A group of influential Democratic senators is demanding that the federal agency overseeing Medicaid institute significantly tougher performance standards for the private government contractors that operate the complex computer systems millions of low-income and disabled Americans rely on for health coverage.
The push comes as three Democratic senators issued a comprehensive set of policy recommendations following a year-long congressional inquiry. The investigation targeted major private corporations—including Deloitte, General Dynamics Information Technology, Gainwell Technologies, and Conduent—which are paid billions in taxpayer dollars to build and manage the digital eligibility infrastructure for the nation’s health safety net. For the nation’s poorest residents, these benefits often spell the difference between receiving essential medical care and going entirely without treatment.
While a small handful of states directly manage their own Medicaid eligibility operations, the vast majority rely on outside technology contractors to build and maintain these vital systems. Previous investigations by KFF Health News revealed that Deloitte holds a dominant market share in this lucrative sector of government contracting. Systems operated by Deloitte have frequently been plagued by software errors and technical malfunctions that can lead to eligible individuals being improperly stripped of their health insurance. Furthermore, these administrative failures can cost millions of taxpayer dollars and routinely take years to fully resolve.
In their newly released report, the senators emphasized the gravity of these software and system failures. Administrative errors in this specific line of work carry entirely different stakes than mistakes in other commercial industries. For sick Americans who attempt to seek necessary medical care only to discover that their Medicaid coverage has been abruptly terminated, the consequences can literally be a matter of life and death.
The urgency surrounding these technology contracts has intensified due to policy shifts mandated by federal law. Legislation signed by President Donald Trump has introduced sweeping changes to Medicaid, compelling states to overhaul and adapt their underlying computer systems on an exceptionally compressed timeline. The policies associated with the One Big Beautiful Bill Act add layers of administrative red tape and restrictive rules that inherently make it more difficult for vulnerable populations to maintain their enrollment.
Chief among these changes are the first federally mandated work requirements in the history of the Medicaid program. Beginning next year, adult enrollees across more than 40 states will be forced to prove that they are actively working or participating in a similar approved activity for at least 80 hours per month in order to keep their benefits, unless they qualify for a specific, often difficult-to-document exemption.
Sens. Ron Wyden of Oregon, Elizabeth Warren of Massachusetts, and Raphael Warnock of Georgia warned that these new regulatory hurdles—stacked directly on top of legacy computer systems with long histories of technical unreliability—will inevitably result in massive numbers of eligible citizens improperly losing their health coverage.
Describing the underlying technological foundation, the senators noted that state eligibility systems have been built up, patched over, and frankensteined together for decades.
As members of the powerful Senate Finance Committee, which maintains direct jurisdiction over major federal health programs like Medicare and Medicaid, these lawmakers are targeting their recommendations squarely at the Centers for Medicare & Medicaid Services. However, their policy proposals currently face a steep uphill battle. The executive branch agencies are controlled by Republicans, and any potential legislative fixes would have to successfully navigate a Republican-controlled Congress.
That delicate balance of legislative and executive power could shift depending on the outcomes of upcoming midterm elections. In the meantime, the three lawmakers are urging CMS to establish mandatory contractual standards that states must enforce with private vendors as a clear condition for receiving federal funding.
Although these technology companies sign direct service contracts with individual state governments, the federal government finances the vast majority of the expenses. Under current federal regulations, the federal treasury covers 90% of the state costs required to develop and implement Medicaid eligibility systems, alongside 75% of ongoing maintenance and operational costs.
To bring greater transparency to this multi-billion-dollar enterprise, the lawmakers recommended that CMS publicly disclose all vendor contracts and subsequent contract amendments. While these legal documents are technically accessible through state governments, the ease and speed of obtaining them varies widely from one state to another.
The senators also argued that CMS should routinely publish contractor performance data, along with detailed records of change orders. Change orders are financial modifications utilized to adjust software and computer systems, with states typically setting aside millions of dollars specifically for these adjustments. Despite these earmarked funds, systems frequently require extensive fixes that extend far beyond the scope of the original agreements.
The millions of Medicaid enrollees who will soon be required to prove their eligibility every six months, document every single hour of work on a glitchy online portal, and find a medical doctor willing to certify that their cancer or chronic medical condition meets strict exemption criteria, deserve private contractors who are held accountable when those systems fail them, the senators wrote.
The parliamentary inquiry began in October when Sens. Wyden, Warren, Warnock, and independent Sen. Bernie Sanders of Vermont dispatched formal letters to the primary companies identified by CMS as dominant eligibility system contractors. At the time, the lawmakers asserted that these private entities bear an inherent responsibility to build functioning, reliable eligibility systems rather than prioritizing their own corporate bottom lines.
As of June, approximately 66 million people were enrolled in Medicaid nationwide, according to official data published by CMS.
During the congressional inquiry, lawmakers questioned the corporate leadership teams regarding their specific contracts, lobbying expenditures, and internal protocols for addressing system errors. While the companies provided some preliminary documentation, they frequently failed to answer specific inquiries posed by the committee.
In their defense, the contractors emphasized that ultimate decision-making authority rests with state governments rather than private software vendors. State workers review and approve or deny eligibility determinations, Deloitte noted in its formal response letter, rather than a private contractor or an automated computer system acting independently.
Nevertheless, the companies declined to provide lawmakers with detailed documentation concerning the specific processes and internal workflows they utilize to assist states in making eligibility determinations.
Furthermore, the corporate representatives denied that they possess any financial incentives to systematically remove individuals from Medicaid rolls. Conduent specifically maintained that its corporate revenue decreases if total program enrollment drops. The companies also declined to clarify whether individual states are ultimately on the hook for paying the financial costs required to fix vendor-induced software errors.
Representatives for Deloitte, Gainwell, GDIT, and Conduent all maintained that it is standard industry practice for states to require them to meet specific, predetermined performance metrics.
Gainwell told lawmakers that the company takes the issues raised by the committee very seriously.
Meanwhile, General Dynamics Information Technology stated that it would answer additional follow-up questions from the senators and asserted in a statement to KFF Health News that it maintains a strong track record of supporting public Medicaid programs. Highlighting its operations in New York, GDIT stated that it plays a limited role in actual eligibility determinations because it strictly relies on rules provided directly by the state government. GDIT currently operates New York’s online Affordable Care Act marketplace, which allows residents to shop for and enroll in various health insurance plans, including Medicaid.
In its written response to the congressional panel, Deloitte stated that it remains proud of its work serving individuals and families across the United States.
The Centers for Medicare & Medicaid Services did not respond to multiple requests for comment regarding the senators’ report and recommendations.
Federal oversight of these complex systems does exist in a limited capacity. As part of the formal process for certifying state computer systems, federal officials evaluate specific operational metrics. These evaluations examine whether states are accurately calculating individual incomes, issuing timely eligibility determinations, and maintaining correct eligibility categories. Despite these monitoring procedures, it remains exceptionally rare for the federal government to actually withhold or withdraw federal funding from states whose systems fall short of performance benchmarks.
Federal momentum toward stricter oversight may be shifting independently. In August, CMS formally announced its intention to develop new nationwide standards specifically for Medicaid eligibility systems. The agency stated that its ultimate goal is to improve enrollee access to care and enhance their overall user experiences with the digital infrastructure. CMS indicated that these upcoming standards will hold corporate contractors strictly accountable for delivering systems that are capable of continuous improvement and possess a stronger institutional capacity to implement critical policy changes smoothly.
