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Medicaid for Millions in America Hinges on Deloitte-Run Systems Plagued by Errors
DiJuana Davis and her child Treasure Woodard sit on a couch in their home.
DiJuana Davis, with daughter Treasure Woodard, at home in Nashville, Tennessee. Davis is a plaintiff in a class-action lawsuit contesting the state鈥檚 Medicaid eligibility process. She and her children lost their coverage in 2019 after Tennessee launched a Deloitte-built eligibility system. (William DeShazer for KFF 国产精品视频 News)

Medicaid for Millions in America Hinges on Deloitte-Run Systems Plagued by Errors

Deloitte, a global consultancy that reported revenue last year of , pulls in billions of dollars from states and the federal government for supplying technology it says will modernize Medicaid.

The company in building sophisticated and efficient systems for states that, among other things, screen who is eligible for Medicaid. However, a KFF 国产精品视频 News investigation of eligibility systems found widespread problems.

The systems have generated incorrect notices to Medicaid beneficiaries, sent their paperwork to the wrong addresses, and been frozen for hours at a time, according to findings in state audits, allegations and declarations in court documents, and interviews. It can take months to fix problems, according to court documents from a lawsuit in federal court in Tennessee, company documents, and state agencies. Meanwhile, America鈥檚 poorest residents pay the price.

Deloitte dominates this important slice of government business: Twenty-five states have awarded it eligibility systems contracts 鈥 with 53 million Medicaid enrollees in those states as of April 1, 2023, when the unwinding of pandemic protections began, according to the Centers for Medicare & Medicaid Services. Deloitte鈥檚 contracts are worth at least $5 billion, according to a KFF 国产精品视频 News review of government contracts, in which Deloitte commits to design, develop, implement, or operate state systems.

State officials work hand in glove with Deloitte behind closed doors to translate policy choices into computer code that forms the backbone of eligibility systems. When things go wrong, it can be difficult to know who鈥檚 at fault, according to attorneys, consumer advocates, and union workers. Sometimes it takes a lawsuit to pull back the curtain.

Medicaid beneficiaries bear the brunt of system errors, said Steve Catanese, president of Service Employees International Union Local 668 in Pennsylvania. The union chapter represents roughly 19,000 employees 鈥 including government caseworkers who troubleshoot problems for recipients of safety-net benefits such as health coverage and cash assistance for food.

鈥淎re you hungry? Wait. You sick? Wait,鈥 he said. 鈥淒elays can kill people.鈥

KFF 国产精品视频 News interviewed Medicaid recipients, attorneys, and former caseworkers and government employees, and read thousands of pages from contracts, ongoing lawsuits, company materials, and state audits and documents that show problems with Deloitte-operated systems around the country 鈥 including in Arkansas, Colorado, Florida, Georgia, Kentucky, Pennsylvania, Rhode Island, Tennessee, and Texas.

In an interview, Kenneth Smith, a Deloitte executive who leads its national human services division, said Medicaid eligibility technology is state-owned and agencies 鈥渄irect their operation鈥 and 鈥渕ake decisions about the policies and processes that they implement.鈥

鈥淭hey鈥檙e not Deloitte systems,鈥 he said, noting Deloitte is one player among many who together administer Medicaid benefits.

Alleging 鈥渙ngoing and nationwide鈥 errors and 鈥渦nfair and deceptive trade practices,鈥 the National 国产精品视频 Law Program, a nonprofit that advocates for people with low incomes, urged the Federal Trade Commission to investigate Deloitte in a complaint filed in January.

鈥淪ystems built by Deloitte have generated numerous errors, resulting in inaccurate Medicaid eligibility determinations and loss of Medicaid coverage for eligible individuals in many states,鈥 it argued. 鈥淭he repetition of the same errors in Deloitte eligibility systems across Texas and other states and over time demonstrates that Deloitte has failed.鈥

FTC spokesperson Juliana Gruenwald Henderson confirmed receipt of the complaint but did not comment further.

Smith called the allegations 鈥渨ithout merit.鈥

The system problems are especially concerning as states wade through millions of Medicaid eligibility checks to disenroll people who no longer qualify 鈥 a removal process that was paused for three years to protect people from losing insurance during the covid-19 public health emergency. In that time, nationwide Medicaid enrollment grew by more than 22 million, to roughly 87 million people. At least 22.8 million have been removed as of June 4 , according to a .

Advocates worry many lost coverage despite being eligible. A KFF survey of adults disenrolled from Medicaid during the first year of the unwinding found that nearly 1 in 4 adults who were removed are now uninsured. Nearly half who were removed were able to reenroll, the survey showed, suggesting they should not have been dropped in the first place.

鈥淚f there is a technology challenge or reason why someone can鈥檛 access health care that they're eligible for, and we're able to do something,鈥 Smith said, 鈥渨e work tirelessly to do so.鈥

Deloitte鈥檚 contracts with states regularly cost hundreds of millions of dollars, and the federal government pays the bulk of the cost.

鈥淪tates become very dependent on the consultant for operating complex systems of all kinds鈥 to do government business, said Michael Shaub, an accounting professor at Texas A&M University.

Georgia鈥檚 contract with Deloitte to build and maintain its system for health and social service programs, inked in 2014, as of January 2023 was worth $528 million. This January, obtained by KFF 国产精品视频 News that its eligibility system 鈥渓acks flexibility and adaptability, limiting Georgia鈥檚 ability to serve its customers efficiently, improve the customer and worker experience across all programs, ensure data security, reduce benefit errors and fraud, and advance the state鈥檚 goal of streamlining eligibility.鈥

Deloitte and the Georgia Department of Community 国产精品视频 declined to comment.

Deloitte is looking ahead anticipating sweeping changes that will expand its own business opportunity.

鈥淪tate Medicaid leaders and policymakers are hungry to know what the future of health care holds,鈥 the company said. 鈥淒eloitte brings the innovative tools, subject matter expertise, and time-tested experience to help states.鈥

Trouble in Tennessee

When Medicaid eligibility systems fail, beneficiaries suffer the consequences.

DiJuana Davis had chronic anemia that required iron infusions. In 2019, the 39-year-old Nashville resident scheduled separate surgeries to prevent pregnancy and to remove the lining of her uterus, which could alleviate blood loss and ease her anemia.

Then Davis, a mom of five, received a shock: Her family鈥檚 Medicaid coverage had vanished. The hospital canceled the procedures, according to testimony in federal court in November.

A portrait of DiJuana Davis. She is standing outside, and wears a blue blouse with gold hoop earrings.
DiJuana Davis is one of the plaintiffs in a Tennessee class-action lawsuit contesting the state鈥檚 Medicaid eligibility process. She and her children lost their Medicaid coverage in 2019 after Tennessee launched a Deloitte-built eligibility system. (William DeShazer for KFF 国产精品视频 News)

Davis had kept her insurance for years without trouble. This time, Tennessee had just launched a new Deloitte-built eligibility system. It autofilled an incorrect address, where Davis had never lived, to send paperwork, an error that left her uninsured for nearly two months, according to an ongoing class-action lawsuit Davis and other beneficiaries filed against the state.

The lawsuit, which does not name Deloitte as a defendant, seeks to order Tennessee to restore coverage for those who wrongly lost it. Kimberly Hagan, Tennessee Medicaid鈥檚 director of member services, said in a court filing defending the state鈥檚 actions that many issues 鈥渞eflect some unforeseen flaws or gaps鈥 with the eligibility system and 鈥渟ome design errors.鈥

贬补驳补苍鈥檚 in 2020 gave a view of what went wrong: Davis lost coverage because of missteps by both Tennessee and Deloitte during what鈥檚 known as the 鈥渃onversion process,鈥 when eligibility data was migrated to a new system.

Tennessee鈥檚 Medicaid agency, known as 鈥淭ennCare, along with its vendor, Deloitte, designed rules to govern the logic of conversion,鈥 Hagan said in the legal declaration. She also cited a 鈥渕anual, keying error by a worker鈥 made in 2017.

Davis鈥 family was 鈥渋ncorrectly merged with another family during conversion,鈥 Hagan said.

Davis regained coverage, but before she could rebook the surgeries, she testified, she became pregnant and a serious complication emerged. In June 2020, Davis rushed to the hospital. A physician told her she had preeclampsia, a leading cause of maternal death. Labor was induced and her son was born prematurely.

鈥淧reeclampsia can kill the mom. It can kill the baby. It can kill both of you,鈥 she testified. 鈥淭hat鈥檚 like a death sentence.鈥

DiJuana Davis holds her smart phone with two hands, to show the photographer a photo of her youngest son, Vrai Davis-Smith.
DiJuana Davis shows a photo of her youngest son, Vrai Davis-Smith. Davis is a plaintiff in a Tennessee class-action lawsuit contesting the state鈥檚 Medicaid eligibility process. She and her children lost their coverage in 2019 after Tennessee launched a Deloitte-built eligibility system.(William DeShazer for KFF 国产精品视频 News)

Deloitte鈥檚 Tennessee contract is worth $823 million. Deloitte declined to comment on Davis鈥 case or the litigation.

Speaking broadly, Smith said, 鈥渄ata conversion is incredibly challenging and difficult.鈥

Hagan called the problems one-time issues: 鈥淣one of the Plaintiffs鈥 cases reflect ongoing systemic problems that have not already been addressed or are scheduled to be addressed.鈥

States leverage Deloitte鈥檚 technology as part of a larger push toward automation, legal aid attorneys and former caseworkers said.

鈥淲e all know that big computer projects are fraught,鈥 said Gordon Bonnyman, co-founder of the nonprofit Tennessee Justice Center. 鈥淏ut a state that was concerned about inflicting collateral damage when they moved to a different automated system would have a lot of safeguards.鈥

TennCare spokesperson Amy Lawrence called its eligibility system 鈥渁 transformative tool, streamlining processes and enhancing accessibility.鈥

When enrollees seek help at county offices, 鈥測ou don鈥檛 get to sit down across from a real human being,鈥 Bonnyman said. 鈥淭hey point you to the kiosk and say, 鈥楪ood luck with that.鈥欌

A Backlog of 50,000 Cases

As part of the Affordable Care Act rollout about a decade ago, states invested in technological upgrades to determine who qualifies for public programs. It was a financial boon to Deloitte and such companies as Accenture and Optum, which landed government contracts to build those complex systems.

Problems soon emerged. In Kentucky, a Deloitte-built system that launched in February 2016 erroneously sent at least 25,000 automated letters telling people they would lose benefits, according to . State officials manually worked through a backlog of 50,000 cases caused by conflicting information from newly merged systems, the reports say.

鈥淲e know that the rollout of Benefind has caused frustration and concern for families and for field staff,鈥 senior Deloitte executive Deborah Sills alongside Gov. Matt Bevin and other senior officials after Kentucky was bombarded with complaints. Within two months, roughly 600 system defects were identified, by the Kentucky state auditor.

The Deloitte logo is seen on a skyscraper building in Warsaw, Poland.
The Deloitte logo is seen on a building in Warsaw, Poland, in 2024.(Marek Antoni Iwanczuk/SOPA Images/LightRocket via Getty Images)

In Rhode Island, a botched rollout in September 2016 delayed tens of thousands of Social Security payments, reported. Advocacy groups filed two class-action lawsuits, and the other to . Both were settled, with Rhode Island officials denying wrongdoing. Neither named Deloitte as a defendant.

In a 2018 , Sills of Deloitte said, 鈥淲e are very sorry for the impact that our system issues have had on your constituents, on state workers, and on service providers.鈥 The state鈥檚 top .

prepared for Gov. Gina Raimondo found that Deloitte 鈥渄elivered an IT system that is not functioning effectively鈥 and had 鈥渟ignificant defects.鈥 鈥淲idespread issues,鈥 it said, 鈥渃aused a significant deterioration in the quality of service provided by the State.鈥

鈥淒eloitte held itself out as the leading vendor with significant experience in developing integrated eligibility systems for other states,鈥 the audit read. 鈥淚t appears that Deloitte did not sufficiently leverage this experience and expertise.鈥 Deloitte declined to comment further about Rhode Island and Kentucky.

Deloitte invokes the phrase to describe its technology 鈥 approving benefits 鈥渨ithout any tasks performed by the State workers,鈥 vying for an Arkansas contract.

In practice, enrollee advocates and former government caseworkers say, the systems frequently have errors and require manual workarounds.

As it considered hiring Deloitte, Arkansas officials asked the company about problems, particularly in Rhode Island.

in 2017, 鈥淲e do not believe Deloitte Consulting LLP has had to implement a corrective action plan鈥 for any eligibility system project in the previous five years.

Arkansas awarded Deloitte a $345 million contract effective in 2019 to develop its system.

鈥淚t had a lot of bugs,鈥 said Bianca Garcia, a program eligibility specialist for the Arkansas Department of Human Services from August 2022 to October 2023.

Garcia said it could take weeks to fix errors in a family鈥檚 details and Medicaid enrollees wouldn鈥檛 receive the state鈥檚 requests for information because of glitches. They would lose benefits because workers couldn鈥檛 confirm eligibility, she added.

The enrollees 鈥渨ere doing their part, but the system just failed,鈥 Garcia said.

Arkansas Department of Human Services spokesperson Gavin Lesnick said: 鈥淲ith any large-scale system implementation, there occasionally are issues that need to be addressed. We have worked alongside our vendor to minimize these issues and to correct any problems.鈥

Deloitte declined to comment.

鈥楬eated鈥 Negotiations

In late 2020, Colorado officials were bracing for the inevitable unwinding of pandemic-era Medicaid protections.

Colorado was three years into what is now a $354.4 million contract with Deloitte to operate its eligibility system. that September had uncovered widespread problems, and Kim Bimestefer, the state鈥檚 top Medicaid official, was in 鈥渉eated鈥 negotiations with the company.

The audit found 67% of the system notices it sampled contained errors. Notices are federally required to safeguard against eligible people being disenrolled, said MaryBeth Musumeci, an associate teaching professor in public health at George Washington University.

鈥淭his is, for many people, what鈥檚 keeping them from being uninsured,鈥 Musumeci said.

DiJuana Davis is sitting outside on a sunny day. Her child, Treasure Woodard, stands beside her.
DiJuana Davis and daughter Treasure Woodard at home in Nashville.(William DeShazer for KFF 国产精品视频 News)

The Colorado audit found many enrollee notices contained inaccurate response deadlines. One dated Dec. 19, 2019, requested a beneficiary return information by Sept. 27, 2011 鈥 more than eight years earlier.

鈥淲e鈥檙e in intense negotiations with our vendor because we can鈥檛 turn around to the General Assembly and say, 鈥楥an I get money to fix this?鈥欌 Bimestefer told lawmakers during the 2020 legislative audit hearing. 鈥淚 have to hold the vendor accountable for the tens of millions we鈥檝e been paying them over the years, and we still have a system like this.鈥

She said officials had increased oversight of Deloitte. Also, dozens of initiatives were created to 鈥渋mprove eligibility accuracy and correspondence,鈥 and the state renegotiated Deloitte鈥檚 contract, said Marc Williams, a state Medicaid agency spokesperson. A contract amendment shows Deloitte credited Colorado with $5 million to offset payments for additional work.

But Deloitte鈥檚 performance appeared to get worse. A found problems in 90% of sampled enrollee notices. Some were violations of state Medicaid rules.

The audit blamed 鈥渇laws in system design鈥 for populating notices with incorrect dates.

In September, Danae Davison received a confusing notice at her Arvada home stating that her daughter did not qualify for coverage.

Lydia, 11, who uses a wheelchair and is learning to communicate via a computer, has a seizure disorder that qualifies her for a Medicaid benefit for those with disabilities. The denial threatened access to nursing care, which enables her to live at home instead of in a facility. Nothing had changed with Lydia鈥檚 condition, Davison said.

鈥淪he so clearly has the need,鈥 Davison said. 鈥淭his is a system problem.鈥

Davison appealed. In October, that Lydia qualified for coverage.

The notice generated by the Deloitte-operated system was deemed 鈥渓egally insufficient鈥 because it omitted the date Lydia鈥檚 coverage would end. Her case highlights a known eligibility system problem: Beneficiary notices contain 鈥渘on-compliant or inconsistent dates鈥 and are 鈥渕issing required elements and information,鈥 according to the 2023 audit.

Deloitte declined to comment on Colorado. Speaking broadly, Smith said, 鈥淚ncorrect information can come in a lot of forms.鈥

Last spring in Pennsylvania, Deloitte鈥檚 eligibility role expanded to include the Children鈥檚 国产精品视频 Insurance Program and 126,000 enrollees.

Pennsylvania鈥檚 Department of Human Services said an error occurred when converting to the state鈥檚 eligibility system, maintained by Deloitte through a $541 million contract. DHS triaged the errors, but, for 鈥渁 small window of time,鈥 some children who still had coverage 鈥渨ere not able to use it.鈥

These issues affected 9,269 children last June and 2,422 in October, DHS said. A temporary solution was implemented in December and a permanent fix came through in April.

Catanese, the union representative, said it was another in a long history of problems. Among the most prevalent, he said: The system freezes for hours. When asked about that, Smith said 鈥渋t's hyperbole.鈥

Instead of the efficiency that Deloitte touted, Catanese said, 鈥渢he system constantly runs into errors that you have to duct tape and patchwork around.鈥

KFF 国产精品视频 News senior correspondent Renuka Rayasam and correspondents Daniel Chang, Bram Sable-Smith, and Katheryn Houghton contributed to this report.