Dems demand tougher standards for companies running Medicaid systems

Key points

• Three Democratic senators want tougher federal standards for contractors running Medicaid eligibility systems.
• They say new Medicaid work requirements will strain systems with histories of errors.
• The recommendations target CMS and face long odds under Republican control of Congress.

Three Democratic senators are calling on the federal agency that oversees Medicaid to set tougher standards for the contractors that build and run state eligibility systems, saying errors in those systems can cost people their health coverage. The recommendations follow a year-long inquiry into Deloitte, General Dynamics Information Technology, Gainwell Technologies and Conduent, companies paid billions in taxpayer dollars for this work.

Sens. Ron Wyden of Oregon, Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia released the report. Most states rely on contractors rather than operating their Medicaid eligibility systems directly, and previous KFF Health News investigations found Deloitte dominates this business, with systems plagued by errors that can cause eligible people to lose coverage.

Pressure from new Medicaid rules

The senators say Medicaid changes mandated by President Donald Trump's tax and domestic policy law are forcing states to adapt computer systems on a compressed timeline. The law, the One Big Beautiful Bill Act, adds the first federally mandated work requirements in Medicaid's history: starting next year, millions of adult enrollees in more than 40 states must show they work or do a similar activity at least 80 hours a month, unless exempt.

The senators argue that layering these restrictions on systems with histories of problems will cause large numbers of people to improperly lose coverage. They described state eligibility systems as having been "built up, patched, and frankensteined for decades."

There are life-and-death consequences for sick Americans who seek care only to find that their Medicaid coverage has been terminated.

— the senators, in their report

What the senators recommend

The lawmakers, who sit on the Senate Finance Committee, direct most of their recommendations at the Centers for Medicare & Medicaid Services. They want CMS to set mandatory standards in state contracts with companies so states can receive federal funds, and to publicize contracts and contract amendments, which currently vary in accessibility from state to state. They also want public disclosure of companies' performance data and change orders.

The federal government approves these state contracts and pays most of the cost: 90% of state costs to develop and implement eligibility systems and 75% of ongoing maintenance and operations, according to federal regulations. The senators' ideas face long odds with Republicans controlling executive agencies and Congress, though that could shift if Democrats win a Senate majority in November's midterm elections.

The companies said states make the final eligibility decisions. Deloitte said state workers approve or deny eligibility, "not a private contractor or an automated system acting alone." The companies denied having financial incentives to remove people from Medicaid, and Conduent said it is paid less if enrollment drops. CMS did not respond to a request for comment; it announced in August that it intends to develop standards for Medicaid systems. As of June, 66 million people were enrolled in Medicaid, according to CMS.