Where the CMS medical frailty exemption rule stands
A federal judge overturned a previously issued rule, and states are forced to pivot again.
Shannon May
A federal judge overturned a previously issued rule, and states are forced to pivot again.
Shannon May
State Medicaid leaders may be experiencing whiplash.
A federal judge on Oct. 29 overturned a controversial rule the Centers for Medicare and Medicaid Services (CMS) released in June that would have made it harder for states to determine who is exempt from Medicaid work requirements due to medical frailty.
Manatt Health, a professional services firm, estimated in July that if the rule were implemented, nearly 1 in 10 enrollees would lose Medicaid coverage from 2027 to 2034.
Hospitals are already feeling the strain of a rising uninsured population. Fewer insured patients increases the chances that hospitals will face more medical debt. And patients without insurance often rely on emergency rooms, where care is significantly more expensive.
More patients seeking care in emergency rooms is “going to create longer waits, potentially, and capacity pressure for everyone, insured and uninsured alike,” Gail Kosyla, CFO at New Jersey-based health system AtlantiCare, said during a media roundtable hosted by consulting firm BRG.
The medical frailty rule CMS released in June was more restrictive than states had planned for. It stated that, in order to verify that a beneficiary qualifies for an exemption, states would have to prove two things: that a beneficiary has a condition that meets the definition of medical frailty and that their condition is severe enough that they can’t participate in required activities.
CMS defines medically frail as someone who is blind or disabled, has a substance use disorder, a disabling mental health disorder, a serious or complex medical condition, or a “physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more activities of daily living.”
Medicaid work requirements take effect Jan. 1, 2027, and mean that beneficiaries must prove they completed 80 hours of at least one qualifying activity per month, including work, school, or community service.
Based on earlier CMS guidance, states were expecting to only be required to prove that someone has a condition that qualifies them as medically frail, Amaya Diana, a policy analyst with KFF’s Program on Medicaid and the Uninsured, previously told Healthcare Brew. Proving that someone is too impaired to complete the required activities would be a big task, as states would have to search and compile data from a variety of disparate sources, she said.
After states had spent months pivoting to accommodate the rule, US District Judge Richard Stearns of Massachusetts ruled that CMS went beyond its authority by adding restrictions without congressional approval. The ruling means states now only have to prove someone has a condition that qualifies them as medically frail.
While the ruling is certainly “welcome,” it also “creates a new set of implementation changes that states have to move so quickly to get into place,” Kinda Serafi, a partner at Manatt Health, told Healthcare Brew.
“There’s this real concern about whether states will be able to make it in time by the Jan. 1 deadline,” she said. “From my perspective, it is extremely unlikely.”
The ruling gives plaintiff states a six-month extension to get systems in place to determine who qualifies for a medical frailty exemption. Until April 29, 2027, CMS cannot penalize states for any errors or delays in medical frailty eligibility determinations, Serafi said.
There is some uncertainty over the extension, however, according to Leonardo Cuello, research professor at the Georgetown University McCourt School’s Center for Children and Families. It’s unclear whether it only applies to medical frailty determination or includes other parts of states’ work requirement implementations, he said.
CMS could appeal the judge’s decision, which stemmed from a lawsuit filed against the agency by 25 states and Washington, DC. The ruling applies to all 50 states, according to Serafi.
CMS Director Mehmet Oz said during a Nov. 3 interview on CNBC that the agency would appeal, though no formal announcement has been made and no appeal has been filed as of Nov. 12. The agency told Healthcare Brew it doesn’t comment on pending litigation.
The American Medical Association pointed Healthcare Brew to an October statement from President Willie Underwood saying the ruling was “a victory for patients.”
“Patients should not have to clear unnecessary bureaucratic hurdles to keep their health coverage, especially hurdles that go beyond what Congress intended,” he said.
