Three Senate Finance Committee Democrats asked the Centers for Medicare & Medicaid Services on Oct. 20, 2026 to impose binding contract standards on the companies that run state Medicaid eligibility systems, before federal work reporting rules start Jan. 1, 2027. Ranking Member Ron Wyden and Sens. Elizabeth Warren and Raphael Warnock set out eight recommendations in a 76-page interim report, "Paid to Process, Not to Protect", and reported by KFF Health News.
The report grows out of an inquiry opened Oct. 10, 2025 into Conduent, Deloitte, General Dynamics Information Technology and Gainwell Technologies, with Maximus added separately. It says Maximus holds about 60% of the market for Medicaid eligibility contractor work and that Deloitte has contracts in at least 25 states worth $6 billion or more. Citing the Congressional Budget Office, it says the work rules account for $326 billion of the law's $911 billion in federal Medicaid cuts over 10 years and will leave 5.3 million enrollees uninsured.
What the senators want CMS to do
- Require model terms in every state eligibility contract, including quarterly error-rate reports and penalties for wrongful disenrollments, as a condition of federal matching funds.
- Publish all vendor contracts and amendments.
- Set standard, public performance metrics based on outcomes.
- Make states disclose contractor performance data, design documents and change orders.
- Order independent audits that separate coverage lost to paperwork from coverage lost because people were ineligible.
- Bar one company from running both eligibility and appeals for the same state.
- Pilot contracts that pay for working software rather than delivered milestones.
- Favor open-source or state-owned systems so states can switch vendors.
The report says no contractor would give data on how often its systems wrongly ended coverage. The companies told the senators that state workers make the final eligibility decisions and denied any incentive to drop people, KFF Health News reported. CMS didn't respond to the outlet; it said in August that it plans to develop standards for Medicaid systems. KFF Health News noted that the ideas face long odds while Republicans control Congress and the executive branch.
The report also argues that CMS's June 2026 interim final rule makes the medical frailty exemption harder to use, by applying a significant-impairment test to every exemption category, including people with a developmental disability. That is the same issue KFF raised for SSI applicants.
Why this matters for providers and DSPs
When an eligibility system wrongly ends someone's Medicaid, HCBS claims stop with it, and the agency either carries the cost or services pause until coverage is fixed. The work rules apply to the expansion adult group, so direct care workers covered through expansion Medicaid will face the work reporting and six-month renewals themselves. Agencies can track renewal dates for the people they support and for staff who rely on Medicaid, and flag sudden terminations quickly.