Senators Press Deloitte, Other Contractors on Errors in Medicaid Eligibility Systems

Senators launched an investigation into companies that paid billions of taxpayer dollars to build Medicaid eligibility systems, expressing concern that error-riddled technology and looming work requirements will “cause Americans to lose Medicaid coverage in this bureaucratic maze.”

The letters, dated Oct. 10, were sent to four companies and follow a KFF Health News investigation that found widespread problems in states using systems managed by Deloitte to assess Medicaid eligibility for millions of people. The failures resulted in low-income people mistakenly losing health coverage and other vital safety net benefits. Malfunctions in these systems can cost millions and take years to correct.

As most states prepare to implement work requirements imposed by the Tax and Domestic Spending Act signed by President Donald Trump in July, the senators wrote that it is up to each company to build functional systems, “rather than prioritizing their bottom line.”

Democratic Senators Ron Wyden of Oregon, Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia, along with Senator Bernie Sanders (I-Vt.), sent the letters to several companies that the Centers for Medicare & Medicaid Services identified as eligibility system contractors: Deloitte, GDIT, Gainwell Technologies and Conduct.

“They’re basically health care middlemen who take care of red tape, and they profit when Americans don’t get health care,” Wyden, the top Democrat on the Senate Finance Committee, which oversees Medicaid, said in an interview.

“They have a history of poor performance when it comes to determining eligibility or helping Americans enroll in Medicaid,” Wyden said. “Without stronger oversight and real accountability, these contractors will simply get a huge windfall by creating systems that actually harm Americans trying to get health care. »

Spokespeople for the four companies provided no comment for this article.

As of June, 70.5 million people were enrolled in Medicaid, according to CMS.

A handful of states operate their own Medicaid eligibility and enrollment systems, but most rely on contractors to build and manage them. KFF Health News found that Deloitte, a global consulting firm that generated $70.5 billion in revenue in fiscal 2025, dominates this slice of government business. Twenty-five states have awarded contracts to Deloitte for eligibility systems. The deals, in which the company agrees to design, develop, implement or operate state-owned systems, are worth at least $6 billion, dwarfing all competitors.

Manatt Health partner Kinda Serafi advises states on how to reconfigure their systems to incorporate work requirements.

States are engaged in a “major sprint” to make changes by 2027, she said, and they are “inundated” with proposals from vendors seeking to secure contracts. This highlights the business opportunity that these system changes represent for entrepreneurs.

“I think we really need to be vigilant to make sure that these providers are implementing the requirements consistent with the law,” Serafi said.

Companies sign contracts with state governments, but the federal government pays most of the costs. The federal government covers 90 percent of states’ costs to develop and implement Medicaid eligibility systems and 75 percent of ongoing maintenance and operating expenses, consistent with federal regulations.

The Senate letters cite problems with eligibility systems run by Deloitte and identified by KFF Health News. Among other problems, Florida’s eligibility system mistakenly removed benefits for new mothers, and a glitch in Kentucky prevented applications for coverage from being submitted online, costing $522,455 and taking 10 months to resolve.

“Unfortunately, these are just a few examples of the failure of third-party systems to fulfill their very function: to reliably and accurately determine an individual’s eligibility for Medicaid coverage and services,” the senators wrote.

The senators asked the companies to respond by Oct. 31 to their questions, such as whether the companies’ contracts with states include financial incentives tying payment to opting out of Medicaid enrollees and whether the companies are penalized for coverage terminations made in error. Senators also demanded an accounting of the company’s lobbying spending over the past five years and protocols for making changes to the system.

By 2027, the Congressional Budget Office projected, based on an early version of the bill, that 18.5 million Medicaid beneficiaries will need to work or perform other qualifying activities for 80 hours per month to maintain their benefits, unless they qualify for an exemption. The CBO estimates that 5.3 million enrollees will lose coverage by 2034.

The new work requirements are just one of several federally mandated Medicaid changes that require states to adapt their eligibility systems.

Medicaid work requirements have faced problems in the few states where they have been tested. Medicaid enrollees have been frustrated trying to navigate Byzantine rules and faulty technology. The work requirements were also very expensive.

Georgia did not adopt the ACA Medicaid expansion, which provided benefits to millions of adults earning up to 138 percent of the federal poverty level. Instead, the state provides benefits to certain people whose income meets the poverty line and who can prove they work or participate in similar activities for 80 hours per month. Nearly 110,000 Georgians had applied for the state’s Georgia Pathways to Coverage program through May, but only 9,157 people were enrolled as of mid-August. Under typical ACA expansion rules, 336,000 adults would be eligible for coverage, according to KFF.

Georgia’s program cost $109 million, with $34 million spent on health benefits and more than $20 million allocated for marketing contracts, according to an analysis of state reports by KFF Health News. Deloitte built Georgia’s eligibility system and is the lead consultant for the Pathways program.

Before Medicaid work requirements became federal law, Arizona also submitted a request to federal regulators to launch its own version that would apply to about 190,000 people.

The state’s application provided a glimpse into the types of system changes states may soon need to make to manage new federal work requirements.

Arizona Medicaid officials said they will gather information on enrollees’ work hours, training and education. The state’s eligibility system, run by Accenture, should also check whether a person is exempt.

States are beginning to determine what changes they need to make to implement work requirements.

Tessa Outhyse, a spokeswoman for the California Department of Health Services, said the state expects the upgrades to be processed “through the existing contract change order process.” State contracts with eligible companies often set aside millions to cover the cost of modifications, but systems may require upgrades beyond the agreed-upon work.

In Missouri, the improvements are expected to cost about $33 million, according to a state budget document.

The state has a contract with the private company RedMane to handle part of its Medicaid eligibility processing. Missouri plans to hire an additional contractor to ensure it properly institutes Medicaid work requirements, according to Baylee Watts, spokeswoman for the Missouri Department of Human Services.

Medicaid-eligible contractors “have a lot of leverage and expertise to influence contracts and win contracts,” Wyden said. “They can do a lot more, depending on what we give them.”

KFF Health News senior correspondent Renuka Rayasam and correspondent Sam Whitehead contributed to this report.