Judge Strikes CMS Impairment Test for Medicaid 'Medically Frail' Exemption, Upholds Two Other Limits in 25-State Suit

A rule with two tests, and a judge who struck one

On Thursday, Oct. 29, 2026, U.S. District Judge Richard Stearns in Boston erased one sentence from a federal Medicaid rule. That sentence decided who counts as "medically frail" under the new work requirements^[1][2]. The rest of the rule stayed. So did the work requirement itself^[1][14].

The requirement comes from the 2025 budget law, known as the "One Big Beautiful Bill." Starting Jan. 1, 2027, many adults ages 19 to 64 who got Medicaid through the expansion must show 80 hours a month of work, volunteering or school^[2][4][10]. The law exempts people who are "medically frail." It lists five groups that count^[3][9].

The extra test CMS added

The Centers for Medicare & Medicaid Services (CMS) wrote the rules for carrying out the law. It used an interim final rule, which takes effect right away, before the usual public-comment round. In June 2026, it added a second hurdle. A person in a listed group also had to show their condition "significantly impairs" their ability to meet the work rule^[3][12].

Twenty-five Democratic-led states and the District of Columbia sued that month^[2][18]. The case is Massachusetts v. Oz^[3]. Stearns ruled that CMS lacked the power to add the test. He vacated the clause, which means it is erased for everyone, not just the plaintiff states^[4][6].

What the states and the administration each argue

The states make a text argument. Congress named the groups, and an agency can carry out that list but can't shrink it^[5][13]. The list includes people who are blind or disabled, people with a substance use disorder or a disabling mental disorder, and people with a serious or complex medical condition^[10]. One category already has its own impairment test, tied to daily living activities. The states say that shows Congress knew how to ask for an impairment showing when it wanted one.

They also make a practical case. Extra proof means more paperwork for the people least able to handle it, and eligible people lose coverage^[1]. The judge wrote that an unlawful definition "may lead to the disenrollment of otherwise eligible vulnerable individuals"^[16].

The administration, defended by the Justice Department, argued the law lets the health secretary define the term^[9]. Its view is that some listed labels are broad. "Any substance use disorder" or "serious or complex medical condition" can describe people who are able to work. Without a function test, such labels could swallow the rule. A function test, in this view, protects the exemption for people whose illness really keeps them from working.

The parts the government won

The ruling was only a partial win for the states. Stearns upheld two other limits^[4][6]. First, states may use only the previous 12 months of claims and visit records, called the "lookback," to confirm frailty. Second, people may self-certify, meaning attest to a condition without records, only once per continuous enrollment period. KFF says that limit applies to periods starting in 2028^[5].

Supporters of tighter rules cite fraud concerns. Those concerns are the reason they defend checks like these^[2][4]. Stearns also put a six-month hold on enforcing frailty decisions. The hold gives states time to rebuild their systems^[4][6].

For an enrollee, the practical result is mixed. Fitting a listed category is now enough to qualify^[5]. But proof must still come from recent records or a limited self-certification. Someone with a lifelong condition and no recent doctor visit may not show up in what the state checks^[4][6].

Why the definition is also a budget question

Underneath the legal argument sits a money one. The Congressional Budget Office (CBO) estimates the work requirement cuts federal Medicaid spending by $326 billion over ten years. That is the biggest single piece of the law's Medicaid savings^[11]. It also projects 4.8 million more uninsured people in 2034^[11].

Every person exempted lowers both numbers. So a broader frailty exemption likely means fewer people lose coverage and smaller savings than planned. No court has put a figure on how much smaller^[5]. The states have their own incentives. They want to keep residents covered, avoid uncompensated care costs at state hospitals, and limit the paperwork their Medicaid agencies must build^[1][4].

CBO also says most projected coverage losses come from paperwork problems, not from people who refuse to work^[11]. An earlier CBO analysis of the House bill estimated about 18.5 million people would be subject to the rule each year^[11]. So how states verify frailty may matter as much as how it is defined.

One ruling, several headlines

Outlets framed the ruling differently. Reuters called it a "partial victory" and noted the fraud concerns^[2]. The Associated Press and CNN used "forcing sick recipients" language. CNN's headline said recipients had to "prove they can't work"^[7][8]. Stateline used a similar "inability to work" paraphrase^[1]. But the struck test asked whether a condition "significantly impairs" the ability to comply. That is a lower bar than inability. The AP headline also said the judge "blocks" the rule, though only one clause fell.

The Epoch Times ran a straight story that gave equal space to the government's wins. It left out coverage-loss projections^[6]. IBTimes UK used the most charged headline and did not mention what the government won^[15]. Forbes columnist Howard Gleckman stressed that most of the work rule survives^[14]. Searches found no coverage from major non-Western outlets. This is largely a domestic regulatory story.

Several things remain open. CMS declined to comment, citing pending litigation, and as of Nov. 5 no appeal had been announced^[1][4]. An appeal would go to the First Circuit and would test the same question: whether the power to "define" a term includes power to narrow a list Congress wrote^[9][13]. The Jan. 1, 2027 start date has not changed.