CMS’s interim final rule jeopardizes Medicaid beneficiaries’ access to life-saving services

On June 1, 2026, the Centers for Medicare & Medicaid Services (CMS) issued an interim final rule (IFR) establishing the operational framework for implementing Medicaid work reporting and community engagement (WR/CE) requirementsopens in new window enacted July 4, 2025, under the One Big Beautiful Bill Act (H.R. 1)opens in new window. These rules are scheduled to take effect on January 1, 2027, with three states (New England, Montana, and Iowa) implementing the requirements early. The IFR provides guidance to states on eligibility determinations, as well as details on exemptions from the WR/CE requirements, reporting requirements, verification processes, and implementation standards. The effective date for the final IFR is July 31, 2026.

Approximately 20 million Medicaid expansion enrollees could be subject to work reporting requirements nationwide. Compliance with the new, unanticipated WR/CE requirements could worsen projected Medicaid coverage losses due to more paperwork for enrollees and a heavier burden on states. The Congressional Budget Office estimated that 5.3 million people could lose Medicaid coverage under H.R. 1, including individuals who remain eligible but are unable to navigate new requirements.

APA Services is deeply concerned about the narrowing of the medical frailty exemptionopens in new window. Rather than simply requiring states to determine whether someone has a qualifying physical, mental, developmental, or behavioral health condition, the IFR now requires states to also evaluate whether that condition “significantly impairs” their ability to work.

APA Services urges CMS to remove the IFR’s requirement that individuals with qualifying mental health conditions and substance use disorders (MH/SUD) prove that their condition “significantly impairs” their ability to comply with burdensome documentation of WR/CE requirements.

APA Services also calls for CMS to minimize documentation barriers by allowing states to use existing data, supporting self-attestation when records are unavailable or delayed, and ensuring that people do not lose coverage simply because behavioral health documentation is difficult to obtain. States can accept self-attestation in 2027, but CMS limits reliance on self-attestation beginning in 2028.

APA Services further recommends that CMS require plain-language beneficiary and provider materials, engage behavioral health stakeholders through listening sessions, and support providers who may be asked to help beneficiaries document exclusions.

Finally, APA Services urges CMS to strengthen oversight by requiring timely publication of implementation data and approving good-faith state waivers when additional time is needed, and to prevent avoidable Medicaid coverage losses and protect access to critical MH/SUD care.

APA Services is drafting comments on the IFR WR/CE requirements which are due by July 31. We will share our comments with you and provide additional resources that build on our Medicaid toolkit for our state, provincial, and territorial psychological associations and other state leaders to engage with relevant stakeholders (e.g., State Medicaid Authorities, State Medicaid Advisory Committees and the State Beneficiary Advisory Councils, et al.) to protect access to life-saving MH/SUD services.

APA Services is working with other mental and behavioral health groups to draft a coalition letter addressing concerns that the IFR will most likely create significant hurdles that put coverage at risk for many people with mental health conditions and substance use disorders. 

For more information, email Julio C Abreu.