Just a few weeks ago, we explained how the Center for Medicare and Medicaid’s (CMS) proposed regulation on state directed payments goes far beyond the statutory authority in H.R. 1 to incredibly harmful effect. Now it has happened again. This time CMS has issued an interim final rule on work reporting requirements (the “IFR”) that also completely re-writes the statutory design. CMS appears to be confusing its Constitutional role—to implement the law—with Congress’s exclusive role in writing new laws. The new IFR goes beyond the parameters of the law in a number of ways, but this blog will focus on the definition of medical frailty.
Although there is ample evidence it is a harmful policy, H.R. 1 requires states to implement work reporting requirements in Medicaid (with most states starting January 1, 2027). You can see all our materials tracking state implementation of work requirements here. Under the H.R. 1 statute, individuals in Medicaid expansion are required to comply with work reporting requirements, but there are numerous exclusions that apply. One of those exclusions exempts people who are “medically frail” from having to comply with work requirements. Under H.R. 1, medically frail is defined as individuals meeting any one of five criteria, namely having a disability, substance use disorder (SUD), disabling mental health condition, functional impairment impacting activities of daily living, or “serious or complex” condition.
The IFR, however, severely narrows the definition—requiring additionally that the underlying condition (for example, an SUD) must significantly impair an individual’s ability to comply with the work requirement. This is not at all in the statutory definition (and in fact, conflicts with it, as we’ll cover below), and is devastating for two reasons. First, most obviously, many individuals who have chronic conditions, and who Congress intended to protect, but don’t meet this new made-up standard, will likely lose their health insurance. Second, it also eviscerates Congress’s intended method to protect people: in the law, Congress requires states to use data to try to automatically identify people who might be medically frail (using things like diagnosis codes in their claims data), but the individualized significant impairment standard may force states, individuals, and their doctors to produce all kinds of evidence to prove they should be exempt. It would also create a far more complex process that would likely require states to dedicate a lot more staff time and resources to sift through the paperwork instead of automating the process. Long-story short: millions of people Congress protected in the law will lose their health insurance, just because of this IFR.
Let’s look more closely at why CMS’s IFR gets it so so wrong.
Congress’s Law is Clear, and the IFR Just Chooses to Ignore It
When Congress added the medically frail exclusion for work reporting requirements to H.R. 1, it wasn’t just making up a new term. “Medically frail,” is a long-standing term in Medicaid, existing in the Medicaid statute Congress wrote and in fact already defined in Medicaid regulations. That existing regulatory definition has the five criteria, described above, that Congress specifically used in H.R. 1. So, putting this together: when Congress created work reporting requirements in HR 1, it created an exclusion using a specific term (“medically frail”) it had already used before, that already had a specific definition (the five criteria) in active use, and just to be safe Congress also included the five criteria from the definition in the text of HR 1 itself. There can only be one reasonable or serious interpretation of Congress’s legislation here.
Nonetheless, CMS went well out of its way to make up an entirely new standard that Congress didn’t ask for. In the IFR, CMS specifies that the new standard (significant impairment) only applies to work reporting requirements, and does not apply to all the prior uses of medically frail. In other words, CMS’s interpretation of Congress’s using a longstanding term with an established definition is that Congress meant for them to make up a second distinct meaning of the same term, which would apply only to work reporting requirements, but keep the first definition in place for other purposes. It is a capricious interpretation by any measure. CMS’s job is to implement the statute, and CMS just ignored it.
CMS Totally Mischaracterizes the Purpose of the Medically Frail Standard
In the IFR, CMS shares its belief—which appears nowhere in the statute—that medically frail for the purpose of work reporting requirements is an exclusion that hinges on someone’s “inability to work.” CMS justifies the new “significant impairment” standard on this belief. There’s just one problem: it’s totally wrong.
The existing medically frail standard is used by states to sort out what Medicaid benefits people should get. States sometimes have the authority to give people alternative benefits packages, but people who are medically frail must always be allowed to access the traditional benefits package. The obvious and long-established rationale for this distinction is that people who are not medically frail might be adequately covered by an alternative benefits package, but for people who have some kind of serious health condition, Congress didn’t want to take any chances—Congress wanted to make sure they always had access to the traditional benefits. It is unmistakable that this has nothing whatsoever to do with “how many hours a month a person” can work. The whole purpose of medically frail determinations is concern about the potential harm for person with a complex health condition if you change their benefits.
When Congress leveraged that existing medically frail term for the work requirement, their purpose was not to assess someone’s ability to work. It was to set out a group of people for whom Congress wanted to protect their access to benefits, out of concern for the potential harm they might experience if their health insurance was cut off. And think about it, if Congress has already legislated with concern about medically frail people having their benefits changed, they would be even more concerned about having their coverage totally cut off.
CMS totally mischaracterizes the purpose of the medically frail standard, which has never been about how many hours you can work. Congress promised they would protect people in cancer treatment or dealing with a substance use disorder or living with other serious health conditions, and wrote an exclusion in H.R. 1 to do that, and CMS is attempting to unlawfully repurpose that protection.
Conclusion
The pattern here is concerning. In just a month, CMS has issued two regulations and one guidance which radically transform the text of H.R. 1, and in every case CMS’s fabricated policy consistently adds huge burdens to states and providers, reduces health coverage for individuals, and operates as a naked cut to the Medicaid program. CMS should get back to running Congress’s Medicaid program, not re-writing it.