A federal judge rejected the federal government’s new definition of “medical frailty” and ruled that states did not have adequate time or resources to overhaul eligibility systems.

Reminder: The Centers for Medicare and Medicaid Services (CMS) rules required that to be exempt from the Medicaid work requirements, beneficiaries have to show not just that they have a qualifying condition, but also that that the severity of the condition impairs their ability to meet the work requirements. More than two dozen states sued over this rule.
Why it’s important: This would be difficult to document and prove, particularly for individuals with substance use disorder, increasing burden for patients and providers and likely resulting in more coverage loss.

The details: The judge ruled that the federal regulations were too restrictive and said that the lawsuit successfully demonstrated that implementation of the work requirements, as written, would cause “irreparable harm.”

The judge wrote, “Because enforcement of an unlawful definition of ‘medical frailty’ 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 states argued that the CMS definition of “medical frailty” went beyond the law by imposing restrictions beyond the categorical exemptions the law delineated. The judge agreed, saying that CMS “lacked authority to exclude any subset of individuals in the five subcategories delineated as ‘medically frail’ by Congress.”
The states also challenged CMS’s requirement that they only use the previous 12 months of health claims and encounter data to assess someone’s medical frailty and the restrictions on the use of self-attestation forms. They argued the provisions were “arbitrary and capricious,” and that the government did not do its due diligence in considering the ramifications. But the judge disagreed with those challenges.

The main point: The ruling blocks the CMS interim final rule published in June that narrowed the definition of “medically frail.” But the broader Medicaid work requirements remain in place, with enforcement beginning Jan. 1.

To provide time for states to update their verification systems to comply with the ruling, the court ordered states to hold off for at least 6 months after the requirements take effect before they cancel coverage for anyone claiming a medical exemption.

Meanwhile: CMS also issued new guidance for states highlighting potential solutions to a list of nearly two dozen anticipated problems in implementing Medicaid work requirements, as many states acknowledge that their systems are not yet capable of handling the new requirements. But some of the mitigation steps outlined would add to workload or costs, including by asking states to create temporary work-arounds or expand call centers’ capacity. It remains unclear whether states can deploy these stopgaps by the start of the year, and questions about oversight remain.