The Centers for Medicare and Medicaid Services this week released guidance for states allowing them to use a “tier system” to determine which Medicaid recipients are too ill to work or volunteer at least 20 hours per week, establishing a CMS Medicaid medical frailty tier system that patient advocates had been pressing the agency to clarify.
Why This CMS Medicaid Medical Frailty Tier System Guidance Came as Relief to Advocates
The decision, discussed internally with state Medicaid leaders in recent days, was made public via a document earlier this week. It came as a small relief to patient advocacy groups and some medical associations that had criticized “medical frailty” exemptions as confusing and potentially burdensome for patients and medical providers. The new guidance is “somewhat more encouraging,” said Benjamin Sommers, a primary care provider and professor of medicine at Harvard University, because it allows states to use existing data to automatically exempt people.
The Statutory Basis for Medical Frailty Exemptions
Under Section 71119 of the Working Families Tax Cut legislation, specified excluded individuals who don’t need to meet the community engagement requirement include those who are medically frail or otherwise have special medical needs, a category covering five groups: individuals who are blind or disabled, those with a substance use disorder, those with a disabling mental disorder, those with a physical, intellectual, or developmental disability significantly impairing activities of daily living, and those with a serious or complex medical condition.
How the CMS Medicaid Medical Frailty Tier System Actually Works
The framework organizes conditions into three tiers. Tier 1 conditions are those the state can confirm significantly impair an individual’s ability to comply with community engagement based on readily available ICD-10 code data alone, examples CMS cites include pancreatic cancer, ALS, end-stage renal disease, and HIV disease resulting in encephalopathy. Tier 2 consists of conditions that may indicate medical frailty but require additional information, such as functional status, high-risk polypharmacy, or elevated acute care utilization, to confirm the exclusion. Tier 3 covers cases with insufficient or no data under Tiers 1 or 2, triggering manual individualized review where the state may require documentation.
Illustrative Examples From the CMS Guidance
The guidance walks through fictional clinical vignettes to show how the same underlying condition can land in different tiers depending on severity: a patient with acute systolic heart failure confirmed by ICD-10 code qualifies as Tier 1, while a patient with more stable coronary artery disease who needs a walker and cardiac rehab, without a direct qualifying diagnosis code, falls into Tier 2 based on combined data points. A patient with well-controlled Type 2 diabetes and only mild neuropathy, by contrast, lands in Tier 3, requiring manual review before any medical frailty determination.
Why the CMS Medicaid Medical Frailty Tier System Aims to Minimize Manual Verification
States must attempt to verify medical frailty using reliable information already available to them, including claims adjudicated in the prior 12 months, encounter data, and health information exchange data, before requiring individuals to submit additional documentation. Before Jan. 1, 2028, states may still require documentation or accept a self-declaration under penalty of perjury each time they verify frailty status; after that date, self-declaration is limited to once per continuous enrollment period, with reverification required at least every 12 months.
A Special Carve-Out for Substance Use Disorder Verification
Because individuals in stable recovery from a substance use disorder for five or more consecutive years are excluded from that medically frail category, but the standard verification lookback is only 12 months, CMS said it anticipates allowing states to use claims and encounter data from the preceding five years specifically to verify whether someone has been in recovery long enough to fall outside the SUD exclusion.
What CMS Explicitly Prohibits Within This Medical Frailty Tier System
CMS reminded states that non-medical coding on its own cannot be used to determine medical frailty, giving the specific example that a diagnostic code for homelessness could not by itself qualify someone, though other coding indicating a disabling mental disorder that impairs community engagement compliance could.
Why States Retain Significant Flexibility Under This Framework
States are not required to use this specific tiered example; CMS said there are a number of data-driven approaches states could take, and encouraged states to first evaluate exclusions with readily available data, such as parental status or pregnancy, before tackling medical frailty determinations that may require more complex data sources.
What This CMS Medicaid Medical Frailty Tier System Means Going Forward
Given Sommers’s characterization of this guidance as “somewhat more encouraging” than earlier proposals, this framework may meaningfully reduce the administrative burden patient advocates and medical associations had warned about, particularly for individuals with clearly severe, well-documented conditions that fall neatly into Tier 1. Given that states retain broad flexibility in designing their own tiered or alternative frameworks, the practical experience of Medicaid beneficiaries navigating work requirement exemptions may vary considerably from state to state even under this shared federal guidance.
What to Watch Going Forward
As states begin implementing this tiered framework ahead of the Jan. 1, 2027 work requirement effective date, patient advocates and researchers will likely watch how many beneficiaries end up in Tier 3, requiring manual review and additional documentation, versus how many are automatically exempted through Tier 1 or Tier 2 data matching alone. Given the complexity of translating this CMS Medicaid medical frailty tier system into actual state eligibility systems, the coming months may reveal whether this data-first approach succeeds in minimizing coverage disruptions for medically frail beneficiaries, or whether implementation challenges leave significant gaps for patients whose conditions don’t map cleanly onto existing claims data.
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