Last week, the Centers for Medicare and Medicaid Services provided a clearer and far more complex picture of the future of Medicaid. CMS published a nearly 400-page interim final rule detailing the mandatory work and community engagement requirements that states must implement by Jan. 1, 2027. The rule clarifies key elements of the mandate, such as who is impacted, how enrollees must document their compliance and what clinicians must do to support enrollees.
The rule includes seemingly positive guidance instructing states to use existing data rather than requiring enrollees to complete unnecessary paperwork. States are encouraged to determine compliance and medical exemptions using data from medical claims or social safety net programs, such as food assistance. It is an admirable goal in theory, and one that Michigan has spent years working toward through improved data sharing across departments and programs.
Centers for Medicare and Medicaid Services: Fact Sheet on the Interim Final Rule
KFF Health News: Final Rules for Medicaid Work Requirements Are Out. Here’s What You Need to Know.
Will the systems be ready in six short months to fully implement the requirements without unnecessary loss of coverage? A lot of complicated, expensive pieces need to fall into place for that to happen.
The Michigan Department of Health and Human Services has been working since 2025 to ramp up hiring and technology support for this new law — and they have their work cut out for them. These are high stakes decisions. The Whitmer administration reportedly estimates that as many as 200,000 residents could lose their coverage due to the new requirements and the heavy administrative burden it puts on patients, providers and other organizations tasked with tracking compliance.
The interim final rule answered questions that states have been grappling with since the passage of H.R. 1 approximately a year ago, such as:
People with blindness or disability as defined by the Social Security Act for the Supplemental Security Income and Social Security Disability Insurance programs; disabling mental disorders; physical, intellectual or developmental disabilities; substance use disorder; and serious or complex medical conditions.
People can self-attest once in 2027 if needed but must then provide clinical documentation at their first re-enrollment.
Clinicians must provide rigorous documentation and a history of the condition, explaining specifically why it creates significant cognitive or physical impairments that would prevent someone from meeting the 80-hour monthly work/engagement requirement.
The insurers must provide enrollees’ health data to MDHHS’s eligibility systems to allow verification of conditions and hardship.
MDHHS must cross-reference data from other state systems that might verify compliance with work requirements, such as data available for those receiving Supplemental Nutrition Assistance Program support. In addition, MDHHS must update its systems to track the 80-hour requirement, allow new types of documentation uploads and adhere to six-month rather than 12-month eligibility checks.
The most impactful sections of the rule seem to address the definition of medical frailty and the exemptions that people who are medically frail can request. There is no question that the rule complicates medical frailty and uses definitions that are much more stringent than Michigan’s original attempt at Medicaid work requirements back in 2020, which never fully saw the light of day.
In addition, there is a risk in requiring increased documentation from healthcare providers (physicians, nurses and other practitioners) who are already overburdened with administrative duties. It is no longer adequate to indicate that a patient has a condition such as cancer, diabetes or a behavioral health disorder. Instead, the clinician must regularly document — as soon as possible to protect future coverage — the exact details of a patient’s condition and why, specifically, it causes them “significant impairment,” either physically or cognitively. If they do so successfully, the patient can be granted an exemption from the requirement. If not, the patient risks losing coverage, which could lead to disruption of care, financial hardship or medical debt.
The greatest risks of coverage loss and friction for enrollees will likely lie in complying with documentation requirements and obtaining exemptions. MDHHS will not only rely on patients to gather documentation of their employment, educational enrollment or volunteerism but will also require patients to submit the documentation on time and repeatedly — perhaps as often as monthly.
Michigan has a robust, passionate and motivated group of stakeholders ready to work in partnership with MDHHS to implement this rule properly while minimizing coverage loss and churn Protecting Michiganders’ coverage and care will require a well-coordinated, comprehensive plan of action involving MDHHS and stakeholders such as the Protect MI Care coalition to educate patients about their responsibilities, inform clinicians about proper exemption documentation and build and launch new data-sharing and technology systems to track compliance.
We know from the 2020 attempted work requirement that this public policy is expensive (to the tune of $187 million just for state preparation) and complicated. Can Michigan — a leader in Medicaid quality and cost in many ways — prove once again to be a national leader by implementing the new work requirements efficiently and effectively while maintaining coverage for most patients? Time will tell, but the clock is ticking.
