordinates the care for spproximately 235,000 Medicaid beneficiaries in Illinois. Among other things, Aetna Beter Health provides managed healthcare services linking primary, specialty, long-term care, and ‘community services for individuals based on their needs, strengths, and expressed goals. 5. Aetna Better Health has 2 history of successful care coordination for Medicaid tnd Medicare beneficiaries across a range of programs. ‘Through these managed-care services, ‘Actna Better Health is commited to using innovative approaches to better coordinate the care of the beneficiaries that it serves. Page 1 of 1LAETNA BETTER HEALTH’S Co? wi PATE OF ILLINOI 6, Aetna Better Health has the following four contracts with the State of Iinois (the Stag"), each with the State's Department of Healthcare and Family Services (*HES”), whereby ‘Aetna Better Health has contracted to provide Medicaid managed-care services (and in one ‘contract, Medicare managed-care services as well) to Illinois Medicaid beneficiaries @ Gi Gi) ww State of Ilinais Contract between HPS and Aetna Better Health for Furnishing Health Services in an Integrated Care Program (ICP) by ‘8 Managed Care Organization, Contraet No, 2015-24004 (ABH) {kia 2010-24-005 (the “ICP Contract”); State of linois Contract between HFS and Aetna Better Health for Fumishing Health Services in a Family Health Program by a Managed Care Organization, Contract No. 2015-24-02 (ABH) fkla 2010-24-002 (the “EHP-ACA Contract”); State of Ilinois Contract between HFS and Aetna Better Health for Fumishing Managed Long Term Supports and Services by Managed Care Organization, Contract No. 2017-24-002-K (ABH) sand Contract between the United States Department of Health and Human Services Centers for Medicare & Medicaid Services, in Partnership with HFS and Aetna Better Heath, issued on August 10, 2016 (the “Duals Contract”), 7. Under these four contracts, Aetna Better Health coordinates healthcare and other services to meet the critical health needs of approximately 235,000 Illinois Medicaid beneficiaries in exchange for certain capitated monthly payments fom the State healtheate services include, for example, the following: @ «i Under the ICP Contract, Aeina Better Health provides ‘approximately 28,500 Medicaid beneficiaries with comprehensive ‘are coordination for aged, blind, and disabled (ABD) beneficiaries and for long-term care beneficiaries in connection with the Integrated Care Program (ICP); Under the FHP-ACA Contract, Aetna Better Health serves approximately 194,400 Medicaid beneficiaries that qualify under temporary financial assistance for pregnant women and families Page 2 of 11 “Thoseand/or Medicaid expansion for low-income Americans, in ‘connection with the Family Health PlanJAffordable Care’ Act (FHP-ACA) Program; (iil) Under the MLTS$ Contract, Aetna Better Health provides approximately 7,500 Medicaid’ beneficiaries with long-term care benefits for “dual eligible” individuals who either reside in an institutional long-term care seting or who are receiving home and ‘community-based serviees and who have opted out of the MMAL program (described below), in connection with the Managed Long ‘Team Supports and Services (MLTSS) program; and (Gy) Under the Duals Contract, Aetna Better Health provides approximately 6,900 Medicaid beneficiaries with comprehensive care coordination for adults 21 years of age and older who are cligible for both Medicaid and Medicare, in connestion with the Medieare-Medicaid Alignment Initiative (MMAD. 8, In adltion tothe Four contracts listed in Paragraph 6 above, Aetna Better Health also has a contract with the State (through its Department on Aging) pursuant to which Aetna [Better Health serves as one of the MCOs that supports the State's administration ofthe Colbert Implementation Plan under the Colbert Consent Decree that this Court entered in Colbert et a. v Rauner eta. (Case No. 07-cv-4737, N.D. IIL} (the “Colbert Contract,” and together with the ICP Contract, the FHP-ACA Contract, the MLTSS Contmet, and the Duals Contract, collectively the “State Contract). In exchange for its services under the Colbert Contract, Aetna Better Heath receives compensation from the State upon completion of certain tasks and benchmarks with respect to Colbert class members, AMOUNTS DUE UNDER THE STATE CONTRACTS 9. As of June 29, 2017, the State owes Acina Better Health approximately {$698 million under the State Contracts. The outstanding $698 milion includes (3) premium amounts that remain unpaid, in whole or in part, sinee October 2016, along with stalutory interest that has acerued thereon, and (b) estimated charges for beneficiary and rate diserepancies (greater than one year old) that have not yet been resolved, As compared tothe amount noted in Page 3 of 11Debra Bacon's declaration dated May 22, 2017, the $698 million tht i due as of Sune 29, 2017 reflects: (a) all payments that Actne Better Health has received from the State since May 22, 2017 under the State Contracts; (b) the approximate amounts that have now eome due under the State Contacts for June 2017; and () the approximately $13 million of unpaid statutory interest that has acerued as of June 29,2017 unde the State Contracts, The $698 milion amount due is necessatly approximate because the State no longer issues in a timely manner the monthly, contractually required “#20 Payment Files” that effetively serve as payment remitances and that ide the Medicaid beneficiaries and associated captated amounts that correspond to the payment being made. Without these “820 Payment Files,” Aetna Better Health must instead ‘estimate the amounts dv based on separate Medicaid enrollment files thatthe State des, in fact, continue to isue 10, Additional amounts beyond the $698 millon noted above will continue to accrue under the Stale Contacts each month after June 2017, with an addtional approximately $115 million coming due under those contracts each month, ‘That $115 milion doesnot include ‘he additional statutory interes that acerues atone percent per month for amounts that are over 90 days in areas. (The interest ha is accruing wil actuate, ofcourse, hase on the specific amount and aging of the arerage but based on the $3.1 billion thatthe State admits is curently inamears o all Medicsid MCOs, the State's statutory interest acerual wil soon reach $1 millon per day) Based on the State's recent payment pattern, Aetna Beiter Health estimates that it will be owed over $1 billion under the State Contracts by the end of October 2017 and that it wil be ‘owed neatly $1.3 billion bythe end of calendar year 2017 (not including statutory interest). The organizational and investor tolerance for Aetna Beiter Health's growing nancial rsk—note that the Actna enterprise must advance cash to Aetna Better Health to sustain operations—is waning Page 4 of 1aun will soon reach a breaking pont, Upon information and bei, at least two other Ins Medicaid MCOs hve slowed—or entiely stopped—payments to their providers, thereby negatively impacting Medica beneficiary acess to care. Although Aetna Better Health has not yet slowed or stopped its provider payments, Aetna Better Health andthe other Iinois Medieaid MCOs have reached a decision point, i ight of the unsustainable arearages, regarding whether they can tolerate this nonpayment and eontine to do business withthe Stat 11, In its briefs and at oral argument in these consolidated cases, the State has es to make some payments “on a regular busis to Medicaid repeatedly srosed that it co providers and MCOs.” Although it is tre that some Medicaid payments are being made to MCOs, two citi fet put these payments ito perspective: (a) the Sate has only pad Aetna Better Health approximately 20 percent of what has come dve under the Sate Contacts in calendar year 2017 (specifically, monthly payments of approximately $21.5 million versus the approximately $115 milion that comes due each month); and (b) the vast majority ofthe Himited amounts that are being pid to Acta Beter Health is 95 10 100 percent fined bythe federal government (oamely, the ACA-expansion rates under the FHP-ACA Contract and the Medicare portion under the Duals Contact) Prior to Otaber 2016, the State typically paid is obligations under the State Contacts in fill—albelt with roughly & 60-day to 90-day delay in its payment cycle—such that Aetna Better Health rarely endured a payment arrearage of eater than two to three months (or tughly $200 millon to $300 milion) ABTNA BETTER HEALTH’S FUTURE RELATIONSHIP WITHTHE STATE, 12, As Aetna Better Health has noted previously, ithe State fil to promptly py the ‘outstanding $698 milion, as wel as the additional amounts that continue to accrue under the State Contracts on a monthly basis, then Actna Better Health may no longer be in @ position to Page 5 of 11pay its healthcare providers the fll amount they ae owed ina timely manner. In tur, those providers may stop serving the Medivaid and Medicare populations discussed above, which include the approximately 235,000 linois Medicaid beneficiaries enrolled with Aetna Better Health, and more broadly the thee million Minos Mediesid beneficiaries statewide. This possibilty will increase in likelihood ifthe statements that Minis Comptroller Susina Mendoza ‘made in er Aptil 26, 2017 press release (eating to certain ofthe State's payments to Hinois “Medicaid MCOs) are tue—namely, tha ITIkis is Meeting good news made possible by the states best ‘month ofthe year for revenues: April, wien the state collects the largest share of taxes... Without a budget, there will not be enough money to pay healthcare providers as we enter the lean summer months... [T]his improved cash flow will not last asthe sate's backlog of bil re excepted [se] trie once again... Fa budget is not passed and signed into la, the ouook for. health care providers. and thase who do Business with the sate will only deteriorate. Delays in payments will increase, and the bill backlog... will grow. Without a budget, service providers should brace themselves and prepare for impact. 13, And this possibility will further increase in likelihood if the statements that Ms, “Mendoza made in her more recent press release on June 20, 2017 ae true—namely, that: ‘As of June 15, the MCOs, and their provider networks, are owed a ‘wal of more than $2.8 billion in overdue bills tthe Comptroller's, (Office, There is no question that these obligations should be paid ina more timely manner and thatthe payment delays caused by the state's financial condition negatively impact the state's healthcare infrastructure, . . , Even absent pressure fom additional court orders, we still foresee unmanageable financial strains, beginning in July, that will severely limit any payments in core areas not ‘under court mandate or consent decree that provide essential services to the state's most vulnerable individuals, including but rot limited to, long-term cate, hospice, and community care and supportive living centers serving the senior community, and ambulatory and other critical medical supplies for the poor and disabled... . [Our Office has made every effort to triage this crisis jn a way that has prioritized and enabled some hardship payments to the state's most vulnerable citizens and the programs that serve Page 6 of 11them while sil mesting core obligations. That ability will eventually cease, Tis erica tht the state's fiscal situation be ‘akessed immediately before the cash shortages this summer ‘ease firther deterioration [Because the Sate further acknowledged during the une 28, 2017 oral argument in these cases that August through October 2017 wil be particularly challenging months ftom a revenue perspective, Aetna Beter Health believes that he State's arrearage under the State Contacts will continue to increase 14, The Act enterprise has over 160 years of industry experience and over 30 yeas of experience in the Medicaid managed-care field, Based on that experience, Aetna Better Health believes thatthe Slate's Medicaid managel-care progam risks a “progressive collapse” in light ofthe unsustainable finan stain that the State has imposed upon its Medicaid MCOs, ‘As note above, the State as acknowledged thatthe next several months will likely be even tighter fom revenue, cash-flow, and payment perspective, Some Mlinois Medicaid MCOs already have slowed or ceased provider payments, and ifthe State's amarages to its MCOs continue to build is ifcult to imagine how this provider-payment problem will nt inevitably worsen and extend to other MCOs and providers. With exsing and future nonpayment to providers, the provider network tht is available to Hlinois Medicaid beneficiaries will ikely shrink, as providers mitigate ther financial csk ether by outight terminating their Mediaid contacts or by foezing their “panels” and refusing to render serves to existing or new Medicaid beneficiaries, This in turn, wil cascade to shift even more riskto the Meicaid MCOs that have not yet slowed or eased provider payments because, aver time, Medicaid beneficiaries will fend to enroll—cither through the annual open-enrollment process or through offeyele, benetciry-iniited requests to switch MCOs—with the Medicaid MCOs that maintain more robust, timely compensated provider networks, In fact, the Medicaid beneficiaries’ providers Page 7 of 11themselves could subtly (or not-so-subtly recommend that their patients enroll in the Medicaid -MCOs that continue fo pay providers. 15, Furthermore, this domino effect could accelerate if one or more of the Illi Medicail MCOs (a) seck to cap theit Medicaid beneficiary membership due to cap wy caneems and/or financial struggles, (b) terminate their contacts with the State to cut off Financial isk, andor (@) simpy financially fi, This would inevitably shift more Medicaid benefieivies—and consequently more financial isk in light ofthe State's nonpayment-—t the remaining Medicaid MCOs, To use Aetna Better Health's current enrotiment and monthly premiums as an example, its cument group of approximately 235,000 Hlinois Meesid beneficiaries and its eurent monthly premium of approximately $115 million could swell tity for lustative purposes) to 300,000 beneficiaries and $150 million, t $00,000 beneficiaries and $250 milion, and so on, Tn fect, this domino effect has aleady begun: Aetna Better Heath understands that one current linois: Mi id MCO fs terminaing is Integrated Care Program (ICP) contact effective ‘August 1, 2017, Actna Better Health ressived a notice fom the State today advising that over 800 new Medicaid beneficiases which corresponds to approximately $1.4 milion in monthly capitaed payments—will be transfered fom that terminating MCO to Aetna Better Health fective August 12017. Adkltionaly, de other incumbent Ilinois Medizaid MCOs did not respond (0 the Stats pending Medicaid managedcare Request for Proposals (the “Medicaid REP") and as ares, those MCOs" respective Medicaid -beneficiary memberships wil need be reasigned to otter MCOs on or before Fanuary 12018, Infact, the Stati expressly secking to reduce the number of MCOs in its Medisié managed-care program effective January 1, 2018 which would thereby concentrate the Financial risk across fewer MCOs, A such, the aforementioned “progressive collapse” will continue—with each newly imposed financial load Page 8 of 11the next level will begin to buckle and collapse, until the entire Medicaid managed-care program falls 16, In its briefs and at oral argument, the State has also indicated an ability andlor willingness to pay an additional $75 million per month (s0, approximately $150 million ater federal match) to all Medicaid-rlated payees going forvard. While Actna Better Health welcomes any increase in payments from the State, Aetna Better Health notes that even a 5150 million inerease ia monthly payments across all Medieid-related payees (i, about a dozen MCOs, dozens of crtial-access facilities, ete.) will not come close to satislying the aggregate amounts that continue to come due each month, and will do nothing to reduce the $698 rillion arrearage that is owed to Aetna Better Health (let alone the arrearage owed to other COs and other Medicaid related payees), 17. Over the past seven years, Aetna Better Health has been privileged to partner with the State in providing managed-care solutions designed to meet the diverse needs of Ilinois Medicaid beneficiaries and to improve their lives and well-being for the long term, Avina Better Health remains excited about the opportunity to continue this relationship asthe State looks to the future of its Medicaid managed-care program as pt ofthe pending Medicaid RFP. To that ‘nd, on oF about May 15, 2017, Aetns etter Health responded to the Medicaid RFP, which visions a new contac that would consfidate and replace the ICP, FHP-ACA, and MLTSS Contacts effective January 1, 2018, To be clear, Aetna Better Health hs not withdrawn its response othe Medicaid RFP. 18, Nevertheless the last two years have been immensely challenging forthe State and its Medicaid MCOs. The State's ongoing fiscal cisis has placed Aetna Better Health under significant financial strain, and as noted above, the arrearage in capitated payments continues to Page 9 of 11row along with the uncertainty of fature payment prospects. Although it remains cautiously optimistic that his visi canbe resolved, Aetna Beer Health must safeguard its interests and postion set mitigate mounting inci risk, As a result i th State does not passa Fiscal ‘Year 2018 budget on or before July 1, 2017 that secures a reliable revenue stream to eure the exiting amearage and stabilize the funding for the State's Medicaid managed-cre program ving forward, Aetna Better Health may be left with no choice but tissue notice of its intent terminate cach of the State Contaels effective on or before December 31, 2017 due to the existing areaage. 19, If Aetna Better Health is competed to exercise its temination rights under the Ste Contracts, it would do so with the hope that those terminations would ultimately be unnecessary upon an intereding, mutually agreeable resolution ofthe pending Medieaid-funding crisis heflore year end—either through a Fiscal Year 2018 budget or throush State compliance with this Court's onder. Consequently, Aetna Better Health would expresly reserve the right rescind its termination notioes atts sole disertion. Aetna Better Health remains enthusiast bout the possibility of continuing its stong Medicaid managed-care relationship with the Sate—and, a8 noted above, its response tothe State's pending Medicaid REP remains in place and has not been withdrawn, But prudence, along withthe possibility that dhe Medicaid REP could be withdrawn or delayed (hich happened earlier this month in Oklahoma), may compe [Aetoa Better Health issue temiation notices under the State Contacts in the near future 10 protect Aetna Better Health’ rights and financial interests. In light of the State's arrearage, however those lerminations will become inevitable if either (a) the Court does not enter the ‘order that was attached to the Plaintiffs’ June 26, 2017 motion (or a similar order that compels oth going-forward payments and « meaningful reduction of the existing arrearage), or (b) the Page 10 of 11State fils to passa budget that cures the existing arearage and stabilizes funding for the State's Medicaid menaged-care program going forward 20, Aetna Better Health's potential exit from the State's Medicaid managed-care program—indeed any MCO's exit from any Medicaid program—will have disruptive effects on its approximately 235,000 Medicaid beneficiaries in llinos. Although Aetna Better Health can ‘and will make every effort to provide a smooth transition for its Medicaid beneficiaries if Aetna ‘Better Health exits the State's Medicaid managed-care program, there will necessarily be some disruption to these beneficiaries and their healtheare asa practical reality, Pursuant to 28 USC. § 1746, I declare under penalty of perjury that the foregoing is true and correct. Executed on June 29, 2017. Keine Probert ox» Laurie A. Brubaker, Chaimman ofthe Board of Directors and President of Aetna Better Health In. Page 11 of 1