Medically frail or not? A court ruling on Medicaid scrambles the answer for physicians, regulators

As states prepare to implement Medicaid's new work requirements, a federal judge on Oct. 29 struck down the Trump administration's narrower definition of who is "medically frail" under the new work requirement rules.

The court ruling added uncertainty for physicians in Indiana and Michigan, two states that recently published details about how state officials plan to use claims data to decide which patients are exempt.

U.S. District Judge Richard Stearns in Boston sided with 25 Democratic-led states and the District of Columbia. He said the frailty standard the Centers for Medicare & Medicaid Services (CMS) issued in June "is beyond the powers of CMS and thus contrary to law," Politico reported. That rule counted a condition only if it "significantly impairs" a person's ability to comply. Enforcing it "may lead to the disenrollment of otherwise eligible vulnerable individuals," the judge said.

The ruling blocks only the frailty definition; the rest of the work requirements take effect nationally in January. CMS did not immediately respond to a request for comment, Reuters reported. It was not immediately clear how the decision applies to states that did not join the lawsuit.

The federal framework

In September, CMS released optional guidance giving states a three-tier framework, the American Medical Association (AMA) reported. In the first tier, diagnosis codes alone establish frailty, and "states may identify these individuals as medically frail without requiring additional information or documentation." The second combines diagnoses with data such as acute care use, high-risk polypharmacy or durable medical equipment. The third is a manual, individual review.

States may accept self-attestation of frailty through 2027. Proof will be required starting in 2028, though what kind remains an open question, Politico reported in July. The administration has argued that diagnosis alone is too broad, asking in a court brief whether "asthmatics and diabetics" have a "serious" or "complex" disorder "if they are not functionally limited."

The AMA has said the "significantly impairs" standard goes beyond what Congress intended and that claims data often miss functional limits. "Our focus is on helping patients understand what is changing," said AMA President Willie Underwood III, MD, MSc, MPH.

Indiana's three tiers

Starting Jan. 1, 2027, most adults ages 19 to 64 in the Healthy Indiana Plan (HIP) and the Healthy Michigan Plan (HMP) must log 80 hours a month of work, school, job training or volunteering, or earn at least $580 a month, unless they are exempt. Both states start with claims data to find frail patients, so the diagnoses physicians code may help decide who keeps coverage, according to the federal rule.

Indiana's approach mirrors the CMS framework. The state will sort HIP members with a claims-review tool it calls MARA, short for Milliman Advanced Risk Adjusters, the Indiana Capital Chronicle reported. The first tier flags members with a diagnosis on a state list; the second weighs qualifying conditions together with treatments, services or supports. Members the tool misses go to manual review. A patient, a physician or other clinician, a managed care organization or the state can refer a case, and state clinical staff review medical records, treatment notes, medication lists and lab results.

A Sept. 30 run of the tool estimated nearly 140,000 of about 475,000 HIP members would qualify through the first two tiers. Frail members are excluded for six months at a time, and determinations are expected by mail in late November or early December. Nearly a quarter of projected frail members are expected to qualify through disabling mental disorders, a category with no first-tier pathway.

Diabetes no longer counts as frailty in Indiana, Family and Social Services Administration (FSSA) Secretary Mitch Roob told lawmakers, WFYI reported. CMS used diabetes as an example in each tier of its guidance.

Michigan's two categories

The Michigan Department of Health and Human Services (MDHHS) reviews claims, health plan encounter data and certain enrollment information against a published list of conditions, treatments, procedures and equipment. Category 1 conditions qualify on their own. Category 2 conditions need more data, such as hospital stays or repeated high-intensity outpatient care. Stays of 30 days or more in a hospital, hospice, nursing facility or psychiatric facility exempt a member automatically, and exemptions found in the data last 12 months.

Patients whose conditions aren't in the data can report them through the MI Bridges portal, without documentation in 2027. New HMP applicants face the requirement Jan. 1; current enrollees face it at renewals on or after March 1, 2027. Eligibility checks move to every six months, and retroactive coverage shrinks from three months to one, FOX 2 Detroit reported, citing MDHHS.

Why it matters for practices

CMS told Politico in June that the rule doesn't make physicians responsible for deciding who must meet the requirement; that falls to states. But the questions are already reaching exam rooms. "They need to give us some very specific guidance," Barbara McAneny, M.D., an oncologist and CEO of an oncology practice in New Mexico, told Politico. "It's an unfunded, administrative burden."

Researchers writing for the Commonwealth Fund have urged states to supplement data matching with self- and provider attestation, noting that 34% of Medicaid enrollees report a disability but only 10% qualify through a disability determination. In an August survey of 1,225 Medicaid members by Aeroflow Health, 44% said they were not prepared to submit the required documentation, Medical Economics reported.

Physicians in both states can take several steps now:

• Document and code chronic, mental health and substance use conditions fully and specifically, because both states start with claims data.
• In Indiana, refer patients who appear to qualify but aren't flagged, and be ready to send records for manual review.
• Point patients to Indiana's FSSA Benefits Portal, Michigan's MI Bridges or Medicaid.gov to learn the rules and report hours, exemptions and changes.
• Watch for state and federal guidance after the ruling. Indiana officials said new forms are in development, and MDHHS says more information is coming in 2027.

State officials have warned that status can change. "Someone who is medically frail today may not be medically frail come January," Sunshine Beam, director of FSSA's Division of Family Resources, said at a September town hall, the Indiana Capital Chronicle reported.