Public Health — News & Analysis

Medicaid Work Reporting Requirements: States Ask a Federal Court to Protect Medically Frail Individuals from CMS Overreach (July 2, 2026)

WASHINGTON, July 2, 2026 — In a post on the blog of the Georgetown University Center for Children and Families, research professor of the practice Andy Schneider lays out the legal theory behind the multistate challenge to the Centers for Medicare & Medicaid Services rule implementing Medicaid work reporting requirements. The piece is advocacy commentary from a nonpartisan university policy center, not news reporting, and it is the clearest available account of where the agency departed from the statute Congress passed.

Section 71119 of H.R. 1 conditions Medicaid eligibility for expansion adults on compliance with work reporting requirements effective January 1, 2027, but exempts individuals who are "medically frail or otherwise [have] special medical needs." The statute names five qualifying groups: people blind or disabled as defined for Supplemental Security Income; people with a substance use disorder; people with a disabling mental disorder; people with a physical, intellectual, or developmental disability that significantly impairs activities of daily living; and people with a serious or complex medical condition. Congress left the Secretary of HHS to define the term.

The interim final rule CMS issued June 3 does more than define it. At 42 CFR 435.554(c)(5)(i), the rule requires that an individual fall into one of the five statutory groups and have a condition that significantly impairs their ability to comply with the work requirement. Schneider's point is that this second test appears nowhere in the statute. A person with cancer, quadriplegia, or a disabling mental disorder must now separately establish that the condition makes compliance impossible — a documentation burden Congress did not impose.

Twenty-five states and the District of Columbia filed suit on June 29 in the U.S. District Court for the District of Massachusetts. The case is Commonwealth of Massachusetts et al. v. Oz et al., No. 1:26-cv-12962, assigned to Judge Richard G. Stearns, with a preliminary injunction hearing set for July 28. Defendants are CMS Administrator Mehmet Oz, CMS, HHS Secretary Robert F. Kennedy Jr., and HHS.

The 120-page complaint argues the rule departs both from the text of H.R. 1 and from CMS's own prior guidance to state Medicaid officials — a November 19, 2025 slide deck and a December 8, 2025 Informational Bulletin — and that it supplies no workable method for verifying either frailty or impairment. The states plead violations of the Administrative Procedure Act on two grounds, contrary to law and arbitrary and capricious, and a Spending Clause violation on the ground that the rule fails to give states clear notice of their obligations.

Relief sought is narrow: an injunction barring enforcement of the challenged provisions against the plaintiff states only. The seventeen expansion states that did not join — all with Republican governors — would remain bound. The preliminary injunction motion carries roughly 600 pages of declarations from state officials in every plaintiff state but Hawaii, arguing that states must now spend unbudgeted money on vendors and systems capable of assessing ability to work by January 1, 2027, and must explain the process to enrollees by August 31, 2026.

Schneider notes an off-ramp that does not require the court: under both the statute and the rule, a state can request a six-month implementation delay by showing a good faith effort to comply, renewable but not past December 31, 2028. The plaintiff states had already requested one.