Medicaid work rules will test states, which await CMS guidance

Modern Healthcare – Tuesday, January 6, 2026
By Bridget Early

A year from the debut of national Medicaid work requirements, states and health insurance companies anxiously await critical instructions from federal authorities.

States have until January 2027 to stand up and activate a new verification system that conditions Medicaid benefits on at least 80 hours per month of work or other qualifying activities, such as full-time schooling or volunteering.

But states and health insurers with Medicaid managed care contracts are contending with a dearth of information from the Centers for Medicare and Medicaid Services about how to implement Medicaid work requirements, which apply to working-age adults without disabilities who are eligible for the program under the Affordable Care Act of 2010 expansion.

With the clock ticking down on a costly, complex preparation period, CMS has offered little clarification on a litany of technical questions that have significant financial and operational implications. The agency released guidance documents in November and December, but they do little more than summarize the relevant provisions of President Donald Trump’s tax law.

“At this point, CMS has released 50 pages of guidance in the last three weeks and managed to clarify almost nothing,” said Hannah Katch, founder and principal of the health policy consulting firm Katch Strategies.

“Meanwhile, states are spending thousands of hours and probably hundreds of millions of dollars to implement this law without the information that they need from CMS,” said Katch, a CMS official under President Joe Biden and former deputy director of the California Department of Health Care Services, which operates the state’s Medicaid program, Medi-Cal.

CMS needs to spell out a variety of technical policies, such as self-attestation parameters, the definition of “medical frailty” for exemptions, whether it will conduct readiness reviews, and what data states must report, Katch said.

To proceed in the meantime, states have to understand whether CMS will be prescriptive in its directives or allow them to customize the policy within the bounds of the law, said Jennifer Tolbert, deputy director of the Program on Medicaid and the Uninsured at KFF, a health policy research institute.

“If states know they don’t have any flexibility, then they need to wait to hear how CMS is deciding that this must be done. Whereas, if they do have flexibility, then they can go ahead and move on their own and be somewhat confident that they won’t have to do a lot of backtracking,” Tolbert said.

Although the concept of tying Medicaid benefits to work may appear simple, the details matter, said Kinda Serafi, a partner at the law and lobbying firm Manatt Health.

“Where the rubber is going to hit the road is the very granular policy and operational decisions that then get translated into business rules, that then have to get implemented into [information technology] systems, which require data matching with new entities and new state partners inside and outside the state. That has never happened before,” Serafi said.

Time is shorter than that January 2027 effective date suggests because states must have systems established and ready for testing by September at the latest to ensure a smooth rollout, Serafi said.

“This is a nine-month sprint,” Serafi said. “If you don’t have policy guidance, you’re very unlikely going to be able to do an IT systems build, and then you have to compound that with all the other types of decisions that need to be made to implement this very complex new eligibility and enrollment process.”

“CMS is confident the needed infrastructure exists,” a spokesperson wrote in an email. The agency plans a “clear, orderly transition” featuring guidance and technical assistance doled out in phases, according to a spokesperson.

The agency is working with states and private organizations to fortify verification systems, develop technology and set reporting requirements, all while reducing administrative burden, the spokesperson wrote. Future guidance will address exemptions and implementation policies, the spokesperson wrote.

Recent experience demonstrates how crucial advance planning and IT capabilities are, as well as the consequences of suboptimal administration.

The nationwide eligibility redeterminations process of unwinding continuous coverage requirements enforced during the COVID-19 pandemic resulted in more than 25 million Medicaid beneficiaries losing coverage in 2023 and 2024. The vast majority of those disenrollments occurred for procedural reasons — such as states not being able to contact beneficiaries — rather than affirmative determinations that people didn’t qualify for benefits. States’ Medicaid systems were overwhelmed.

Not long before that, a handful of states attempted to impose work requirements at the invitation of the first Trump administration, before federal courts struck down the policy. These experiments were rife with problems.

Nearly one-quarter of Arkansas Medicaid enrollees lost coverage in 2018 and 2019 under the state’s work requirements initiative, which also did not promote employment.

Georgia has spent nearly $87 million since 2021 on its Pathways to Coverage program, the Government Accountability Office, a nonpartisan congressional investigative agency, reported. Yet only 11,600 people were enrolled as of Nov. 30, according to data compiled by the left-leaning Georgia Budget and Policy Institute.

None of this is stopping Nebraska from plowing ahead with its work requirements program, however.

Gov. Jim Pillen (R) and CMS Administrator Dr. Mehmet Oz announced Nebraska would be the first to implement Medicaid work requirements at a news conference in Lincoln on Dec. 17.

Nebraska intends to begin its program in May, eight months ahead of the deadline. The state will begin notifying enrollees this January. A spokesperson for the Nebraska Department of Health and Human Services declined a request for an interview about the state’s plans.

Other states could start preparing now, as well, said Tara LeBlanc, a director in the consulting firm Guidehouse’s state health and human services practice and a former Louisiana Medicaid director.

First, states should identify available data and begin strategizing about how to integrate data sources, LeBlanc said. They should also identify enrollees who are clearly exempt under the tax law. For example, parents of children under 14 and pregnant people are not subject to work requirements.

States should consider automating as much as possible to maximize thin resources and reduce the burden on understaffed agencies, LeBlanc said.

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