Health Law Daily Wrap Up, MEDICAID ELIGIBILITY—D.Mass.: Court vacates Medicaid frailty rule limiting eligibility exemption, (Oct 30, 2026)

By Patricia K. Ruiz, J.D.

CMS exceeded its authority by narrowing Congress's definition of medically frail Medicaid beneficiaries, the court found.

States challenging a Medicaid interim final rule (IFR) won partial summary judgment after a federal court concluded CMS unlawfully narrowed the statutory definition of “medically frail” individuals exempt from new Medicaid community engagement requirements. The court vacated the challenged provision, permanently enjoined its enforcement, and granted the states a six-month stay of enforcement on medical-frailty determinations. The court otherwise upheld separate provisions limiting the use of older medical records and self-attestations to establish medical frailty (Massachusetts v. Oz, No. 26-12962-RGS (D. Mass. Oct. 29, 2026)).

The Commonwealth of Massachusetts and 26 other states, the District of Columbia, and two governors sued Mehmet Oz, in his official capacity as director of CMS, and other federal officials over portions of a June 2026 interim final rule implementing Medicaid community engagement requirements enacted in H.R. 1, known as the “One Big Beautiful Bill.” The statute requires certain Medicaid expansion-population beneficiaries to work, attend school, or perform community service beginning Jan. 1, 2027, while exempting specified categories of individuals, including those who are medically frail or otherwise have special medical needs.

Definition exceeded statutory authority. The states argued that CMS unlawfully added an additional limitation to the statutory exemption by defining a medically frail individual as someone who both falls within one of five listed categories and has a condition that significantly impairs compliance with the community engagement requirement. The court agreed, finding that Congress required the term to include individuals who are blind or disabled, have substance use disorders, disabling mental disorders, qualifying physical, intellectual or developmental disabilities, or serious or complex medical conditions.

According to the court, the statute's use of the word “including” established a minimum scope that CMS lacked authority to narrow. The court found that Congress knew how to impose functional limitations when it wished to do so and did not require individuals in the listed categories to demonstrate an inability to comply with community engagement requirements. As a result, the court held that the IFR's additional impairment-to-comply requirement was ultra vires and contrary to law under the Administrative Procedure Act.

APA challenge largely rejected. The court declined to invalidate two other challenged provisions of the rule. One limits states to using claims and encounter data from the preceding 12 months when verifying medical frailty. The other permits only one self-attestation of medical frailty during a continuous enrollment period. The court found CMS had provided reasonable explanations for both policies, including concerns that older medical information may not reflect current conditions and that verification requirements could encourage individuals to obtain care. Although the states disagreed with those policy choices, the court concluded their objections fell well short of demonstrating arbitrary and capricious agency action.

Vacatur and injunction granted. Turning to remedies, the court vacated the unlawful language from the interim final rule and rejected the government's request for remand. It reasoned that severing the offending language would not affect the remainder of the rule and would provide clarity before the Jan. 1, 2027, implementation deadline.

The court granted a permanent injunction, finding the states had demonstrated irreparable harm from the costly changes required to their eligibility-verification systems and that the public interest favored preventing enforcement of an unlawful rule that could cause eligible Medicaid beneficiaries to lose coverage. In addition, the court granted a six-month stay of enforcement regarding determinations of whether individuals qualify as medically frail, while leaving unchanged Congress's January 1, 2027, implementation deadline.

The case is No. 26-12962-RGS.

Judge: Stearns, R.G.

Attorneys: Nita Kumaraswami Klunder, Massachusetts Attorney General's Office, for the Commonwealth of Massachusetts. Stephen Mark Richmond, Jr., U.S. Department of Health and Human Services, for Mehmet Oz.

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