CMS Finalizes Medicaid Community Engagement Requirements Rule

The Centers for Medicare and Medicaid Services (CMS) issued the interim final rule (IFR) on Medicaid community engagement requirements, implementing provisions of the Working Families Tax Cut legislation (WFTCL). The IRF details applicable individuals, exclusions and exemptions from community engagement requirements, how to verify engagement, and good faith effort exemptions.

The WFTCL requires certain Medicaid beneficiaries to demonstrate that they work or are in a work program, are enrolled in school, or complete community service for 80 hours a month to stay enrolled in the program. The community engagement requirement begins Jan. 1, 2027.

Like the December 2025 preliminary guidance, the IFR implements provisions regarding which beneficiaries must meet the community engagement requirements, which beneficiaries are excluded, criteria for community engagement, optional short-term hardship exceptions, and verification processes for community engagement requirements, as well as exemptions.

The WFTCL specifically excludes beneficiaries that are medically frail from community engagement requirements. States will have flexibility to determine which conditions qualify for the medical frailty exemption. However, the IRF requires states to verify the presence of a condition or diagnosis that meets the medical frailty criteria and that the condition significantly impairs the beneficiary's ability to comply.

To verify that an individual qualifies for the medical frailty exclusion, states must use all reliable data available, including adjudicated claims and encounter data from the preceding 12 months, before requesting information from the individual. Beginning Jan. 1, 2028, states may use self-attestation once to verify qualification of medical frailty when claims or encounter data is not available.

America's Essential Hospitals will provide in-depth analysis of the IFR in a forthcoming Washington Briefing.

Contact Director of Policy Rob Nelb, MPH, at [email protected] or 202.585.0127 with questions.