Dive Brief:
- Four of the largest Medicaid contractors that build IT systems for the massive safety-net insurance program are under fire from members of the Senate Finance Committee for error-prone technology.
- Ranking Member Ron Wyden, D-Ore., along with Finance Committee members Elizabeth Warren, D-Mass., Raphael Warnock, D-Ga, and Bernie Sanders, I-Vt., sent letters on Friday to Deloitte, Gainwell Technologies, Conduent and General Dynamics Information Technology, asking the contractors about how they build and oversee Medicaid systems after receiving reports of crashes and glitches impacting member enrollment and eligibility processes.
- The letter says the stakes of system breakdowns are significantly higher as states prepare for implementation of work requirements in Medicaid at the start of 2027. Wyden and Warren launched a similar inquiry against Maximus, a major Medicaid eligibility contractor, in June.
Dive Insight:
States Medicaid systems are infamously rigid, complex, difficult to update and susceptible to errors. Currently, many states are pivoting to a modular approach, in which individual segments can be updated without an overhaul of the entire system. It’s a tricky transition, and one that’s complicated further by states’ need to stand up new infrastructure to track and verify members’ work, volunteering and education hours to check their eligibility for Medicaid under the GOP’s massive tax and policy law passed this summer.
Work requirements are a long-held conservative dream, but the policies are deeply controversial. Such mandates have been trialed in a handful of states, and have led to many eligible individuals losing coverage due to paperwork errors and other bureaucratic hurdles without any corresponding uptick in employment.
The Congressional Budget Office estimates more than 5 million people will lose Medicaid coverage as a result of nationwide work requirements.
Democrats strongly oppose the policy. And now, party leaders in the Senate are airing related concerns that the IT underpinning states’ Medicaid operations may not be robust enough to withstand added pressure.
Issues with existing systems are “already harming beneficiaries across the country,” Wyden, Warren, Warnock and Sanders wrote in their letter.
The letter cites Florida, where system glitches led to new mothers being accidentally disenrolled from Medicaid; Arkansas, where people with disabilities had their home care services cut after the state’s eligibility system failed to consider their medical conditions in determining eligibility; and Missouri, where some beneficiaries became unsure whether or not they were covered due to confusing notices generated by the state’s system.
A few states operate their own Medicaid systems, but most contract with third parties to build, implement and oversee them. According to a KFF investigation last year, Deloitte, a global consultancy that brings in tens of billion of dollars in annual revenue, holds the lion’s share of state contracts for Medicaid systems with agreements with 25 states worth at least $6 billion.
Gainwell is also a major company in the space, contracting with 30 states on Medicaid enterprise system support, according to the company’s website. Conduent and GDIT, a business unit of General Dynamics, are smaller players.
It’s a difficult market for new vendors to disrupt, given many states require existing experience with Medicaid systems as a requirement for consideration during their procurement processes. And any issues with existing systems can be expensive for states and the federal government, given Washington heavily subsidizes the cost of designing, developing and installing Medicaid systems overseeing eligibility and coverage.
“Time and time again, the same vendors incorrectly implement Medicaid program rules and build systems with persistent usability and compliance issues,” the senators’ letter reads.
The senators gave contractors until the end of October to respond to two dozen requests for information, including what documentation they use to determine whether someone is eligible for Medicaid and what additional data might be needed once work requirements go into effect.
The letter also asks whether the companies’ contracts include bonus structures that tie payment to the number of people who are removed from Medicaid; whether they’re penalized under state contracts if they wrongfully terminate an individual from Medicaid; what type of pre- and post-deployment testing do they conduct to ensure their systems are working properly; and additional information about current and past Medicaid systems contracts.
GDIT declined to comment for this story. Deloitte, Gainwell and Conduent did not respond to a request for comment.
