Federal officials have shown states how they could use medical claims and other data to decide which Medicaid enrollees are too sick to meet new work requirements, a step that may determine whether many people with chronic illness need to submit paperwork to keep their coverage. The Centers for Medicare & Medicaid Services released an example three-tier framework for the "medically frail" exemption on Sept. 8.
Under the model, some diagnoses in a person's claims history could qualify them on their own. Others would need supporting data, such as pharmacy records or medical equipment claims. People whose records do not settle the question would face an individual review that could require medical documentation.
For households managing cancer, heart disease, diabetes, mental illness, or addiction, the guidance shifts the question. It is no longer only whether an exemption exists. It is whether a state's data system will recognize a condition without a doctor's letter.
Three Tiers for Sorting Enrollees
The work requirement applies to many adults ages 19 to 64 covered through Medicaid expansion. Unless exempt, they must show 80 hours a month of work, community service, a work program, or at least half-time school, or earn at least $580 a month in 2026, according to the CMS fact sheet. States must generally start by Jan. 1, 2027.
Medically frail adults are exempt. But under the interim final rule CMS issued in June, a diagnosis alone is not enough. A person's condition must "significantly impair" their ability to meet the requirement.
The CMS model gives states one way to apply that standard. In Tier 1, a diagnosis code by itself confirms significant impairment. CMS examples include cancer of the pancreas, ALS, end-stage kidney disease, acute heart failure, diabetes with advanced eye damage, and agoraphobia with panic disorder.
Tier 2 covers conditions that need more evidence. CMS describes a patient with heart disease who uses a walker and attends intensive cardiac rehabilitation, and a patient in daily methadone treatment with frequent peer counseling. Pharmacy, equipment, and service-use data could tip them into the exemption.
Tier 3 covers people whose records are unclear or missing. CMS examples include a breast cancer survivor diagnosed 10 years ago, a person with early diabetic nerve symptoms, and someone with mild anxiety managed by a primary care doctor. Those cases would go to manual review, and states may ask for records.
Changes Since MedicalDaily's Earlier Reports
MedicalDaily previously reported on the documentation that people with chronic illness may need after a federal judge declined to pause the rule in July. At that point, states had the "significantly impairs" standard but little federal direction on how to verify it using data.
The Sept. 8 presentation fills part of that gap. States are not required to use it, and CMS calls it an example rather than a mandate. It also restates that states must first try to verify medical frailty using claims from the prior 12 months, including denied claims, along with encounter data and other health data such as health information exchange records.
The American Medical Association welcomed parts of the approach, saying in its Sept. 11 advocacy update that the data-driven method "could reduce the need for beneficiaries and physicians to submit additional documentation." The group also warned that many people are still likely to need manual review.
Other gaps remain. Analysts writing for State Health and Value Strategies said the examples are mostly clear-cut and offer less direction for common gray-area conditions. They also reported that CMS plans to begin collecting information on states' methods this fall.
Patients Most Likely to Face Paperwork
The people most exposed are those with serious but less obvious conditions, such as controlled diabetes with early complications, cancer in remission, depression or anxiety treated in primary care, chronic pain, or long COVID. Their claims may not show enough to reach Tier 1 or Tier 2.
People with little recent claims history face a similar problem. Someone who skipped care because of cost, or who recently enrolled, may have little data for the state to review.
The stakes appear in CMS's own forecast. The agency's interim final rule projects that the work requirement will reduce Medicaid enrollment by about 2.3 million people in fiscal year 2027 and by 3.1 million to 3.3 million a year after that. That projection covers the whole policy, not only the frailty exemption, and actual losses will depend on state choices.
Many adults are exempt for other reasons. The CMS fact sheet lists pregnant and postpartum people, parents and caregivers of children 13 and under or of a person with a disability, American Indians and Alaska Natives, former foster youth, veterans with a total disability rating, people in drug or alcohol treatment programs, and some people meeting SNAP or TANF work rules.
Before Jan. 1, 2028, states may accept a signed statement of medical frailty, made under penalty of perjury, when data are missing. After that, such a self-declaration can be used only once per period of enrollment.
Steps to Take Before January and What Comes Next
Enrollees can prepare now without assuming the worst. Confirm your mailing address with your state Medicaid agency and open every notice. If you manage a serious condition, ask your clinician's office whether diagnoses, prescriptions, and equipment are recorded in your chart and billed accurately.
Keep copies of recent visit summaries, discharge papers, medication lists, and any disability determination. If a state notice says it cannot verify that you meet the requirement or are exempt, you have 30 days to respond. People who lose coverage can reapply. Do not stop prescribed treatment because of coverage worries without talking with a clinician.
Legal uncertainty remains. A coalition of more than two dozen states is challenging the rule, and SHVS reported that a ruling on the frailty definition could come in November or December. The states have asked for a six-month delay in enforcement.
CMS has shown states a data-first path that could spare the sickest enrollees from paperwork. The central uncertainty is how each state draws its lines and whether a court changes the rules weeks before January.
Developing Story Timeline
Sept. 8, 2026: CMS posted its example three-tier medical frailty framework for states after previewing it on a Sept. 3 call.
July 31, 2026: The interim final rule took effect, and the public comment period closed.
June 1, 2026: CMS issued the interim final rule adding the "significantly impairs" standard to the medical frailty exemption.
Key Questions Answered
What did CMS release on Sept. 8? An example three-tier framework showing states how to use claims and other data to decide who qualifies as medically frail and is exempt from Medicaid work requirements.
What are the three tiers? Tier 1 diagnoses qualify on their own. Tier 2 conditions need supporting data, such as prescriptions or medical equipment. Tier 3 cases lack enough data and go to manual review, which may require records.
Do states have to use this model? No. CMS describes it as an example. States choose their own methods but must meet the rule's "significantly impairs" standard.
When do work requirements start? States must generally begin by Jan. 1, 2027. Some states have started earlier.
How many people could lose coverage? CMS projects enrollment will fall by about 2.3 million in fiscal year 2027 and 3.1 million to 3.3 million a year after that.
What should enrollees with chronic illness do now? Update contact information, respond to every notice, and ask clinicians to make sure diagnoses and treatments are accurately recorded.
