Key Questions in Medicaid Work Requirements: Medical Frailty and the Lookback Period

The recently enacted Medicaid work requirements raise a number of important implementation questions — particularly for individuals who qualify as “medically frail.”

Under the law, these requirements will take effect on January 1, with an interim final rule from the Administration expected by June 1. Notably, this rulemaking is exempt from the Administrative Procedure Act, meaning it will not go through a traditional public comment process.

As we await the interim final rule, we are tracking several key questions that will shape how these requirements are implemented in practice. This issue focuses on one in particular: how CMS will apply the lookback period for individuals who meet the definition of medical frailty.

Background

When Congress created Medicaid expansion under the Affordable Care Act (ACA), it required states to cover expansion populations through Alternative Benefit Plans (ABPs).

States may align these plans with their traditional Medicaid state plan benefits or design them within ACA parameters. However, certain individuals — including those who are “medically frail” — must be given the option to enroll in state plan coverage instead of an ABP.

The regulatory definition of “medical frailty” (42 CFR 440.315(f)) includes individuals with disabilities, chronic conditions, and other significant health needs.

The Statute

The new law requires “applicable individuals” to comply with work requirements, while also establishing mandatory exemptions for “specified excluded individuals.”

Importantly, this includes individuals who are considered medically frail.

The statute largely adopts the existing regulatory definition, including individuals who:

• Are blind or disabled

• Have a substance use disorder

• Have a disabling mental disorder

• Have a physical, intellectual, or developmental disability that limits daily activities

• Have a serious or complex medical condition

One notable change: the statute replaces “serious and complex medical condition” with “serious or complex medical condition.”

This shift may expand the number of individuals who qualify for the exemption — potentially allowing more people with significant medical needs to maintain coverage.

The Guidance

In December, CMS issued initial guidance on implementation, including how lookback periods would apply for demonstrating compliance or exemption.

The guidance specifies that individuals who meet the definition of a “specified excluded individual” — including those who are medically frail — are not considered “applicable individuals” and are therefore not subject to work requirements for the relevant period.

This raises an important question: Does this mean that lookback period requirements do not apply to individuals who qualify as medically frail?

If so, this could have significant implications. Individuals may not need to demonstrate their exemption in advance of coverage, which could be especially important for those with new diagnoses or sudden changes in health status.

Open Questions

Two key questions remain:

• How will CMS apply lookback periods for individuals who meet the medical frailty definition?

• Will CMS interpret the statutory change from “serious and complex” to “serious or complex” as expanding eligibility for the exemption?

What We’re Watching

The interim final rule is currently under review at OMB and is expected to be released by June 1.

We’ll be watching closely for how CMS addresses these questions — and what it means for individuals and organizations navigating these requirements.