The Centers for Medicare and Medicaid Services (CMS) released guidance for states allowing them to use a “tier system” to determine which Medicaid recipients are exempt from work requirements.

Why it’s important: The guidance allows states to use existing data to automatically exempt people from the requirements due to “medical frailty.” This could reduce the need for beneficiaries and physicians to submit additional documentation, as groups feared would be required for all exemptions to show not just that an individual had a certain condition, but that it would prevent them from fulfilling the community engagement requirements.

The details: In addition to compiling lists of diagnostic codes that might indicate “medical frailty,” states can tier diagnoses based on how likely they are to impair someone’s ability to work.

Tier 1: Tier 1 includes diagnoses so serious they automatically prevent beneficiaries from working or conducting daily activities. No additional paperwork is needed to qualify for a medical frailty exemption. This includes people with conditions such as end-stage renal disease, ALS, or end-stage cancer.
Tier 2: Tier 2 conditions may indicate medical frailty but require additional data, such as billing for recent acute care, or pharmacy codes for medications.
Tier 3: Tier 3 illnesses would undergo case-by-case review.

Many diagnoses could fall into different tiers depending on the specifics of the patient’s illness.

The bigger picture: States are not required to use the tier structure, but the flexibility could be helpful given the pressure they are under to establish Medicaid work requirement systems by January 1.

What’s coming: Disease groups are lobbying for better placement in the tier structure, as moving up a tier could mean less paperwork for patients and lower risk of losing coverage.

On SUD: The guidance outlines the substance use disorder (SUD) medically frail category and provides examples of how it would fit into the tier system.

Medical frailty: Individuals in stable recovery from SUD (in recovery for 5+ consecutive years) are not considered medically frail. To determine if an individual in recovery for less than 5 years is medically frail, the state must determine that SUD significantly impairs the individual’s ability to comply with the community engagement requirement.
Lookback period: States may verify medical frailty by looking at claims from the “preceding 12 months.” But this 12-month lookback complicates the verification of medical frailty on the basis of SUD, due to the 5-year timeframe. CMS anticipates allowing states to use claims and encounter data from the preceding 5 years for SUD determinations.
Tier examples: The guidance outlines clinical examples for which SUD would fall into Tier 1 and Tier 2. In the Tier 1 example, the patient qualifies as exempt based on the ICD-10 code for “alcohol dependence with withdrawal delirium,” which demonstrates that the patient has severe features of alcohol use disorder (withdrawal). In the Tier 2 example, the patient qualifies as exempt due to significant time commitment of daily visits to a methadone clinic and weekly self-help/peer services — medical claims for opioid dependence, PTSD, alcohol and/or drug services and methadone administration and/or service, and self-help/peer services, in combination with pharmacy claims for methadone.