Errors in Deloitte-run Medicaid systems can cost millions and take years to fix – The Mercury News

Samantha Liss, Rachana Pradhan | (TNS) KFF Health News

The computer systems run by the consulting giant Deloitte that millions of Americans rely on for Medicaid and other government benefits are prone to errors that can take years and hundreds of millions of dollars to update. While states wait for fixes from Deloitte, beneficiaries risk losing access to health care and food.

Changes needed to fix Deloitte-run eligibility systems often pile on costs to the government that are much higher than the original contracts, which can slow the process of fixing errors.

It has become a big problem across the country. Twenty-five states have awarded Deloitte contracts for eligibility systems, giving the company a stronghold in a lucrative segment of the government benefits business. The agreements, in which the company commits to design, develop, implement, or operate state-owned systems, are worth at least $6 billion, dwarfing any of its competitors, a KFF Health News investigation found.

Problems and delays can extend beyond Medicaid — which provides health coverage to roughly 75 million low-income people — because some state systems assess eligibility for other safety-net programs. Whether a person gets the benefits they are entitled to depends on what the computer says.

There is no automatic switch to stop errors in the system, said Elizabeth Edwards, a senior attorney with the National Health Law Program, a nonprofit that advocates for people with low incomes and medically underserved populations. The group in January filed a complaint urging the Federal Trade Commission to investigate Deloitte, alleging “ongoing and nationwide” errors and “unfair and deceptive trade practices.”

“People will go without care,” Edwards said, and until there’s a fix or a workaround, “you will continue to have the harm over and over again.”

Kenneth Smith, a Deloitte executive who leads its national human services division, previously told KFF Health News that Medicaid eligibility technology is state-owned and agencies “direct their operation” and “make decisions about the policies and processes that they implement.” Smith has called the legal nonprofit’s allegations “without merit.”

States set aside millions of dollars to cover the cost of changes, but systems may require fixes beyond the agreed-upon work. The number of hours or updates is capped each year, so states are left to prioritize certain fixes over others. And even though Deloitte isn’t reinventing the wheel for each eligibility system it builds or runs, the company addresses problems state by state rather than patching through fixes for systems across states, Smith said — a change request in one state “likely has absolutely nothing to do with another state.”

“Because of the custom nature of these systems, it’s never quite that simplistic as, ‘Hey, a particular issue that’s arisen in state of A is directly applicable to state of B,’” Smith said.

Speaking generally, Smith said, “I’m unaware of any circumstance in which a client has needed to get something done that we haven’t found a way to get it done.”

The work is lucrative for Deloitte, which reported global revenue of $65 billion in fiscal year 2023.

Deloitte’s estimates show that 35 change requests for Georgia’s eligibility system in 2023 would take more than 104,000 hours of work, according to a list of change requests that KFF Health News obtained in response to a public records request. That’s the equivalent of 50 years of work, if someone worked 52 weeks a year at 40 hours a week.

“System changes were made to align with changing federal and state policies, as well as to meet evolving business needs,” said Ellen Brown, a spokesperson for the Georgia Department of Human Services. Brown earlier said changes also were made to “improve functionality.”

The federal government — that is, its taxpayers — covers 90% of states’ costs to develop and implement state Medicaid eligibility systems and pays 75% of ongoing maintenance and operations expenses, according to federal regulations.

Eligibility systems for years have posed problems for states because of the dynamic between contractors and government officials, said Matt Salo, CEO of consulting firm Salo Health Strategies. The companies hold the expertise “and, quite frankly, they’re kind of running circles around the state capacity,” said Salo, a former executive director of the National Association of Medicaid Directors.

“For decades all I’ve heard from states in this arena is: We know that when we go out to contract it’s going to cost us a lot of money and it is going to run over, it is going to deliver years late, it is going to deliver millions if not hundreds of millions of dollars over budget,” Salo said, and “by the time it’s delivered, our needs have changed and so it’s just this constant process of change orders and going back and fixing.”

Going to Court in Florida

Two advocacy groups last August sued Florida in federal court, alleging tens of thousands of people were losing coverage without proper warning. And Florida’s eligibility system was cutting off Medicaid coverage for some moms after giving birth, William Roberts, a state employee who reviews Medicaid eligibility decisions, testified when the case went to trial in July.