The Centers for Medicare and Medicaid Services (CMS) has released federal guidance detailing how states must implement medical frailty exemptions for upcoming Medicaid work requirements. Under the 2025 reconciliation law, 44 states must mandate work or community engagement for certain Medicaid enrollees by January 1, 2027. The new federal rule requires states to verify that a patient’s medical condition—such as a disability, substance use disorder, or complex chronic illness—significantly impairs their ability to meet these work requirements.
How CMS Defines Medical Frailty for Medicaid Exemptions
The CMS rule establishes five specific categories for medical frailty, requiring states to look beyond a simple diagnosis to determine if a condition prevents an individual from working. According to the official CMS guidance, the exempt categories include:
- Individuals who are blind or disabled.
- Those with physical, intellectual, or developmental disabilities limiting activities of daily living (ADLs).
- Individuals with a substance use disorder (SUD).
- People with a disabling mental health disorder.
- Those with a "serious or complex" medical condition.
Unlike previous state-level expectations, the federal rule mandates that states assess whether the condition functionally limits the individual’s ability to participate in community engagement. For those with an SUD, the exemption applies regardless of active treatment status, provided the individual has not been in recovery for five or more years. For "serious or complex" conditions, the rule requires a high level of clinical acuity, a more restrictive standard than some state programs previously utilized.
Verification Processes and Data Requirements
States must use claims and encounter data from the preceding 12 months to verify medical frailty before requesting documentation from enrollees. The rule prohibits the use of data older than one year, as it may not reflect the individual’s current health status.
Because diagnosis codes alone do not confirm an inability to work, states face a significant operational hurdle. According to the Kaiser Family Foundation (KFF), states will likely need to develop complex algorithms—incorporating prescription drug data, durable medical equipment (DME) utilization, and hospitalization records—to automate these determinations. If state verification processes are found to be insufficient during federal audits, states could face financial penalties.
Challenges for Providers and Enrollees
The reliance on provider confirmation introduces potential administrative and ethical conflicts. Research from New Hampshire’s prior work requirement implementation indicates that when states require physicians to certify a patient’s inability to work, it creates a significant burden on the clinical workforce.
Many primary care providers have historically resisted signing forms that declare a patient "unable to work," citing concerns about the patient-provider relationship and potential conflicts of interest. Furthermore, because Medicaid coverage is often essential for ongoing care, the threat of losing eligibility due to a failed exemption application could lead to increased gaps in coverage for vulnerable populations.
Future Limitations on Self-Attestation
The CMS rule allows states to accept self-attestation of medical frailty throughout 2027 when reliable administrative data is unavailable. However, this flexibility is temporary. Starting January 1, 2028, states may only accept self-attestation once per enrollment period. After that, enrollees will be required to provide clinical documentation or be verified through state-held data. States are required to conduct this verification at least every 12 months, even for individuals with permanent disabilities, unless the state elects to use more frequent renewal cycles.
This regulatory framework places the burden of proof on state agencies to balance strict federal compliance with the need to prevent vulnerable enrollees from losing access to health coverage.
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