Health Law Daily Wrap Up, MEDICAID—D. Mass.: 26 states sue CMS over Medicaid work requirement rule, (Jul 6, 2026)
Law Firms Mentioned:Nita Kumaraswami Klunder, Attorney at Law
Organizations Mentioned:Centers for Medicare & Medicaid Services
By Sheila Lynch-Afryl, J.D., M.A.
The complaint alleges that the rule’s definition of “medically frail” is narrower than the statute’s.
A coalition of 26 states filed a lawsuit that challenges CMS’s June 3 interim final rule implementing the One Big Beautiful Bill Act’s (OBBBA) Medicaid work requirements. The main contention in the complaint is that the rule’s definition of “medically frail” diverges from the statute and CMS’s past guidance and communications, requiring such individuals to “jump through unnecessary administrative hoops to get and retain life-saving healthcare coverage.” The states also filed a motion for preliminary injunction (Commonwealth of Massachusetts v. Oz, No. 1:26-cv-12962 (D. Mass. June 29, 2026)).
Beginning January 1, 2027, under section 71119 of the OBBBA, Medicaid expansion states and those that have a section 1115 demonstration covering a similar population must, as a condition of Medicaid eligibility, require adults aged 19 to 64 to “demonstrate community engagement” for 80 hours per month. The law excludes the medically frail. CMS’s interim final rule (91 Fed. Reg. 33348 (June 3, 2026)) defined “medically frail” as requiring the individual to satisfy one of five diagnostic categories and demonstrate that the condition “significantly impairs” his or her ability to comply with the requirement.
The complaint alleges that the rule is contrary to law under the Administrative Procedure Act (APA) because:
its “narrow definition” of the “medically frail” or “special medical needs” exclusion (42 C.F.R. § 435.554(c)(5)(i)) is contrary to the specific and broader categorical exclusions in the statute (42 U.S.C. § 1396a(xx)(9)(A)(ii)(V));
its narrow definition of the exception to emergencies that “affect[] the ability of applicable individuals to demonstrate community engagement in a particular county or other equivalent unit of local government, or multiple counties, or statewide” (42 C.F.R. §435.555(d)(2)(i)) is contrary to the broader exception in the statute (42 U.S.C. § 1396a(xx)(3)(B)(ii)(II)(aa)); and
its provision limiting states’ use of self-attestation to verify eligibility for coverage, including eligibility for the medical frailty exclusion, starting in January 2028 (42 C.F.R. § 435.557(f)(1)(ii)) violates the statute’s provision allowing states to “elect to not require an individual to verify information” that he or she is a “specified excluded individual” (42 U.S.C. § 1396a(xx)(3)(A)).
Count II alleges that these and other actions on the part of the federal government were also arbitrary and capricious under the APA, in part because it failed to sufficiently explain why the rule deviated from CMS’s prior subregulatory guidance.
Finally, Count III alleges that the rule violates the Spending Clause (U.S. Const. art. I, § 8, cl. 1) because it fails to provide clear notice of the states’ obligations to satisfy the conditions to receive the restricted federal Medicaid funding and places retroactive conditions that the states could not have reasonably anticipated when they began implementation of in reliance on the statute and CMS’s prior guidance.
The case is No. 1:26-cv-12962.
Attorneys: Nita Kumaraswami Klunder (Nita Kumaraswami Klunder, Attorney at Law) for the Commonwealth of Massachusetts.
Companies: Centers for Medicare & Medicaid Services
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