Oregon AG Challenges Medicaid Regulations on Medically Frail Criteria

Oregon Attorney General Dan Rayfield has initiated legal action against the current administration regarding newly imposed Medicaid regulations. The contested interim rule, released this month, modifies the criteria for exemptions from Medicaid's impending work and reporting mandates by redefining "medically frail." This reclassification, contested by 24 attorneys general and the governors of Kentucky and Pennsylvania, challenges eligibility standards Congress originally designed to safeguard individuals with significant health conditions.

The lawsuit contends that the U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services have adopted a more stringent interpretation of "medically frail" than Congress intended. As a result, individuals with serious health conditions like cancer or severe mental health issues may now have to comply with the new Medicaid work requirements unless they fit the narrower criteria.

Dan Rayfield has voiced concerns about the undue hardship on individuals managing severe health challenges, stressing the unfair burden of proof now placed on them for Medicaid eligibility. The One Big Beautiful Bill, a tax and spending package from last year, introduced national Medicaid work requirements, while offering exemptions, including for those deemed medically frail.

In Oregon, Medicaid covers over 1.4 million residents, a significant portion of the state’s population. State estimates suggest that about 462,000 of these individuals could be affected by the new criteria, potentially leading to coverage losses for up to 200,000 residents due to administrative difficulties.

Oregon Governor Tina Kotek, alongside other governors, has pointed to implementation challenges in communications with federal officials, citing insufficient guidance and time to adjust to the changes. Advocates argue that the revised criteria undermine protections for disabled individuals, opposing previous assurances.

The states' legal counsel asserts that the administration's changes exceed statutory boundaries, altering exemptions via regulation instead of adhering to Congressional mandates. The lawsuit seeks to block the rule’s implementation before the August 31 deadline for notifying Medicaid beneficiaries about these changes.

The administration is also accused of violating the federal Administrative Procedure Act by allegedly ignoring empirical data from past Medicaid work requirement trials, such as those in Arkansas, which showed increased uninsured rates mainly due to compliance documentation challenges. States have already made significant logistical preparations for the Medicaid requirements, raising concerns about financial burdens associated with adapting to the rule change at this late stage. A coalition of attorneys general from states including Washington, California, and New York seeks judicial intervention to address these regulatory issues.