A group of Democratic senators issued a report recommending that the federal government establish stricter oversight for private contractors that manage Medicaid computer systems. Senators Ron Wyden (D-OR), Elizabeth Warren (D-MA), and Raphael Warnock (D-GA) requested that the Centers for Medicare & Medicaid Services (CMS) institute mandatory performance standards in state contracts. The recommendations follow a year-long inquiry into companies including Deloitte, General Dynamics Information Technology, Gainwell Technologies, and Conduent, which receive billions of dollars to build and run eligibility systems for the low-income health program.
Most states hire private contractors to handle the technical infrastructure for Medicaid eligibility. According to federal regulations, the federal government pays 90% of the costs to develop these systems and 75% of ongoing maintenance expenses. A KFF Health News investigation found that Deloitte holds a dominant share of this market and reported that system errors have previously led to eligible individuals losing coverage. The senators' report described some state systems as being "patched, and frankensteined for decades," leading to administrative errors that can terminate coverage for those seeking medical care.
The senators' inquiry began in October 2025 with letters sent to the contractors regarding their lobbying expenditures, contract details, and protocols for fixing errors. In their responses, the companies stated that final eligibility decisions are made by state workers rather than automated systems or private firms. Conduent noted it has no financial incentive to reduce enrollment, as its pay decreases if enrollment drops. Deloitte, Gainwell, and GDIT stated they are subject to state performance metrics and expressed pride in their work or a willingness to address the lawmakers' concerns.
The scale of the issue involves billions of dollars in federal spending and millions of individual health records. Under current rules, the federal government rarely withdraws funding from states when systems fall short of certification metrics. The senators are calling for CMS to publicly disclose company performance data, contract amendments, and "change orders," which are funded by millions of state taxpayer dollars to adjust computer systems. A person enrolled in the program would notice these changes through the reliability of the digital portals they use to submit income documents, work hours, or medical exemptions.
A shift in these standards would set a precedent for how the federal government regulates the private technology firms that manage social safety net programs. While the senators' current recommendations face hurdles in a Republican-controlled Congress, CMS announced in August that it intends to develop new standards for Medicaid systems to improve enrollee access and company accountability. The next steps include the implementation of the new federal work requirements next year and the potential for legislative action depending on the results of the upcoming midterm elections.