In June 2026, the Centers for Medicare & Medicaid Services (CMS) issued an interim final rule on the Medicaid work requirement (or “community engagement” requirement) established by the 2025 reconciliation law known as the One Big Beautiful Bill Act. The rule provides states with guidance for implementing the work requirement for adults who are eligible for Medicaid through the Affordable Care Act expansion or through certain demonstration waivers. Among other provisions, the rule defines qualifying community engagement activities for meeting the requirement and exemption criteria and specifies procedures for verifying compliance and exemptions.

Our Comments

In a public comment letter submitted to CMS, Urban Institute researchers show that the way the rule has structured the work requirement will place many vulnerable Medicaid beneficiaries at risk of losing coverage. In particular, under its definition and procedures for establishing specified exclusions for medical frailty, adults with serious health issues are likely to be among those at greatest risk of coverage loss under the policy. This will in turn jeopardize their access to needed health care, their health and functioning, and their ability to work, and will potentially increase their mortality. It will also increase their risk of incurring medical debt and will raise uncompensated care costs for health care providers. In addition, the researchers find that the rule’s regulatory impact analysis understates likely coverage losses and overstates likely employment gains, given prior experience with community engagement requirements in Medicaid that led to coverage losses without meaningful changes in employment. The researchers draw on previous research and new data analysis to highlight the following challenges:

1. The proposed definition of medical frailty as a physical or behavioral health condition that significantly impairs an individual’s ability to comply with the community engagement requirement will likely result in Medicaid disenrollment or denial of Medicaid coverage for substantial numbers of adults with serious health conditions.
2. The proposed definition of medical frailty combined with the limitations on self-attestation that begin in 2028 will increase risks of coverage losses among those who meet the proposed medical frailty standard.
3. The regulatory impact analysis rests on assumptions that likely understate potential coverage losses under the policy, while ignoring peer-reviewed evidence from prior experience with work requirements in Medicaid and containing apparent errors that result in a vast overestimation of the community engagement requirement’s potential employment impacts. As a consequence, the rule overstates the provision’s economic benefits, even as it ignores the costs associated with loss of coverage and health care access.

Several changes to the rule could mitigate coverage losses among vulnerable beneficiaries with significant health care needs and other adults who are either compliant with the community engagement requirement or eligible for an exemption. Along with not restricting medical frailty criteria based on work impairments, these changes include providing states with flexibility in their use of diagnosis codes and lookback periods when conducting ex parte verifications of medical frailty using claims data; allowing medical frailty exemptions for some conditions to last longer than 12 months without reverification; allowing states to accept self-declaration of exemptions without documentation; and extending retroactive coverage for people who submit required documentation after being disenrolled for procedural reasons.

Other actions that could limit wrongful denial or termination of coverage include delaying the implementation deadline, requiring public transparency of key reporting metrics, and pausing implementation in states with large disenrollment among vulnerable groups. Postponing the implementation date may be critical to ensure states have sufficient time to make the operational changes necessary to minimize wrongful coverage losses.