On June 1, the Centers for Medicare & Medicaid Services (CMS) issued an interim final rule announcing mandatory Medicaid community engagement requirements – what most people are simply calling work requirements. The rule requires certain Medicaid expansion enrollees to document at least 80 hours per month of work, education or community service to maintain their coverage, with states required to comply by Jan. 1, 2027.

For home care, this has a series of meaningful implications. More than 300,000 people receiving home care services are enrolled through the ACA’s Medicaid expansion. Over a quarter of home care workers are themselves Medicaid beneficiaries. And unpaid family caregivers – the backbone of long-term care in this country – now face a new bureaucratic framework to prove they qualify for an exemption.

This is a rule that demands attention, because CMS officials havemade it clear that the agency doesn’t intend to wait around for feedback before enforcement begins. Providers must take action to educate clients and employees, and prepare for a new Medicaid reality.

In this week’s exclusive, members-only HHCN+ Update, I’ll dig into the interim final rule, offering analysis and key takeaways, including:

– Why the “interim” part of the interim final rule matters so much

– The actions home care providers need to take now

– The backlash to – and support for – the rule

Digging into the details

I covered the key components of the rule in my original story, but I I want to narrow in on CMS’ rule-making process here. Typically, CMS proposes rules with opportunity for comments. Then CMS can theoretically revise the rule based on comments before announcing the final rule.

This time, not so much. CMS released the requirements, with a seven-month deadline, as an interim final rule. The agency is still soliciting comments – the deadline is July 31 – but there has been no clarity around whether CMS will update the interim final rule based on those comments.

I don’t think it’s a waste of time to submit those comments – CMS should hear feedback, and the comments create a public record that can be cited in future legal challenges. But I assume CMS released the rule as an interim final rule because the agency doesn’t plan to revise it, at least in any substantial way. The reconciliation law that called for work requirements directed CMS to publish an interim final rule specifically – not a proposed rule – which indicates Congress intended to bypass the standard notice-and-comment process. CMS is collecting comments because it’s legally required to when issuing an interim final rule, not because it’s seeking a conversation.

In another example of CMS keeping a door open by only a crack, the rule provides a “good faith effort” extension that would allow a state to delay implementation of the rule until 2028 – a year after the required implementation date – but the extension has requirements that make it unlikely that states would take CMS up on the offer or successfully secure that extension.

These requirements include quarterly reports on the status of milestones for when the state anticipates achieving full compliance, and information on specific risks or newly identified barriers to full compliance. The requirements could also include requests for data, operational details and reporting on a more frequent basis. CMS estimates that approximately 10 states will need to prepare and submit a good faith exemption request, but the agency anticipates approving only two such requests. In other words, CMS expects 80% of the states that ask for more time to be denied.

I would actually argue that if an estimated 20% of states won’t be able to comply by the deadline – and CMS expects to reject the vast majority of those seeking extensions – the timeline for compliance is unrealistic. But CMS’ posture suggests the agency views this less as a reason to adjust and more as a problem for states to solve.

In terms of the actions operators need to take, it starts with mindset: They need to act as if this rule already is cemented.

Providers also should educate clients about whether they’re impacted by the new requirements and what actions they need to take to meet them. There is a genuine risk that clients who qualify for exemptions, including the “medically frail” exemption and the exemption for individuals with conditions that limit activities of daily living, may lose coverage simply because they don’t know how to navigate the process or fail to respond to paperwork within CMS’ 30-day window.

The rule requires states to verify exemptions, and CMS has taken a notably restrictive approach to the medically frail definition: states cannot simply grant a blanket exemption based on a diagnosis, but must evaluate whether the condition actually impairs the individual’s ability to meet the 80-hour requirement. States also cannot rely on medical information older than 12 months, meaning exemptions will need to be re-verified at least annually.

Providers also urgently need to work with their employees who receive Medicaid to limit any loss of coverage to eligible employees. Workers need to know that these requirements exist and understand the process for demonstrating compliance. If providers don’t act, home care workers who are already in short supply risk becoming even more scarce, as it becomes increasingly difficult to show up to work when you can’t access the medical care you need.

Criticisms and a vote of support

In our coverage of this topic on HHCN, I cited research and analysis from experts suggesting that work requirements can be problematic and ineffective – that they don’t increase employment but do take away coverage from eligible people due to red tape. CMS’ own projections in the rule support this concern: the agency estimates a 15% disenrollment rate among the affected population, with roughly 9% failing to meet the requirements and 6% losing coverage due to administrative or paperwork barriers.

The majority of the advocacy/industry group reactions I saw offered at least some version of this critique. The organizations speaking out include:

– The Center on Budget and Policy Priorities (CBPP)

– The National Alliance for Direct Support Professionals

– The Modern Medicaid Alliance

– America’s Essential Hospitals

– Legal Action Center (LAC)

– The Alliance of Community Health Plans (ACH)

At least one organization took a far more rosy view of the requirements. Paragon Health Institute, a self-described nonpartisan, not-for-profit policy research institute, called the work requirement “common sense” and said that the rule strikes the right balance between necessary program integrity protections and accommodations for folks who genuinely need assistance. It’s worth noting that Paragon was founded by Brian Blase, who served as a health policy advisor in the first Trump administration, and has been identified as an influential think tank shaping the current administration’s health policies.

“Since passage of the ACA, Medicaid has expanded dramatically among non-disabled, working-age adults, with federal matching rates seven times greater for this group than for traditional enrollees such as children, pregnant women, seniors, and people with disabilities,” the Paragon Health Institute’s statement read. “Without reforms, this distortion of state incentives crowds out care for the truly needy. Work requirements help protect finite Medicaid resources for those who cannot work due to disability, frailty, or caregiving responsibilities, while promoting independence for those who can.”

One of only two data points Paragon shared to back up its statement was the HHS study released the same day as the interim rule and cited in the announcement of the final rule. The other data point was a Paragon survey showing that over 80% of Americans support work requirements for “able-bodied” Medicaid recipients.

But regardless of the quality of its data, Paragon’s reaction is the only one I found that did not offer a single criticism of the work requirement, while a slew of other organizations and individuals found that the rule went too far and would have unintended consequences.

On LinkedIn, individuals called the rule “draconian,” that it treats disability as a “paperwork problem,” and that the rule is “heartless and cruel.”

Given the slew of criticisms and few fully supportive responses, I feel safe summarizing that there is broad concern over the new rule. I assume the rule will garner quite a few comments, given the proliferation of criticism, but given my skepticism over CMS making revisions, I fear this is an instance when advocacy will prove futile, and providers need to act urgently to mitigate the fallout they anticipate.