Tennessee TennCare TEDS

TEDS, Tennessee's Eligibility Determination System, is rules-based software that decides who qualifies for Medicaid in Tennessee. The Division of TennCare, the state agency that runs Tennessee's Medicaid program, operates it, and Deloitte built it. It applies eligibility rules, renews coverage automatically, and generates the notices enrollees receive.

What the system is

The sources describe TEDS as a rules-based automated, or “algorithmic”, system, not an AI or machine-learning model. Its public portal is TennCare Connect. It has run statewide since March 19, 2019, for a program covering roughly 1.7 million residents.

This network models the pattern the case documents. It is not a reconstruction of the actual system.

Who built it

Deloitte built TEDS as the systems integrator of a three-contract program, the firm that builds the system and joins its parts. It took over after an earlier build under a different contractor failed. TEDS was built on components from Georgia's system.

Cost figures differ by source and scope. They range from a reported roughly $400 million system to an $823 million original contract with change-order amendments. Change orders are paid work added outside the contract's original scope.

Deloitte was not a named defendant. Reporting has tied Deloitte's Medicaid systems to recurrent errors across roughly two dozen states.

The lawsuit

A.M.C. v. Smith (No. 3:20-cv-00240, M.D. Tenn.) is a class action filed in March 2020 on behalf of 35 named child and adult plaintiffs. Secondary legal analysis describes the class as over 100,000 people terminated, plus over 100,000 qualified individuals with disabilities.

U.S. District Judge Waverly D. Crenshaw Jr. held a five-day bench trial, a trial before a judge without a jury, in November 2023.

What the court found

The court issued a 116-page opinion on August 26, 2024. It held that the system violated the Medicaid Act, the Fourteenth Amendment's Due Process Clause, and the Americans with Disabilities Act.

The court found that TEDS often failed to load data such as Social Security benefit receipt, disability status, and marital status. It assigned people to the wrong households and made incorrect eligibility determinations. It did not always check people terminated from one coverage category for others they might qualify for.

It issued “misleading and deficient” termination notices. A good-cause exception gives enrollees and applicants a right to a hearing about their eligibility if certain criteria are met. An unwritten policy refused the good-cause exception to people who never received written notice.

Judge Crenshaw wrote that “TEDS is flawed, and TennCare knows that it is flawed.” He also wrote that poor, disabled, and otherwise disadvantaged Tennesseans “should not require luck, perseverance, or zealous lawyering” to receive their benefits.

What happened next

Rather than stop the system at once, the court ordered mediation before considering an injunction, a court order to stop or require an action. Secondary coverage reports the mediation ran roughly six months.

As of late 2025 and into 2026, the case is in its remedies phase, the stage where the court decides what must be done about the harm. An appeal is pending at the U.S. Court of Appeals for the Sixth Circuit (No. 25-5660). TEDS remains in operation.

The central dilemma

Medicaid law entitles enrollees to a fair hearing, a formal appeal in which they can contest a decision about their coverage. Caseworkers could in principle override TEDS. The case file locates the failure in the notice, which connects a wrong determination to a person's ability to contest it.

When notices are misleading, deficient, or sent to the wrong household, the right to appeal becomes unreachable. A wrong automated termination then becomes final without anyone deciding that it should.

In the case file's reading, a fair process came to depend on having an advocate.

One data-entry mistake in the old system was copied into TEDS when records were converted. It merged people into the wrong households. The case file says it could repeat because a correction step was cut. The sources do not say which step.

What the available tools can and cannot address

A failure pathway is a link between two parts of the network where a mistake made by one part can be passed on to the other. A tool closes a pathway when mistakes stop passing along it.

This case has a budget of 12 units and offers twelve tools. Understand the system costs 3 units under Explore (No Targets) and Service Targets Only, and 4 under the two higher levels. Its stronger setting costs 6 at every level.

While Understand the system is on, four tools cost 1 unit less, or 2 less at its stronger setting, never below 1. They are Check copied records, Assign a challenger, Review on schedule, and Mark AI-written records.

Explore (No Targets) sets no targets. Under Service Targets Only, one tool is enough to meet them: Mark AI-written records, at 2 units, or Vet connections, at 3.

Under Service and Safety Targets, the targets can be met. That level asks you to close every failure pathway, among other targets. The cheapest way costs 10 units and uses four tools: Mark AI-written records, Gate record entries, Vet connections, and Escalate checks. Every combination that meets the targets includes the last three.

Here is what each does on this network. Mark AI-written records marks what TEDS wrote, so readers weigh it. Mistakes stop passing along the data read for each decision, the stored records read at renewal, and caseworkers reading the records.

Gate record entries requires sign-off before anything enters the case records. Mistakes stop passing along the pathway where TEDS writes determinations into them. Vet connections allows record copies and reads only where explicitly granted. Mistakes stop passing along the data read for each decision, the stored records read at renewal, and the terminations and notices sent.

Escalate checks raises caseworkers' checking when monitoring flags trouble. Mistakes stop passing along the pathway that sends determinations to caseworkers. Together the four close all six failure pathways.

Under All Governance Targets, this case is not fully addressable with the available tools. At that level, Vet connections and Check copied records work at reduced strength unless Understand the system is also on. Without it, the pathway that sends terminations and notices from the case records stays open.

With it, one combination within the budget closes every failure pathway. It is Understand the system, Gate record entries, Vet connections, and Escalate checks, for all 12 units. That level also asks for a larger, steadier gain in service, meaning the benefit the deployment delivers. This combination falls just short of it.

No tool offered here adds a way into a fair hearing. That is a finding about the deployment, not a gap in your approach.