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Author: Shelby Liebler

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CMS Issues Interim Final Rule on Medicaid Community Engagement Requirements

Written by Shelby Liebler on . Posted in Alerts, Alerts, News & Insights.

CMS issued the interim final rule (IFR), Medicaid Program: Community Engagement Requirement for Certain Individuals, after the market closed on Monday, June 1.
 
This IFR implements Sec. 71119 of H.R. 1 (also known as the One Big Beautiful Bill Act and the Working Families Tax Cut legislation), which conditioned Medicaid eligibility on completing 80 hours per month of community engagement activities (i.e., work, community service, or educational activities).
 
Statutory exceptions to community engagement requirements include people who are medically frail, which includes having a substance use disorder (SUD) or disabling mental disorder (DMD). The IFR does not define either SUD or DMD, but rather indicates that states will need to adopt lists of qualifying conditions and implement a process for individuals to request an exemption due to a condition excluded from the list. Importantly, the IFR clarifies that people with SUDs would only qualify for the SUD exemption if they have been in recovery for fewer than five years, and active treatment participation is not needed to qualify.
 
States are required to prioritize assessing exception eligibility using their existing data. For individuals whom states cannot verify as medically frail using their existing data, practitioners can submit documentation to demonstrate eligibility. Otherwise, individuals can self-attest to medical frailty and enroll in Medicaid for six months before information is required to substantiate their attestation. If states grant the medically frail exception, they would need to reassess this exception at least annually.

Congress directed CMS in H.R. 1 to implement community engagement requirements via an IFR, a type of regulation that bypasses a public comment process on a draft version of a rule before it takes effect. 
 
The NABH team will continue to review the IFR, which takes effect on July 31, 2026, the same day public comments are due. However, states do not need to implement the IFR’s provisions until Jan. 1, 2027.