Four states sue CMS over Medicaid work requirements, asking a court to pause penalties

After other attempts have failed to delay the implementation of Medicaid work requirements, set to go into effect beginning in 2027, four states have filed a new lawsuit asking a federal court to block penalties related to enforcement.

The plaintiffs, Oregon, Minnesota, New Mexico and Washington, filed a complaint last week, claiming the threats made by the Centers for Medicare & Medicaid Services (CMS) to withhold funding to state programs violate their governmental sovereignty. They are asking a U.S. District Court in Oregon to block any attempts to withhold Medicaid funds, a measure put in place to punish state governments that do not comply with the new conditions for residents to be covered by the program.

Medicaid work requirements were part of a massive budget reconciliation bill passed through Congress and signed by President Donald Trump in 2025, dubbed the One One Big Beautiful Bill Act. Per the law, all Medicaid enrollees in the U.S. must complete 80 hours of work, school or volunteering every month to keep their coverage.

There are some limited exemptions, mainly for any patient who is deemed to be “medically frail.” Defining that term practically has been the subject of contention, with a U.S. District Court of Massachusetts judge striking down the definition used by CMS in October.

For now, the agency has yet to rework how it defines medically frail, leaving work requirements in limbo due to the lack of a practicable, workable understanding of what that means that would include the ability of states to assess and report on patients who aren’t working and yet still eligible for Medicaid.

CMS defines medically frail as any person whose “physical, mental, or other behavioral health condition significantly impairs the individual’s ability to comply with the community engagement requirement,” which the federal court in Massachusetts ruled does not align with the intent of the law, as passed by Congress.

Following that decision—which also involved the four states in this latest case—the attorneys general filed a new lawsuit last week, asking a court to pause withholding of Medicaid funds until there’s a clear process in place.

The states have also argued that they do not have the infrastructure to comply with what CMS is asking for—even if the definition of medically frail is later found to be lawful—as it would require monthly audits that create a hefty administrative burden.

Part of the issue, the states contend, is that many Medicaid-eligible workers change jobs frequently, meaning there could be potential gaps in coverage that challenge their ability to be re-enrolled, despite being in compliance with the 80-hour-per-month requirement.

For now, the order in Massachusetts pauses the need for states to review medical frailty and potentially terminate residents’ coverage for a period of six months.