Senators press contractors on errors in Medicaid eligibility systems

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

The letters, dated Oct. 10, were sent to four companies and follow a KFF Health News investigation that exposed widespread issues in states using Deloitte-run systems to assess Medicaid eligibility for millions of people. Failures have resulted in the erroneous loss of health coverage and other vital safety-net benefits for low-income people. Malfunctions in those systems can cost millions and take years to fix.

As most states prepare to institute work requirements mandated by the tax and domestic spending law President Trump signed in July, senators wrote it is each company's responsibility to build functioning systems, "rather than to prioritize their bottom line."

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

"They're essentially health care middlemen that are in the business 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've got a history of poor performance when it comes to determining eligibility or in helping Americans enroll in Medicaid," Wyden said. "Without stronger oversight and real accountability, these contractors are just going to get a jumbo windfall for creating systems that actually harm Americans trying to get health care."

Spokespeople for the four companies did not provide comments 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 run them. KFF Health News found that Deloitte, a global consultancy that generated $70.5 billion in revenue in fiscal year 2025, dominates this slice of government business. Twenty-five states have awarded Deloitte contracts for eligibility systems. The agreements, in which the company commits to design, develop, implement, or operate state-owned systems, are worth at least $6 billion, dwarfing any of its competitors.

Kinda Serafi, a partner at Manatt Health, is advising states on how to reconfigure their systems to incorporate work requirements.

States are in a "major sprint" to make changes by 2027, she said, and they're being "inundated" with pitches from vendors looking to secure contracts. It underscores the business opportunity these system changes represent for contractors.

"I think we have to really be vigilant to make sure that these vendors are implementing the requirements consistent with the law," Serafi said.

Companies sign contracts with state governments, but the federal government pays the bulk of the cost. The federal government covers 90% of states' costs to develop and implement state Medicaid eligibility systems and 75% of ongoing maintenance and operations expenses, according to federal regulations.

The Senate letters cite problems with Deloitte-run eligibility systems that KFF Health News identified. Among other issues, the Florida eligibility system erroneously cut benefits for new moms, and a problem in Kentucky prevented coverage applications from getting through online, which cost $522,455 and took 10 months to resolve.

"Unfortunately, these are just a few examples of third-party systems' failure to serve 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 companies' contracts with states include financial incentives tying payment to the removal of Medicaid enrollees and whether the companies are penalized for coverage terminations made in error. The senators also demanded an accounting of the company's lobbying expenditures for the past five years and protocols for making system changes.

By 2027, the Congressional Budget Office projected, based on an early version of the bill, 18.5 million Medicaid beneficiaries will have to work or complete other qualifying activities for 80 hours a month to keep 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 are forcing states to adapt their eligibility systems.

Medicaid work requirements have been plagued with problems in the few states where they've been tested. Medicaid enrollees have been frustrated in trying to navigate byzantine rules and glitchy technology. Work requirements have also come at great cost.

Georgia has not adopted the ACA Medicaid expansion, which has granted benefits to millions of adults earning up to 138% of the federal poverty level. Instead, the state offers benefits to some people earning up to the poverty line who can prove they're working or participating in similar activities for 80 hours a month. Nearly 110,000 Georgians had applied to 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.

The Georgia program has cost $109 million, with $34 million spent on health benefits and more than $20 million allocated to marketing contracts, according to a KFF Health News analysis of state reports. Deloitte built Georgia's eligibility system and is the primary 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 roughly 190,000 people.

The state's application provided insight into the types of system changes states may soon need to make to manage the new federal work requirement.

Arizona Medicaid officials said they would gather information on enrollees' work hours, training, and education. The state's eligibility system, which is operated by Accenture, would also need to check whether someone is exempt.

States are in the early stages of determining changes they need to make to implement work requirements.

Tessa Outhyse, a spokesperson for the California Department of Health Care Services, said the state expects upgrades to be processed "through the existing contractual change order process." State contracts with eligibility companies often set aside millions to cover the cost of changes, but systems may require upgrades beyond the agreed-upon work.

In Missouri, upgrades are expected to cost roughly $33 million, according to a state budget document.

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

Medicaid eligibility contractors "have a lot of leverage and expertise to influence contracts, to win contracts," Wyden said. "They can do a lot more, to the value of what we're giving them."

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

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism.