Senate Democrats press CMS for tougher oversight of Medicaid eligibility contractors

Three Senate Democrats sent the Centers for Medicare & Medicaid Services a new set of recommendations Tuesday pressing for stricter oversight of the private contractors that build and run the computer systems states use to decide who qualifies for Medicaid, intensifying a yearlong inquiry just as the program prepares to enforce its first federally mandated work requirements.

Sens. Ron Wyden of Oregon, Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia, all members of the Senate Finance Committee, laid out the proposals a year after they and Sen. Bernie Sanders of Vermont opened an investigation into four companies that build state Medicaid eligibility and enrollment systems. The companies are Deloitte, General Dynamics Information Technology, Gainwell Technologies and Conduent.

Four companies, billions in contracts

The four firms are paid billions of taxpayer dollars to build or operate the systems that determine whether applicants qualify for coverage. The federal government covers 90% of states' costs to develop and install the systems and 75% of ongoing maintenance, according to the senators. Deloitte dominates the business, holding Medicaid eligibility-system contracts in 25 states, and reporting by KFF Health News has documented errors in its systems that have caused eligible people to lose coverage.

The stakes are rising because of a rule the Centers for Medicare & Medicaid Services finalized in June. Under the community engagement requirement, adults in more than 40 states will have to document at least 80 hours a month of work, schooling or similar activity to keep their coverage starting Jan. 1, 2027, unless they qualify for an exemption or a state receives a temporary good-faith extension. It is Medicaid's first federally mandated work requirement in the program's six-decade history. As of June, roughly 66 million people were enrolled in Medicaid nationwide, according to CMS data.

What the senators are asking for

The senators told CMS it should require, as a condition of federal funding, that states build certain safeguards into their contracts with eligibility-system vendors. Their recommendations include three specific steps:

• Require mandatory performance standards in state contracts as a condition of receiving federal Medicaid matching funds
• Require states to publish their contracts and any contract amendments
• Require public disclosure of contractors' performance data and the "change orders" used to alter systems, which can require work beyond the original contract

The senators argued that the consequences of an error are more severe in this context than in other industries.

"Medicaid enrollees deserve contractors who are accountable for what happens when the system fails them."

State eligibility systems, several of them decades old, "have been built up, patched, and frankensteined for decades," the senators wrote, warning that layering a new nationwide work-reporting requirement on top of that patchwork raises the risk that eligible people will be wrongly dropped from coverage. CMS did not respond to a request for comment on the recommendations. The agency announced in August that it planned to develop its own standards for state Medicaid eligibility systems, though it has not published details.

A history of system errors

The push builds directly on the October 2025 letters that Wyden, Warren, Warnock and Sanders sent to the four companies, which followed earlier KFF Health News reporting on Deloitte-run systems that produced coverage-ending errors in multiple states. Those letters asked whether any contract ties a company's payment to the number of people removed from Medicaid rolls, and whether companies or states bear the cost of fixing errors once they are identified.

In their responses, the companies gave partial answers but sidestepped several of the senators' core questions, according to the senators' recommendations released Tuesday. Deloitte said in its response that states, not contractors or automated systems, make the final eligibility decisions, and said in a statement that "we are proud of our work serving individuals and families across the U.S." Gainwell said in a statement that "we take seriously the issues raised." Conduent told the senators its revenue falls if enrollment drops, and all of the companies denied having any financial incentive to remove people from Medicaid. None of the four detailed whether states or the companies themselves are financially responsible when systems need to be fixed.

CMS set aside $200 million in fiscal 2026 for states to build the technology needed to verify work-requirement compliance, an amount the senators have separately questioned as insufficient given the scale of the task facing all 50 states and the District of Columbia.

Long odds in a Republican-controlled Congress

The recommendations carry no legal force. Republicans control both chambers of Congress and the White House, and CMS is not obligated to adopt any of the senators' proposals. Finance Committee Democrats, who hold no subpoena power as the minority, have relied on public pressure and the threat of future oversight rather than legislation. That dynamic could shift if Democrats win a Senate majority in next month's midterm elections, which would hand committee gavels, and subpoena authority, to Wyden and his colleagues.

For now, the clock is the more immediate pressure point. The public comment period on CMS's work-requirement rule closed July 31, 2026, and states must have compliance systems operating by Jan. 1, 2027, unless they secure a short extension. The senators said they intend to keep pressing CMS and the contractors as that deadline approaches, arguing that the same systems blamed for past errors are now being asked to carry out a far more consequential test: determining, every month, whether tens of millions of low-income adults are still allowed to keep their health coverage.