Democratic lawmakers critique Medicaid contractors’ eligibility determinations

A handful of Democratic senators have sent letters to four major contractors responsible for processing Medicaid eligibility, critiquing them for maintaining systems that are “plagued with errors.”

In the letter, Senate Finance Committee ranking member Ron Wyden (D-OR) and Finance Committee members Elizabeth Warren (D-MA), Bernie Sanders (I-VT) and Raphael G. Warnock (D-GA) indicated they were launching an inquiry into Conduent, Deloitte, General Dynamics Information and Gainwell Technologies to seek information on the payment structures in their contracts. 

Specifically, the lawmakers are pressing for information on how the companies update their platforms to account for identified errors.

“We write out of concern that thousands of eligible Medicaid beneficiaries are erroneously denied coverage each year due to eligibility systems plagued by errors,” the members wrote. “H.R. 1 includes the largest cuts in Medicaid’s history and adds new red tape requirements by requiring states to condition Medicaid eligibility on individuals proving work. The addition of paperwork hurdles, layered onto problematic eligibility systems, will cause Americans to lose Medicaid coverage to this bureaucratic maze.”

WHAT'S THE IMPACT 

The letter comes as the Republican budget bill creates new requirements for beneficiary enrollment. States must verify before the end of next year that enrollees are engaged in certain “community engagement” activities such as employment or a job search, community service, a  training program or education for 80 hours per month.

Calling these requirements “red tape,” the senators said previous attempts by states to implement similar “work requirement” programs have resulted in significant coverage losses and low enrollment, “and had no impact on employment rates, at a significant cost to taxpayers,” they said.

Earlier this year, Wyden and Warren began investigating another contractor, Maximus, for what they determined were similar practices.

In their letter to Maximus, Wyden and Warren accused the company of using work requirements to kick millions of low-income Americans off their Medicaid coverage – even when they meet all the program’s eligibility requirements – to earn more profit.

“As the largest contractor for Medicaid eligibility determinations, your company would likely assess whether individuals meet the requirements outlined in the Republican bill, giving you extraordinary power over Americans’ access to healthcare,” the senators wrote. “But your company has an abysmal track record, with reports of egregious backlogs and service delays and several reported instances of fraud.”

Hospitals are dependent on Medicaid and face uncompensated care and an increase in ER use should beneficiaries lose their coverage. The American Hospital Association estimates that 96% of hospitals have 50% of their inpatient days paid by Medicare and Medicaid.

THE LARGER TREND 

If Medicaid work requirements were established in states that have expanded their programs, more than 5 million people could lose their coverage, according to a March study from the Urban Institute and the Robert Wood Johnson Foundation.

The analysis assumes that work requirements would only apply to expansion enrollees, and that states use available data to automatically exempt enrollees from reporting requirements, as Arkansas and New Hampshire did under prior waivers. But some states may not replicate the data-matching efforts employed by Arkansas and New Hampshire, meaning potential coverage losses would be higher.

Most people with Medicaid coverage are currently already working, a February KFF analysis found. In 2023, most Medicaid adults under age 65 were working – among those who don't receive benefits from Social Security disability programs, Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI), and who are not also covered by Medicare - 92% were working full or part-time, or not working due to caregiving responsibilities, illness or disability, or school attendance.

The remaining 8% of Medicaid adults reported that they are retired, unable to find work or were not working for another reason.