Dive Brief:
- A federal judge on Wednesday rejected a bid by dozens of states to pause the implementation of new Medicaid work requirements.
- Twenty-five states and Washington, D.C., sued the Trump administration last month, arguing a regulation promulgated by the CMS on how to adopt work requirements was significantly different from the policy enacted by Congress — and would cause major complications for states that have until January to put the new work rules in place.
- But a judge wasn’t convinced the regulation would cause irreparable harm. Plus, it’s not clear the tight implementation timeline is the CMS’ fault, given the deadline was set by lawmakers, he wrote.
Dive Insight:
The lawsuit from the states, which includes Massachusetts, California, New Jersey, Colorado and New York, came weeks after the CMS finalized a rule detailing how to set up Medicaid work requirements, one of the largest changes to the safety-net insurance program enacted in the “Big Beautiful Bill” passed last summer.
Under the law, beneficiaries enrolled through Medicaid expansion will have to work, volunteer or go to school for 80 hours each month to stay enrolled in coverage.
The states argue putting the work requirements in place by Jan. 1 will create expensive and complex administrative hurdles, potentially disrupting their beneficiaries’ access to care, according to the lawsuit, filed in late June.
They also alleged the rule released by the CMS included a narrower definition of “medically frail” — or enrollees with serious health conditions who should be exempt from work requirements — creating new challenges for states that have to determine these enrollees’ eligibility. The states asked the court to issue a preliminary injunction to pause the implementation of the work requirements.
But the judge rejected the states’ request. It’s not clear that states’ expenditures to set up work requirements will be entirely unrecoverable, as the federal government has said it will reimburse 90% of states’ costs to develop eligibility systems to implement the regulation, District Judge Richard Stearns wrote.
And it’s not clear the CMS is at fault for the quickly approaching deadline, he said.
“The States’ main complaint associated with these costs is the ‘tight timeline’ [...] under which they must implement the programmatic changes,” he said. “But it is not clear how much this harm can fairly be attributed to CMS. This timeline was set by Congress in [‘The Big Beautiful Bill’], not by CMS in the challenged [Interim Final Rule].”
However, the judge dismissed the states’ move to pause work requirements without prejudice, so the court will continue to hear a full briefing on the merits of their case. If the briefing continues past the end of the year, states could once again ask to pause the work requirements.
