Impact of New Medicaid Work Requirements on Beneficiaries and States

A recent policy shift by the Centers for Medicare and Medicaid Services (CMS) may significantly affect Medicaid beneficiaries, especially those under the expansion in most states. Starting next year, new Medicaid work requirements could jeopardize health coverage for numerous enrollees. These rules stipulate that individuals aged 19 to 64 must work, volunteer, or attend school for a specified number of hours each month unless they qualify for a medical frailty exemption.

DeAnna Brandon, a North Carolina resident and blood cancer survivor, is concerned about these requirements' impacts. Although she expected to qualify for a medical frailty exemption, new CMS guidance requires individuals to demonstrate that their medical conditions "significantly impair" their ability to meet work, school, or service hour requirements. This interim final rule has unsettled state Medicaid programs, as CMS's policies mandate proof of significant impairment, not allowing automatic exemptions based solely on diagnoses.

Kinda Serafi, a partner at Manatt Health, highlighted the challenges states face in using claims data not currently available within their systems to make exemption determinations. This has generated confusion among state officials regarding regulatory compliance with the new rules. Operations are complicated further as states, though receiving federal aid, may incur over $1 billion in costs due to necessary technology upgrades and increased staffing. Nebraska, an early adopter of the work requirements, might need to revise its system, which previously relied on diagnostic codes.

The policy's potential for significant coverage loss has drawn criticism, with Adrianna McIntyre, a Harvard University public health professor, highlighting the likely increase in paperwork, particularly affecting the most vulnerable Medicaid recipients. The CMS administrator emphasized an approach to streamline exemption identification, reducing enrollee engagement. However, the path to regulatory compliance involves substantial adaptation, requiring facilities to manage operations effectively without compromising patient care continuity.