Medicaid's Work Rule Takes Effect by Jan. 1. Here Is What States May Ask Physicians to Document.
CMS's optional three-tier framework for the medically frail exclusion sends unresolved cases to individual review, where states may seek provider records. A federal judge hears the states' challenge on Oct. 22.
States must begin Medicaid's community engagement requirement no later than Jan. 1, 2027. From then, most adults in the expansion group will need to show at least 80 hours a month of work, community service, a work program or at least half-time schooling to keep coverage, unless they qualify for an exclusion. One exclusion is for people who are "medically frail," and the part of that process that lands on clinicians is still being defined, state by state.
The Arizona Center for Investigative Reporting published a detailed look on Oct. 15 at how one state is preparing. The federal framework behind it is the practical issue for practices everywhere, and a federal judge in Boston hears arguments in the states' challenge to the rule on Oct. 22.
What the rule and the guidance say
The Centers for Medicare and Medicaid Services (CMS) published an interim final rule in the Federal Register on June 3, effective July 31. According to a CMS implementation deck for states, medically frail covers people who are blind or disabled, have a substance use disorder or a disabling mental disorder, have a physical, intellectual or developmental disability that significantly impairs one or more activities of daily living, or have a serious or complex medical condition. In every category, the condition must significantly impair the person's ability to meet the requirement.
CMS released the guidance on Sept. 8, the Association of American Medical Colleges reported. It sets out an example three-tier framework, and the deck says states are not required to use it.
Where physicians come in
Tier 1 relies on diagnosis codes alone. Tier 2 adds data such as comorbidities, pharmacy claims, durable medical equipment or high utilization. Tier 3 applies when data are missing or insufficient, and it triggers a manual individualized review. At that stage, the deck says, states may seek health records such as medical history, treatment records, progress notes, discharge paperwork, medication lists and test results, as well as "provider documentation or certification." CMS says the aim of its data-first approach is to limit the need for manual verification by a clinician or caseworker. The state, not the physician, makes the determination.
States must first try to verify frailty from claims adjudicated in the prior 12 months, encounter data and other sources such as health information exchange data. Before Jan. 1, 2028, a state may accept a self-declaration under penalty of perjury each time it verifies status; from 2028, only once per continuous enrollment period. Frailty must be reverified at least every 12 months.
Whether a patient keeps coverage may turn on how accurately a diagnosis is coded and whether function is documented in the chart, long before anyone asks for a letter.
The pushback and the courts
In KFF Health News reporting in July, Willie Underwood III, MD, president of the American Medical Association, said the rule "transforms the clinical encounter into an eligibility gatekeeping process." CMS Administrator Mehmet Oz said documentation "should be relatively easy to provide."
The states' suit, Massachusetts v. Oz, was brought by 23 states, the District of Columbia and two governors, a coalition often reported as 25 states. Judge Richard G. Stearns denied a preliminary injunction on July 29, and the court docket sets an Oct. 22 hearing on the parties' cross-motions for summary judgment. Separately, physician groups including the American College of Physicians, enrollees and a municipality sued in Maryland federal court on Sept. 18, the Healthcare Financial Management Association reported. The rule could change as these cases proceed.
What practices should do now
Ask your state Medicaid agency or managed care plans whether the state will use the tiered framework and what a Tier 3 request will look like. Decide who in your office will handle those requests, and whether the time is billable; we found no federal source that addresses payment. Review coding accuracy for chronic and disabling conditions, and document functional limitations in the note, not only in the problem list. Our reporting on Medicaid enrollment churn covers the panel effects. Finally, set a policy for what you will certify, in line with your clinical judgment and your state board's guidance.
Reported, fact-checked and edited by The Script Pad's editorial staff.
This article is for professional education and does not replace clinical judgment. Treatment decisions should be based on the individual patient and current guidelines.
