From advocating with the Centers for Medicare & Medicaid Services (CMS) to making a case in court, the AMA and organized medicine are fighting to protect Medicaid coverage for people with serious medical conditions,
Under the One Big Beautiful Bill Act of 2025 (OBBBA), certain Medicaid beneficiaries will have to meet new work requirements starting in 2027. Congress, however, recognized that people with serious medical conditions—termed “medically frail” in the law—should be protected from losing coverage for failing to meet those requirements. The law therefore excludes people who fall within five categories of medical frailty.
CMS regulations implementing the new requirements significantly narrowed that protection. Under an interim final rule published in June, having a condition that falls into one of the five statutory categories is not sufficient to become exempt. Under the new rules, a person must also show that the condition “significantly impairs” their ability to comply with work requirements. This additional functional impairment test does not appear in the statute and could leave millions of eligible people with serious medical conditions at risk of losing Medicaid coverage.
The interim final rule also bars states from relying on Medicaid claims and encounter-data older than 12 months when verifying someone’s medical frailty or other exclusions. As a result, people with permanent, irreversible or progressive conditions may be required to repeatedly document conditions that were previously established, creating unnecessary paperwork burden for patients and physicians and taking time away from patient care.
AMA backs legal challenge to CMS rule
Earlier this summer, 25 states and the District of Columbia filed a lawsuit, Massachusetts v. Oz, challenging parts of the rule. The Litigation Center of the American Medical Association and State Medical Societies and the Massachusetts Medical Society filed an amicus brief supporting the states’ request for a preliminary injunction that would have stopped CMS from applying and enforcing the interim final rule while the legal challenge to the work requirements proceeded.
Medicaid expansion under the Affordable Care Act allows 20 million Americans to access needed healthcare and the AMA has long advocated that patients with significant medical conditions, such as cancer and multiple sclerosis, must be protected from losing Medicaid coverage due to work requirements. Congress also recognized that medically frail individuals shouldn’t lose coverage based on their ability to work. The CMS rule’s additional restrictions jeopardize care for these individuals, says the physician organizations’ brief.
The federal district court in late July denied the states’ motion for a preliminary injunction without prejudice, saying that the harms principally involved minimal additional bureaucratic burdens and, in any event, were not likely attributable to CMS rulemaking but rather to OBBBA legislation the agency was directed to implement. The court has entered an expedited briefing schedule to consider the merits of the case.
Find out more about the cases in which the AMA Litigation Center is providing assistance and learn about the Litigation Center’s case-selection criteria.
AMA calls for changes
The AMA has long opposed work requirements because experience shows that those who are eligible for Medicaid often lose coverage for procedural reasons, which disrupts access to medically necessary care and imposes administrative burdens on beneficiaries, state Medicaid agencies and clinicians. On top of that, it does little to increase employment.
The AMA also raised its concerns about the work requirements in a comment letter to CMS, urging the agency to revise the interim final rule “to avoid compounding the well-documented harms of work requirements.”
The AMA comments warn that CMS’ approach “departs from Congress’s intent in ways that will predictably increase avoidable coverage loss and unnecessarily burden patients, physicians and state Medicaid agencies.”
The interim final rule (IFR) relies on verification systems that often don’t exist and it creates documentation and functional assessment requirements that Congress didn’t enact, AMA CEO John Whyte, MD, MPH, wrote in a July 29 letter (PDF) to CMS Administrator Mehmet C. Oz, MD.
It also “shifts responsibility for complex eligibility assessments onto patients and treating clinicians,” the letter states. “Rather than minimizing administrative burden, the IFR will require many eligible beneficiaries to obtain additional documentation solely to maintain coverage, increasing the likelihood that medically frail and otherwise eligible individuals will lose Medicaid for procedural rather than substantive reasons.”
The letter urges CMS to:
- Restore the medical frailty exclusion to the categorical protection Congress established by treating a qualifying diagnosis, condition or status as sufficient; preserve self-attestation; and minimize documentation burdens on beneficiaries and clinicians.
- Grant states good faith effort exceptions according to the standard Congress enacted.
- Revise the verification and assistance provisions to reflect the practical realities of obtaining third-party records and securing timely assistance from state agencies.
Preserve state flexibility on Medicaid payments
The AMA is also pressing CMS to protect states’ ability to use Medicaid payment policy to improve access to high-quality care. In July, the AMA submitted a comment letter on a separate CMS proposed rule addressing two payment mechanisms available to state Medicaid programs: state directed payments in Medicaid managed care and targeted practitioner payments in Medicaid fee-for-service.
The AMA urged CMS to avoid putting limitations on state payment mechanisms in Medicaid managed care that go beyond the scope of limitations that the OBBBA imposed. The AMA’s letter also urged CMS to withdraw its proposed restrictions on targeted practitioner payments in Medicaid fee-for-service, an area where OBBBA did not impose any new restrictions.
While the AMA supports CMS’ commitment to eliminate fraud, waste and abuse, the letter emphasizes that Medicaid payment rates too often fall short of the cost of providing care. States need sufficient flexibility to respond to those payment shortfalls and to design reimbursement policies that reflect the needs of their Medicaid populations.
“In doing so, it unduly restricts states’ ability to design reimbursement models that allow their Medicaid programs to operate efficiently and economically while also ensuring an adequate number of providers and maintaining high-quality care for beneficiaries,” Dr. Whyte wrote to CMS in a July 17 letter (PDF).
You can learn more about the OBBBA’s changes to Medicaid, the ACA and other key provisions in the law. Explore how changes that the law created are reshaping care in 2026, and stay up to speed with this implementation timeline (PDF) for OBBBA’s many healthcare-related provisions.
