AHA Comments on CMS Medicaid Community Engagement Requirements Interim Final Rule

July 31, 2026

The Honorable Mehmet Oz, M.D.
Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
7500 Security Boulevard
Baltimore, MD 21244

Download the Letter PDF

Re: Medicaid Program; Community Engagement Requirement for Certain Individuals

Dear Administrator Oz:

On behalf of our nearly 5,000 member hospitals, health systems and other healthcare organizations, our clinician partners — including more than 270,000 affiliated physicians, 2 million nurses and other caregivers — and the 43,000 healthcare leaders who belong to our professional membership groups, the American Hospital Association (AHA) appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services (CMS) interim final rule on Medicaid community engagement requirements.

Medicaid is an essential source of coverage for millions of Americans and a critical component of the healthcare safety net. Because Public Law (P.L.) 119-21 requires Medicaid expansion states and states with expansion-like coverage to implement community engagement requirements, which CMS estimates will result in over two million people losing Medicaid coverage in 2027 and over three million in later years, policymakers must carefully consider the role that Medicaid plays in improving the health and well-being of individuals and communities and prioritize preventing unnecessary coverage losses through effective implementation of the statutory provisions.

Through Medicaid, patients can access a full range of critical healthcare services: preventive care that maintains or improves individuals’ well-being; mental and behavioral health services that support stability and recovery; chronic disease management that prevents costly complications; and prescription drug coverage that provides access to lifesaving medications. Individuals with Medicaid coverage are more likely to have a regular source of healthcare, obtain needed treatment and manage chronic conditions than those who are uninsured. As a result, those with Medicaid coverage have better access to services, lower mortality rates, improved physical and mental health, and fewer preventable hospitalizations.¹^,²^,³^,⁴

Hospitals see firsthand the importance of maintaining coverage, particularly for individuals with significant health needs. Many Medicaid beneficiaries live with chronic illnesses, serious or complex medical conditions, behavioral health needs or other health challenges that require ongoing access to care for monitoring or treatment. Coverage interruptions can disrupt the course of care, increase the risk of worsening health conditions, and create avoidable barriers to accessing necessary services. For these patients, maintaining a stable pathway to coverage is essential to preserving their health and well-being.

The benefits of maintaining Medicaid coverage extend beyond individual beneficiaries to employers and local economies. Research shows that access to Medicaid increases workers’ incomes, improves financial security, and promotes job creation and labor market growth.⁵^,⁶ Medicaid coverage also helps build a healthier workforce that spends less time away from work due to illness.⁷ As a result, when people lose coverage or experience disruptions in coverage, these workforce and economic gains are jeopardized, with effects that ripple throughout communities.

As CMS implements the new community engagement requirements, we respectfully urge the agency to minimize unnecessary procedural coverage loss and recognize the operational complexities facing both patients and states. The AHA is concerned about two components of the interim final rule that, if left unchanged, could increase procedural disenrollments and undermine access to coverage. First, CMS' definition of medical frailty, which adds an overarching functional impairment requirement that does not appear in the statute, will erect barriers to coverage for eligible individuals with serious or complex medical conditions who Congress intended to protect. Second, CMS' approach to good-faith effort exemptions, which conditions approval on a showing of “extraordinary or severe barriers” not required by statute, risks pressuring states to implement these complex requirements before they are operationally ready, increasing the likelihood that eligible individuals lose coverage for procedural rather than substantive reasons. We urge CMS to reconsider both policies, eliminate the additional functional requirement that narrows the medically frail definition, and extend greater flexibility to states working in good faith to implement these requirements.

Medical Frailty Exemption

Medicaid coverage is critical for individuals to access care, manage health conditions and prevent higher-acuity care, and as such, under P.L. 119-21, Congress designed an exemption that would protect patients who are medically frail or otherwise have complex medical needs from losing coverage under the new community engagement requirements. The statute provided discretion to the Secretary of the Department of Health and Human Services (HHS) to define the term “medically frail” to identify individuals who would be exempt from meeting the community engagement requirements.

In the rule, CMS maintains the five categories of exclusions under the medical frailty definition already specified in the law and does not allow states to add additional categories. Those five categories are classified as individuals (1) who are blind or disabled; (2) with a substance use disorder; (3) with a disabling mental disorder; (4) with a physical, intellectual or developmental disability that significantly impairs their ability to perform one or more activities of daily living; or (5) with a serious or complex medical condition. However, CMS has interpreted the statutory definition of medically frail to depend not only on the presence of a particular diagnosis or condition, but also on the extent to which the condition impairs an individual's ability to participate in community engagement activities. This means a state could not determine that an individual meets the definition of medically frail based on diagnosis or condition alone; rather, the state also must assess whether the individual is capable of meeting the requirements. The AHA is concerned that this additional functional requirement established in the interim final rule will create significant administrative complexity for beneficiaries, providers, health plans and states while increasing the risk that individuals with serious healthcare needs experience coverage disruptions.

CMS' approach creates a two-step determination process that will be difficult to implement and may result in eligible individuals losing access to coverage because of documentation and procedural barriers rather than because they no longer have significant healthcare needs.

In addition to the impacts on coverage, hospitals and health systems are particularly concerned about the provider burden associated with the rule. Because many medical frailty determinations will require individualized documentation, providers may become the primary source of information used to verify whether a patient's condition limits their ability to comply with community engagement requirements. Responding to these requests will require staff time, provider review, documentation development and potentially modifications to existing electronic health record workflows. At a time when hospitals, health systems and physician practices continue to face workforce shortages and significant financial pressures, these additional administrative requirements will add additional costs to the healthcare system and divert scarce resources away from patient care activities toward new paperwork requirements.

The AHA believes that a diagnosis-based determination process would better support effective implementation and reduce unnecessary administrative burden. Providers already document diagnoses, treatment plans and clinical conditions through established medical records, claims and encounter data systems. By contrast, evaluating whether a patient's condition prevents them from satisfying community engagement requirements is not a determination that is routinely made in the course of clinical care. Requiring states and providers to establish new processes for assessing and documenting functional capacity will create substantial operational challenges and increase administrative costs for the entire healthcare system.

The rule may also create administrative barriers that impede patient access to care. If beneficiaries must obtain provider documentation to establish or maintain a medical frailty exemption, many will need appointments that are scheduled solely for administrative purposes rather than to address a clinical need. These visits consume limited appointment capacity in communities that are already experiencing shortages of primary care physicians, behavioral health providers and specialists. Increased demand for documentation-related appointments could lengthen wait times for medically necessary care and further strain an already challenged healthcare workforce.

The frequency with which individuals may be required to verify or recertify their medical frailty status — at least every six months — will exacerbate administrative burden and barriers to accessing care. Many Medicaid beneficiaries face barriers to obtaining timely appointments, including provider shortages, transportation challenges and other access limitations. Requiring individuals to repeatedly obtain provider documentation during each eligibility redetermination, or more frequently if required by a state, could result in unnecessary coverage losses among medically frail beneficiaries who meet all of the exemption criteria but are unable to secure a timely appointment.

For these reasons, the AHA urges CMS to revise the final rule to allow medical frailty determinations to be based on diagnosis alone and eliminate the additional requirement that individuals demonstrate an inability to comply with community engagement requirements. Should CMS proceed with implementation of the rule without modification, we request that the agency issue guidance to states regarding the process to determine medical frailty and clearly define the role of providers in a way that does not add new requirements outside of the routine way of delivering and documenting care.

Good Faith Effort Exemption

Implementing the community engagement requirements will require significant state investments in technology, staffing and beneficiary outreach. States will need to modify eligibility and enrollment systems, develop new administrative processes, train staff, update contracts and partnerships across the Medicaid ecosystem, and educate beneficiaries and stakeholders, all within a compressed implementation timeline that creates substantial administrative and operational challenges. Should states attempt to launch the new requirements before their systems, processes and partnerships are ready, it may cause unnecessary disenrollments and significant disruptions to care. As such, Congress granted the HHS secretary the authority under P.L. 119-21 to provide a short-term good-faith effort exemption from compliance with the implementation of the requirements through Dec. 31, 2028. According to the rule, requests for good-faith effort exemptions will be assessed on a case-by-case basis and are generally limited to states demonstrating meaningful progress and extraordinary or severe barriers to implementation. CMS may grant short-term exemptions to states based on certain criteria, and these exemptions will be limited to no longer than six months but may be extended until Dec. 31, 2028.

CMS' decision to limit good-faith effort exemptions to states demonstrating “extraordinary or severe barriers” to implementation sets a materially higher bar than the statute requires and should be reconsidered. The statute allows for exemptions to be granted based on a good-faith effort to comply with the requirements; it does not require that implementation barriers faced by states be extraordinary or severe. The practical consequence of this heightened standard is that states that have made a good-faith effort to comply but do not satisfy CMS' threshold for an exemption may feel compelled to implement the requirements before they are operationally prepared to do so. For example, a state may implement the requirements before compliance processes have been fully developed and communicated to beneficiaries and applicants, new systems have been adequately tested, and their eligibility and enrollment staff are adequately trained. A rushed implementation of this scope and complexity creates a serious risk that individuals will lose Medicaid coverage, not because they failed to meet the community engagement requirements, but for purely procedural reasons, because the state's systems and processes were not sufficiently mature to accurately assess and document their compliance. CMS should revise its good-faith effort exemption policy to recognize that states' inability to fully implement the requirements due to the significant administrative complexity of implementation is, by itself, a legitimate basis for an exemption.

Given the complexity of designing, testing and implementing system and process changes, states would benefit from maximum flexibility to utilize the good-faith effort exemption when they demonstrate that additional time is needed to achieve operational readiness. AHA urges CMS to adopt a more flexible approach that permits states to receive exemptions based on a good-faith effort to comply, with such exemptions expiring Dec. 31, 2028, unless a state demonstrates it can comply earlier than that date. Providing states adequate time to thoughtfully implement these requirements will help reduce avoidable coverage losses, protect continuity of care for Medicaid beneficiaries, and support a more orderly and effective transition to the new requirements.

We appreciate your consideration of these issues. Please contact me if you have questions, or feel free to have a member of your team contact Ben Finder, AHA vice president of coverage policy, at bfinder@aha.org, or Krista Geier, AHA senior associate director of Medicaid policy, at kgeier@aha.org.

Sincerely,

/s/

Ashley Thompson
Senior Vice President
Public Policy Analysis and Development

Medicaid