CMS lets states exempt the sickest Medicaid recipients using data they already hold

Every input the tier structure uses is an administrative record. Tier 1 turns on the diagnosis alone ^[5]. Tier 2 adds billing for recent acute care and pharmacy codes for particular medications ^[6]. Those records capture what a clinician coded and what a payer was billed, and work capacity is inferred from that.

Which is why one diagnosis can land in two places. CMS's own example: a patient whose type 2 diabetes has caused vision loss is tier 1, and a patient with type 2 diabetes on several medications, possible peripheral neuropathy and no recent hospital admissions is tier 3 ^[10]. The second patient may be just as unable to work. What separates them in the data is a coded complication and an inpatient record.

Benjamin Sommers, a primary care provider and professor of medicine at Harvard, said the guidance is "somewhat more encouraging" because it allows states to use existing data to automatically exempt people ^[13]. "At the same time, it's still a fairly complicated approach and there's just not much time for states to get this right," he said ^[14]. He remains worried that very sick people will get caught in red tape and lose their insurance ^[15]. STAT's report is dated Sept. 11 ^[2], and states are under pressure to have an eligibility-check system running by Jan. 1 ^[12], which leaves about 16 weeks ^[24].

How many people each tier catches is an open question. STAT's account of the document sets out the three definitions without a share for any of them ^[26]. So it is too early to judge whether the automatic path clears most seriously ill recipients or a narrow band at the top. The Congressional Budget Office's preliminary estimate is that over 7 million people will lose Medicaid coverage in coming years ^[16].

The tiers only see what the coding system has already recorded. People with little-understood conditions such as ME/CFS or long Covid often struggle for years to get a diagnosis while their health clearly declines ^[22]. Self-attestation covers the first year of work requirements; from 2028, documentation is required to keep the frailty exemption ^[21]. "We're looking at two cliffs," Ben HusuBorger, #MEAction's campaigns director, told STAT ^[23]. His group has reached out to dozens of state Medicaid directors and met with several ^[20].

The American Medical Association had been asking CMS to clarify whether diagnostic codes alone could establish medical frailty for seriously ill patients; without that, physicians would have had to produce more documentation, which the group said was unrealistic ^[18]. In a national advocacy update, the group said "This data-driven approach could reduce the need for beneficiaries and physicians to submit additional documentation" ^[17]. Nothing obliges a state to use the tiers at all ^[11]. Disease groups are already lobbying for better placement, because moving up a rung means less paperwork for patients and a lower risk of losing coverage ^[19].