As states prepare for a new federal Medicaid work reporting rule, three Democratic U.S. senators are seeking contract safeguards and penalties for technology errors that wrongly end coverage.
On Oct. 20, Senate Finance Committee ranking member Ron Wyden, along with Sens. Elizabeth Warren and Raphael Warnock, issued an interim report recommending regular vendor reports on system errors, public access to contracts and contractor performance records, and independent audits. The senators also want financial penalties when system failures improperly remove people from coverage and repairs at no added cost to states. These are recommendations, not rules currently in force.
The report examined Deloitte, Conduent, Gainwell Technologies, General Dynamics Information Technology and Maximus. It said none supplied the requested contracts or historical totals of referrals for possible ineligibility. The report characterized the firms’ accounts of their accuracy checks as inadequate. Maximus said it does not build, deploy or operate the core Medicaid eligibility or claims systems discussed in the inquiry.
Federal and state outlays on Medicaid Enterprise Systems reached $9.0 billion in fiscal 2025, with contractors receiving 82% of the total, according to the Medicaid and CHIP Payment and Access Commission (MACPAC). The spending covers claims and other functions as well as eligibility systems. Qualifying development costs can receive a 90% federal match, while qualifying operations and maintenance can receive 75%; other system expenses may receive 50%, MACPAC says.
MACPAC says complex, interconnected systems can be costly to change and requirements for prior Medicaid experience may restrict competition among vendors. It also notes that a 2015 federal rule made eligibility systems permanently eligible for enhanced federal matching.
The senators argue vendors could gain implementation work under the new requirement while states and beneficiaries bear the consequences of errors that end coverage. The report does not estimate how many people might be wrongly disenrolled specifically because of vendor system errors. Deloitte said its payments are not tied to disenrollment and that government officials make eligibility decisions. Conduent said its compensation generally falls when enrollment declines. Because the requested contracts were not supplied, the companies’ specific contractual terms remain unverified.
The Centers for Medicare & Medicaid Services (CMS) says adults subject to the rule may meet it through 80 hours a month of qualifying activity, half-time education or sufficient monthly income; exemptions and hardship exceptions also apply. CMS says affected groups are covered in 43 states and the District of Columbia. A separate CMS request for information issued Aug. 10 concerned technical standards for Medicaid systems, not the contract safeguards proposed in the senators’ later report. States generally must implement the work rule by Jan. 1, 2027.
