Senators launched an investigation into the companies that paid billions of taxpayer dollars to create Medicaid eligibility systems, expressing concern that error-riddled technology and looming work requirements “will result in Americans losing Medicaid coverage in this bureaucratic maze.”
The letters, dated October 10, were sent to four companies and follow KFF Health News Investigation It exposed widespread problems in states using Deloitte's systems to assess Medicaid eligibility for millions of people. The failures led to the wrongful loss of health insurance and other vital public benefits for low-income people. Faults in these systems could be worth millions and it takes years to fix.
As most states prepare to implement work requirements contained in the tax and interior spending bill signed by President Donald Trump in July, senators wrote Every company's responsibility is to create functioning systems, “not to prioritize their profits.”
Democratic Senators Ron Wyden of Oregon, Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia, as well as Senator Bernie Sanders (I-Vt.), sent letters to several companies that the Centers for Medicare and Medicaid Services have identified as contractors of the selection system: Deloitte, GDIT, Gainwell Technologies and Conduent.
“They are essentially health care middlemen who deal with bureaucratic 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 results when it comes to determining eligibility or helping Americans enroll in Medicaid,” Wyden said. “Without stronger oversight and real accountability, these contractors will simply make huge profits for creating systems that actually harm Americans trying to get health care.”
Representatives for the four companies did not comment for this article.
As of June, 70.5 million people were enrolled in Medicaid, according to CMS.
Several states have their own Medicaid eligibility and enrollment systems, but most rely on contractors to create and operate them. KFF Health News discovered that Deloitte, the global consulting firm that created Revenue $70.5 billion. will dominate this segment of government business in fiscal year 2025. Twenty-five states have contracts with Deloitte for candidate selection systems. The agreements, in which the company commits to design, develop, implement or operate government systems, are worth at least $6 billion, dwarfing any of its competitors.
Kinda Serafi, a partner at Manatt Health, advises states on how to reconfigure their systems to meet operational requirements.
States are in a “big sprint” to make changes by 2027, she said, and they are “inundated” with proposals from vendors eager to win contracts. This highlights the business opportunity these system changes present for contractors.
“I think we need to be really vigilant to make sure that these suppliers are meeting the requirements that are compliant with the law,” Serafi said.
Companies sign contracts with state governments, but the federal government pays most of the costs. Under federal regulations, the federal government covers 90% of states' costs for developing and implementing state Medicaid eligibility systems, as well as 75% of ongoing maintenance and operating costs.
The Senate letters cite problems with candidate selection systems run by Deloitte, which KFF Health News identified. Among other things, Florida's selection system benefits were mistakenly cut for new mothers, and an issue in Kentucky caused coverage claims to fail 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 do their job: reliably and accurately determine an individual’s eligibility for Medicaid coverage and services,” the senators wrote.
Senators asked the companies to respond by Oct. 31 to their questions, such as whether the companies' contracts with states include financial incentives that tie payment to the exclusion of Medicaid enrollees and whether companies are penalized for ending coverage in error. Senators also demanded an accounting of the company's lobbying expenditures over the past five years and records of systemic changes.
The Congressional Budget Office projected that by 2027, based on an earlier version of the bill, 18.5 million Medicaid beneficiaries they will have to work or perform other qualifying activities for 80 hours per month to maintain their benefits unless they qualify for an exemption. CBO estimates that 5.3 million members will lose coverage by 2034.
The new employment requirements are just one of several federally approved Medicaid changes that are forcing 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 confusing regulations and flawed technology. The demands of the job also came at a cost.
Georgia did not pass the ACA Medicaid expansion, which provided benefits to millions of adults with incomes as high as 138% of the federal poverty level. Instead, the government offers benefits to some people earning below the poverty line who can prove they work or engage in similar activities for 80 hours a month. Through May, nearly 110,000 Georgians applied to the state's Pathways to Coverage Georgia program, but only 9,157 had been enrolled as of mid-August. Under typical ACA expansion rules, 336,000 adults will be eligible for the program. for coverage, according to KFF.
The program in Georgia 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 records. Deloitte developed the Georgia candidate selection system and is the primary consultant for the Pathways program.
Before Medicaid work requirements became federal law, Arizona also sent a request federal regulators asking them to launch their own version that would apply to about 190,000 people.
The state's filing provided insight into the types of systemic changes states may soon need to make to meet new federal work requirements.
Arizona Medicaid officials said they will collect information about enrollees' hours, training and education. The government selection system, run by Accenture, will also have to check whether someone is exempt.
States are in the early stages of identifying the changes they need to make to implement operational requirements.
Tessa Outhis, a spokeswoman for the California Department of Public Health, said the state expects the updates to be processed “through the existing contractual change process.” Government contracts with eligible companies often provide millions of dollars to cover the cost of changes, but systems may require upgrades beyond what was agreed upon.
In Missouri, the upgrades will cost about $33 million, according to the agency. state budget document.
The state has a contract with a private company, RedMane, for some Medicaid eligibility processes. Missouri plans to hire an additional contractor to ensure proper compliance with Medicaid work requirements, according to Bailey Watts, a spokeswoman for the Missouri Department of Human Services.
Medicaid-eligible contractors “have a lot of leverage and experience to influence contracts and win contracts,” Wyden said. “They can do so much more with what we give them.”
KFF Health News senior correspondent Renuka Rayasam and correspondent Sam Whitehead contributed to this report.
