Dive Brief:
- A court has tossed out the Trump administration’s policy for determining which sick people are exempt from Medicaid work requirements, a victory for consumer advocates, providers and states that had argued the definition was too restrictive and could lead to ill enrollees losing coverage — but one that injects fresh uncertainty into work requirements’ already troubled rollout.
- On Thursday, a Massachusetts district judge agreed with the more than two dozen states that had sued over the CMS rule, ruling that the agency’s determination of which Medicaid beneficiaries are “medically frail” and therefore not subject to looming work rules is more limited than what Congress intended.
- The judge vacated the definition, but left other controversial stipulations of the rule in place. The ruling gave states an additional six months to absorb the changes before enforcement kicks in, though the CMS could appeal the decision.
Dive Insight:
Under the GOP’s “Big Beautiful Bill” passed last summer, adults who receive Medicaid through the Affordable Care Act’s expansion have to log at least 80 hours of work, volunteering or schooling each month to stay eligible for the safety-net insurance program starting in 2027.
The law excluded people who are blind or disabled, along with those with a substance use or serious mental health disorder; a physical, intellectual or developmental disability that impairs daily living; or a serious or complex medical condition.
States, up against a tight timeline to stand up the work mandates, relied on informal guidance from the CMS about how to determine which enrollees with a serious or complex medical condition qualified for an exemption. So many were shocked when the agency finalized formal guidance this summer requiring medically frail people to be so sick they’re unable to comply with the work requirements, instead of people who are simply very sick.
The rule sparked significant backlash for creating an additional hurdle for ill Medicaid enrollees to prove they’re exempt. Democrats, patient advocates, medical groups and other critics argued it could drive up the number of eligible Medicaid beneficiaries who improperly lose coverage.
In June, 25 states and the District of Columbia sued over the rule, arguing that several stipulations — especially the medical frailty definition — went well beyond what was outlined in the “Big Beautiful Bill.”
Judge Richard D. Stearns of the U.S. District Court of Massachusetts rejected the state’s bid to pause the work requirements in July. But on Thursday, he agreed that the extra limitation on which people can qualify for the medical frailty exemption deviated from Congress’ intent.
“Because enforcement of an unlawful definition of ‘medically frail’ may lead to the disenrollment of otherwise eligible vulnerable individuals relying on Medicaid coverage for continuity of care, the States (and public) face potential for great hardship in the absence of an injunction. The court accordingly will issue the permanent injunction requested by the States,” Stearns wrote.
The judge, however, upheld two other disputed policies in the rule. States can still only use medical claims and clinical visit data from the past 12 months, instead of a patient’s historical medical record, to determine medical frailty. Limitations on how frequently individuals can self-attest to their medical frailty will also remain in place.
Opponents of the rule cheered Stearns’ decision — including provider groups, which had been concerned that forcing clinicians to weigh in on their patients’ ability to work would clash with medical ethics, create inconsistent determinations and result in more strain on doctors.
The ruling “is a victory for the rule of law, medical ethics, and common sense,” Susan Dentzer, the president and CEO of America’s Physician Groups, said in a statement.
Dr. Willie Underwood, the president of the American Medical Association, called the decision a “victory for patients.” The AMA and other medical societies filed an amicus brief supporting the states’ case in September.
However, the ruling raises fresh headaches for states that now have to go back to the drawing board on how to track medical frailty and ensure those people retain Medicaid.
In recognition of the operational lift, Stearns gave states a six-month stay on enforcing medical frailty determinations. And carving the definition out shouldn’t create too many problems for states, the judge argued.
“The text can easily be excised from the [CMS’ rule] without otherwise impacting the validity of its provisions,” Stearns wrote.
A spokesperson for the CMS declined to comment on the ruling, citing pending litigation. The agency could still appeal, once again throwing medical frailty exemptions into doubt. The industry is also waiting on the results of similar litigation — another case challenging work requirements was filed by Medicaid enrollees and provider groups in September.
States are also bracing for potential policy shifts if the balance of power changes in next week’s midterm elections. Democrats are expected to retake control of the House, which could spark an effort to overturn work requirements altogether.
Families USA, a consumer advocacy group, urged the Trump administration to postpone the start of the work requirements due to the ruling and ongoing turmoil.
“The court decision brings a welcome reprieve and further illustrates why the Trump administration should delay the start of Medicaid work reporting requirements set to begin two short months from now,” Families USA Director Anthony Wright said in a statement.
