A group of Democratic senators is pressing the federal agency overseeing Medicaid to institute tougher standards for government contractors running the complex computer systems millions of low-income and disabled Americans rely on for health coverage.
Three Democratic senators issued a series of recommendations following a yearlong inquiry into private companies paid billions in taxpayer dollars to build and operate eligibility systems for safety-net health coverage. While a handful of states directly manage their own Medicaid eligibility programs, most contract out the work to private firms. Among them, Deloitte dominates the sector, though its systems have previously faced scrutiny over errors that resulted in eligible individuals losing their health coverage, costing millions and taking years to resolve.
The lawmakers—Ron Wyden of Oregon, Elizabeth Warren of Massachusetts, and Raphael Warnock of Georgia—warned that administrative failures in these programs carry severe consequences. “There are life-and-death consequences for sick Americans who seek care only to find that their Medicaid coverage has been terminated,” the senators wrote in their new report.
The push for tighter contractor accountability arrives as states face compressed timelines to adapt their computer systems under sweeping legislative changes. Policies stemming from the One Big Beautiful Bill Act add administrative hurdles and restrictions designed to make maintaining enrollment more difficult. Notably, the legislation mandates the first federal work requirements in Medicaid’s history. Beginning next year, millions of adult enrollees across more than 40 states must prove they are working or participating in similar activities for at least 80 hours a month to retain benefits, unless they qualify for exemptions.
Senators Wyden, Warren, and Warnock argue that layering these new restrictions onto computer systems with established histories of malfunctions will cause large numbers of eligible residents to improperly lose coverage. Describing current infrastructure, the lawmakers stated that state eligibility systems “have been built up, patched, and frankensteined for decades.”
The recommendations are directed primarily at the Centers for Medicare & Medicaid Services, which oversees federal health programs. However, any potential legislative action faces steep hurdles given that Republicans currently control executive branch agencies and both chambers of Congress. That balance of power could shift depending on the outcome of upcoming midterm elections.
The senators called on CMS to establish mandatory performance standards in state contracts as a condition for receiving federal funds. The federal government covers the vast majority of these expenses, footing 90% of state costs to develop and implement Medicaid eligibility systems and 75% of ongoing maintenance and operations costs.
Additionally, the lawmakers urged CMS to publicly disclose all contracts and contract amendments, as well as contractor performance data and change orders. Change orders are utilized to adjust computer systems, with states setting aside millions of dollars for them, though systems frequently require fixes beyond initial agreements.
The inquiry initially began in October 2025, when the three senators, joined by Senator Bernie Sanders, sent letters to prominent contractors including Deloitte, General Dynamics Information Technology, Gainwell Technologies, and Conduent. Lawmakers questioned the companies regarding their contracts, lobbying expenditures, and protocols for managing system errors. While the firms responded, lawmakers noted they often failed to provide specific details or answer questions regarding documents used to assist states in determining eligibility.
Private contractors defended their operations by emphasizing that final eligibility determinations remain the responsibility of state governments. Deloitte stated in its response that state workers approve or deny benefits, “not a private contractor or an automated system acting alone.” The companies also denied having financial incentives to remove people from Medicaid, with Conduent noting its revenue decreases if enrollment drops. Representatives for Gainwell, GDIT, and Deloitte affirmed that they take performance metrics seriously and stand by their public service records. CMS did not respond to requests for comment.
While CMS routinely reviews certain metrics during system certification—such as income calculations, timeliness of decisions, and category accuracy—withdrawing federal funds from underperforming states remains rare. In August, CMS announced intentions to develop broader standards for Medicaid systems aimed at improving enrollee access and holding contractors accountable for implementing critical policy changes.
