Lawsuit Challenges CMS Rule Making Sick Medicaid Enrollees Prove They're Too Sick to Work

Since Congress passed the One Big Beautiful Bill Act in 2025, mandating the first-ever national work requirement for Medicaid, states have been racing to figure out how to implement it before the rule kicks in this coming January 2027. The newest fight isn't about whether work requirements exist. It's about who counts as too sick to meet them, and how hard they have to work to prove it.

The law itself carved out a blanket exemption for people who are "medically frail." Federal regulations let states take an enrollee's word for it, under penalty of perjury, for the first year. That's called self-attestation. After that, states need real documentation.

But CMS didn't wait. In June 2026 the agency issued an interim final rule that, according to Healthcare Dive, narrowed the definition of medical frailty beyond what the original law spelled out. Under the new guidance, enrollees can use medical claims data to prove their condition, but that data can be no more than 12 months old.

A new lawsuit followed, filed by the American College of Physicians, the American Academy of Pediatrics, and five Medicaid enrollees with chronic conditions, according to Healthcare Dive. The suit argues CMS rewrote the law through regulation, turning a blanket exemption into something enrollees now have to actively justify.

"The statute does not require medically frail people to prove that their conditions are so debilitating that they cannot meet the work requirement," said Jane Perkins, litigation director at the National Health Law Program, one of the groups representing plaintiffs. "The statute exempts the medically frail from work requirements and does not authorize CMS to re-introduce it through the backdoor with the new rule."

The plaintiffs also object to putting doctors in the position of deciding who's fit to work. "As physicians, we are trained to diagnose and treat our patients' medical conditions, not to conduct assessments about a given patient's ability to work," said Jan K. Carney, president of the American College of Physicians, in a statement.

Asking a doctor to certify employability, rather than diagnose illness, is a different clinical judgment than what most physicians are trained or paid to make. And a 12-month lookback on claims data, instead of 24 months as plaintiffs wanted, will cut some people out who'd otherwise qualify simply because their paperwork trail is thinner.

Six States Already Went Further Than CMS Requires

Separate from the CMS lawsuit, at least six states, Arkansas, Idaho, Indiana, New Hampshire, North Carolina and Ohio, have laws or policies barring self-attestation entirely, according to the Associated Press. They're not waiting for the federal grace period. New applicants there will need provider documentation from day one.

Jennifer Tolbert, director of state health policy and data at KFF, says that's a real problem for people entering the system. "Someone may not be able to work, but they can't see a doctor because they can't afford it. So they're now applying for Medicaid," Tolbert said. "But Medicaid is saying you need documentation from a provider." The very reason someone needs Medicaid, no money for a doctor, is the reason they can't get the paperwork Medicaid now demands.

On the other side, the Foundation for Government Accountability argues self-attestation invites abuse. "Self-attestation is fraud-by-design," said Jonathan Ingram, the group's vice president of research and policy. "It is a policy developed by bureaucrats to maximize enrollment at the expense of program integrity." Lying under self-attestation is technically perjury, but the AP notes such charges are rare. A rule with no real enforcement teeth isn't much of a rule.

Missouri state Rep. Darin Chappell tried to go further still, working with the Foundation for Government Accountability on a constitutional amendment requiring documentary evidence for any work-requirement exemption, no exceptions for self-attestation at all. It passed the Missouri House but died in the Senate without a vote. Chappell says he'll try again next year.

Two Lawsuits, Two Different Targets

Democratic officials in 25 states have separately sued over the broader work-requirement rollout, arguing it's too harsh, according to the Independent and the AP. That fight is distinct from the provider groups' suit specifically over the medical-frailty definition, though both aim at the same underlying law.

The Congressional Budget Office estimated in 2025 that the work requirements will save the federal government $887 billion over ten years and result in 7.5 million fewer people with health insurance. Neither figure is disputed by either side; the argument is entirely about whether that reduction falls on people gaming the system or people too sick to prove otherwise.

No court has ruled on the CMS medical-frailty lawsuit. With work requirements set to take effect in January 2027, the litigation timeline and the implementation timeline are now racing against each other, and it's an open question which one finishes first.