As states prepare to implement new Medicaid work requirements beginning in January, the Centers for Medicare & Medicaid Services (CMS) has released additional information on how states can identify beneficiaries who qualify for an exemption because they are medically frail.
The guidance outlines an optional, data-driven framework that states can use to determine whether beneficiaries qualify for the medical frailty exemption, including circumstances in which states can make that determination using existing health care data without requiring additional documentation from patients or physicians. But the guidance does not resolve concerns about the restrictive medical frailty standard established in a June CMS rule, which the AMA has warned could cause eligible patients to lose coverage and impose significant administrative burdens on physicians.
Under the One Big Beautiful Bill Act—called OBBBA or H.R. 1, for short—certain Medicaid beneficiaries will be required to demonstrate that they are working or participating in other qualifying activities to obtain or maintain coverage. The requirements generally take effect Jan. 1, although states may implement them earlier.
Congress recognized that people with serious medical conditions, termed “medically frail” in the statute, should be protected from losing their coverage if they don’t meet the new work or community engagement requirements. This includes those with a serious or complex medical condition, disabling mental disorder, substance-use disorder, significant physical, intellectual or developmental disability, or who are blind or otherwise meet the Social Security Act disability standard.
However, the interim final rule that CMS released in June narrowed the exclusion Congress put in place—a move that quickly drew pushback from the AMA and others, including an ongoing lawsuit, Maryland v. Oz, from more than half the states in which the AMA joined 10 other medical associations in filing an amicus brief (PDF). The interim final rule requires states to assess whether someone has a qualifying condition and determine whether the condition “significantly impairs” their ability to comply with the work requirements.
The AMA and others believe the rule goes beyond what Congress intended with H.R. 1 and that the new requirement will be difficult to prove, likely resulting in widespread, procedural disenrollment of people who are eligible for Medicaid. The rule will also create additional burdens on physicians and sow confusion for states.
The CMS guidance—issued in September and titled “Implementing Medical Frailty Under Community Engagement (Section 71119 of WFTC Legislation)”—offers a three-tiered, optional framework for states. The guidance notes that “there are a number of data-driven approaches that states could take” and encourages “states to design their process in such a way that minimizes administrative burden, considering factors such as the availability of data and the likelihood an individual has reasonably available documentation if data are not available.”
The tiered framework
The guidance from CMS says that states could use “a tiered approach building on available coding and data sets to better organize a list of qualifying conditions for medical frailty.”
For example, the guidance says, this is a way to identify individuals who may qualify as medically frail based on their conditions.
Tier 1: Conditions for which available diagnosis codes confirm that the individual’s ability to comply with the community engagement requirement is significantly impaired. States may identify these individuals as medically frail without requiring additional information or documentation.
Tier 2: Conditions that may indicate an individual is medically frail but additional information is needed to determine if the condition significantly impairs the individual’s ability to comply with community engagement. States could assess severity or functional status, for example by combining diagnosis codes with other available data that indicate elevated acute care utilization, high-risk polypharmacy or use of certain durable medical equipment.
Tier 3: There is insufficient or no information or data to assess medical frailty based on tier 1 or tier 2 criteria alone. A manual individualized review process, where additional documentation is gathered, may be required before deciding on excluding the beneficiary from the work requirements.
The guide goes on to give a “stepwise approach for implementing the tiered medical frailty framework,” including ways to identify the universe of application conditions, match the conditions to relevant code sets, develop methodology using the tiered framework and apply the methodology against available beneficiary data.
Among other things, the guide also walks through some clinical vignettes, including ones for coronary artery disease and diabetes, with a vignette for each tier level and the data available for each vignette, along with a determination for example based on the vignette and available data.
More changes needed
The guidance clarifies that states may use existing data to identify at least some medically frail beneficiaries without requiring them to obtain additional documentation. That approach is consistent with the AMA's longstanding advocacy to streamline exemption determinations and minimize administrative burdens.
However, the guidance does not change the underlying requirement that a qualifying medical condition significantly impair an individual's ability to comply with work requirements. Medical claims and other administrative data may establish that a person has a particular condition or has utilized certain services, but they often do not capture functional limitations or demonstrate how a condition affects their ability to comply with the community engagement requirement.
As a result, many beneficiaries may still need a manual, individualized assessment or additional documentation to establish their eligibility for a medical frailty exemption. That is still likely to create substantial administrative burdens for states and physicians, as well as an increased risk that eligible individuals lose coverage because they are unable to obtain or submit sufficient documentation.
In a July comment letter to CMS (PDF), AMA CEO John Whyte, MD, MPH, urged the agency to clarify how states could use existing information to identify medically frail beneficiaries and avoid unnecessary administrative burden. The AMA has also raised concerns that the additional impairment standard could result in eligible beneficiaries losing Medicaid coverage for procedural reasons rather than because they fail to meet the statutory criteria for an exemption.
Those concerns are central to ongoing litigation over the interim final rule. In Massachusetts v. Oz, 26 states are challenging the rule's medical frailty provisions in the U.S. District Court for the District of Massachusetts. The AMA Litigation Center, the Massachusetts Medical Society and nine national medical associations filed an amicus brief supporting the states. The judge in late July denied the state’s request for a preliminary injunction and set an expedited schedule to consider the case’s merits at summary judgment. The judge is expected to rule before Jan. 1, when the work rule would go into effect.
States will have some temporary flexibility in determining exemptions for medically frail beneficiaries. The interim final rule allows states to accept self-attestations through the end of 2027, potentially allowing beneficiaries to establish eligibility for an exemption without obtaining additional medical documentation during the initial implementation period.
While the AMA continues to advocate for changes to federal rules, important decisions about how medical frailty exemptions will operate are being made at the state level. The AMA is working with state medical associations and other partners to inform these decisions and advocate for implementation approaches that protect eligible patients and minimize unnecessary burdens.
Alongside its federal and state advocacy, the AMA is helping patients and physicians understand the new requirements and prepare for implementation. The AMA recently announced a guide (PDF) to help patients navigate the new Medicaid work and community engagement rules that are coming in 2027, explaining who may be affected, which exemptions are available and what beneficiaries can do now to reduce the risk of losing coverage.
“When Congress was debating this bill, the AMA raised concerns that it would make it harder for patients to access care and could lead to worse health outcomes,” said AMA President Willie Underwood III, MD, MSc, MPH. “Now that these policies are taking effect, our focus is on helping patients understand what is changing and what they can do to maintain coverage.”
Dr. Underwood added that the AMA is “ready to work with Congress and the administration to protect patients’ access to care.”
