Dive Brief:
- Twenty-six states have filed a lawsuit against the Trump administration challenging Medicaid work requirements, arguing several provisions in regulation promulgated by the CMS are unlawful and risk harming enrollees in the safety-net insurance program.
- The lawsuit, filed in federal court Monday, argues the regulation differs significantly from the provisions outlined in the “Big Beautiful Bill,” which established Medicaid work requirements last year. Those differences are causing undue complications for states, which must implement work requirements by Jan 1., and risk disrupting coverage for enrollees, the lawsuit says.
- States also allege the CMS narrowed the definition of “medically frail” in its interim final rule, which could make it harder for sick people to qualify for exemptions. The lawsuit seeks to vacate some of the provisions in the interim final rule.
Dive Insight:
The CMS published its highly anticipated interim final earlier this month, just seven months ahead of the deadline for states to begin enforcing work requirements in Medicaid.
States had been waiting since the passage of the “Big Beautiful Bill” last year for guidance from the Trump administration on several key details in order to create the systems to enforce the work requirements, which require that people enrolled through Medicaid expansion log 80 hours per month of work, volunteer or school service in order to stay covered.
The interim final rule, among other things, codified the definition of “medically frail,” or those with serious health conditions who would be exempt from work requirements. The definitions have major effects in the program — research says that two-fifths of Medicaid enrollees who are at risk of being disenrolled have three or more chronic conditions.
Enrollees with a health condition also must be found to be significantly impaired in their ability to meet the work requirements, the CMS said in their interim final rule.
That definition is a significant departure from what was outlined in the “Big Beautiful Bill,” which only specified that individuals who were “medically frail or otherwise have special medical needs,” according to the lawsuit. The new definition from the CMS could disrupt coverage for patients undergoing cancer treatment, those with disabilities or others struggling with complex health conditions, the states said.
“CMS’s abrupt change, if allowed to stand, will make it significantly harder for vulnerable individuals to qualify for exclusions from the Medicaid work requirements and harder to maintain Medicaid coverage,” the Massachusetts Attorney General’s office said in a release.
In addition, states say the interim final rule creates additional administrative burdens for them, which could place strain on state Medicaid programs and exacerbate the risk of enrollees losing coverage for administrative reasons, even if they’re eligible.
States say they had already begun making substantial investments in their Medicaid systems to get ready for work requirements, but that the final rule “will cause harm and chaos” for them, according to the lawsuit.
The plaintiff states, which includes Massachusetts, California, New Jersey, Colorado, New York and others, say the CMS’ interim final rule violates the Administrative Procedure Act and “unconstitutionally coerces states” by imposing unclear new requirements. They’re asking the court to pause the work requirements provisions while the courts consider the case.