In about fifteen weeks, most states will begin conditioning Medicaid coverage for expansion adults on 80 hours a month of work, school, community service or a work program. The requirement comes from Public Law 119-21, signed July 4, 2025, and the operating rules come from an interim final rule that CMS issued on June 1, 2026 (CMS-2454-IFC), published in the Federal Register on June 3 and effective July 31. States must implement by January 1, 2027. Nebraska started early, on May 1, 2026, and several states have been sending outreach notices to enrollees since the summer.
This is not a rule about physician practices, and we're not going to pretend it is. But the practices we work with in expansion states will feel it in three places: eligibility responses that change month to month, patients who arrive believing they are covered and are not, and requests for documentation to support exemptions. The time to set up for that is now, while the state notices are going out and before the first terminations land.
Key takeaways
- The requirement applies to expansion adults aged 19 to 64 in 43 states and the District of Columbia; children, pregnant patients, people on Medicare and most disability categories are outside it.
- Coverage will change between visits, so eligibility has to be checked on the day of service, at the state and at the managed care plan.
- Expect requests for "medically frail" documentation; treat them as records requests with a template, a signer and a turnaround time.
- Decide the self-pay policy for lapsed Medicaid before January, with counsel, because retroactive coverage is also shrinking.
What the rule actually requires
The requirement applies to non-pregnant adults aged 19 to 64 who are not enrolled in Medicare and who are eligible through the Medicaid adult (expansion) group or certain section 1115 demonstrations. CMS says this covers 43 states plus the District of Columbia. Affected individuals must show, for each month, at least 80 hours of work, community service or a work program, or half-time enrollment in an educational program, or a combination totaling 80 hours, or monthly income of at least $580 (80 hours at the federal minimum wage).
Exemptions include pregnant and postpartum individuals, people who are medically frail, parents or caretakers of a child aged 13 or younger or of a disabled individual, American Indians and Alaska Natives, former foster youth, veterans with a total disability rating, people already meeting SNAP or TANF work requirements, people in drug or alcohol treatment programs, and people who are incarcerated. States may also grant short-term hardship exemptions, for example after a hospitalization or a disaster declaration.
States must verify compliance at application (looking back at least one month before the application month), at renewal (one or more months between renewals), and, at the state's option, more often. If a state cannot verify compliance, it must send a notice and allow 30 calendar days for the person to demonstrate compliance or claim an exemption before coverage is denied or ended. The same law also moves expansion adults to eligibility redeterminations every six months for renewals scheduled after December 31, 2026, so the churn will be structural, not a one-time wave.
The 30-day notice is what sets the practice's timeline. A patient whose state cannot verify October hours gets a notice in November. If nothing changes, coverage can end at the close of the notice period, which puts the first wave of terminations in December and January in states that go live on the deadline, and the second wave at the first six-month redetermination in the summer. Your eligibility failures will come in waves, not as a steady trickle, and staffing the desk for that is part of the preparation.
What it means at the front desk
Here is the practical sequence. A patient who has been continuously covered for years receives a state notice in the autumn. If they do not respond, or respond incorrectly, they may lose coverage in January or February. They may not know until they are in your waiting room. Your eligibility check on the day of the visit is now the only thing standing between a covered visit and a self-pay balance the patient cannot afford and did not expect.
We would change four things before January:
- Verify eligibility on every Medicaid visit, on the day of service. Batch checks two days before the appointment are fine as a first pass, but the response can change. The 271 response will show a termination date or an inactive status; make sure your staff can read it and knows what to do next.
- Check the managed care plan, not just the state. In managed care states, the MCO enrollment can lag the state's eligibility change in either direction. If the state shows active and the plan shows termed, call the plan before the visit.
- Write the conversation script. Staff should be able to say, in plain language, "our check shows your Medicaid may have ended on this date; here is the state number and here is what usually restores it" without offering legal advice or guessing at the cause. Put the state's Medicaid agency phone number and the enrollment portal address on a card.
- Decide the self-pay policy for lapsed Medicaid in advance. Retroactive coverage rules are changing under the same law (shorter look-back periods for expansion adults), so "we'll bill Medicaid when you're reinstated" is a promise you may not be able to keep. Decide whether you see the patient, what you charge, and how you document the conversation. Talk to counsel about your state's rules on billing Medicaid patients.
A worked example makes the stakes concrete. A family practice with 600 Medicaid visits a month, 40 percent of them expansion adults, has about 240 visits a month exposed to the requirement. If 8 percent of those patients lose coverage in the first wave, roughly 19 visits a month arrive without coverage. At a self-pay charge of $120 for a 99213, that is about $2,300 a month in balances that, in our experience, mostly go uncollected when they are discovered after the visit, and mostly get resolved (paid, reduced, rescheduled or restored) when they are discovered before it. The check costs seconds. The conversation costs a few minutes. The statement costs the whole balance.
Exemption documentation requests
The medically frail exemption is where practices get pulled in. States define "medically frail" within federal parameters, and many will accept or require documentation from a treating clinician about a disabling condition, a serious mental health condition, a substance use disorder, or a complex medical condition. Expect patients to ask for letters. We would build a template now, decide who signs it and how long it takes, and treat it as a records request with a turnaround time. Do not charge Medicaid patients for it without checking your state's rules. Do not promise the letter will result in an exemption; that is the state's decision.
The template should state the diagnosis in plain words with the ICD-10-CM code, how long the clinician has treated the patient, the functional effect on the patient's ability to work, and the clinician's contact details for verification. Keep it to one page. Log every request with the date received and the date sent, because a practice that produces forty of these in January will want to know how long they took and whether the state accepted them.
The numbers to watch from January
| Measure | Why | Where to see it |
|---|---|---|
| Medicaid eligibility failures on day of service, as a share of Medicaid visits | The direct measure of churn hitting your schedule | Eligibility log or 271 responses, weekly |
| Denials with CARC CO-27 (coverage terminated) and CO-26 (expenses incurred before coverage) from Medicaid and MCOs | Visits that got through the front end and denied anyway | Denial report by payer, monthly |
| Self-pay balances created from lapsed Medicaid | The revenue exposure, and the patient hardship | Patient AR by financial class |
| Exemption letter requests and turnaround | Provider time, and a leading indicator of who is at risk | Records request log |
| Reinstatements within 60 days of a failure | Tells you whether the front-desk script and the state contact card are working | Re-run eligibility on failed patients monthly |
Where we think this goes
Honestly, most of the administrative burden lands on the states and on patients, and the coverage losses will show up in practices as uncompensated care and slower Medicaid payment rather than as a compliance event. But the practices that treat eligibility verification as a real-time step, rather than an overnight batch, will absorb it far better. If your eligibility workflow is already solid, this is a small extension of it. If it isn't, this is the reason to fix it before January. Practices that use our billing services get day-of-service eligibility as part of the standard workflow, and the Medicaid churn measures above will be on the monthly report from January.
Questions we hear
Does this affect our patients on traditional Medicaid (disability, aged, children)?
No. The requirement applies to the expansion adult group and certain demonstration populations. Children, pregnant individuals, people with disabilities and people over 64 are outside it.
Our state applied for an extension. Does that mean nothing changes in January?
The law allows an extension for states demonstrating a good-faith effort, but each state's timeline is its own. Check your state Medicaid agency's implementation page monthly and assume the six-month redetermination cycle proceeds regardless.
Should we help patients report their hours?
Point them to the state portal and the state's help line, and keep the phone numbers at the desk. Entering hours on a patient's behalf is not something a practice should do.
What to do this month
- Confirm your state's go-live date and read its implementation page; note whether it verifies monthly or only at application and renewal.
- Turn on day-of-service eligibility for every Medicaid visit and confirm the 271 response shows the termination date and the MCO.
- Write the front-desk script and the state contact card, and have counsel review the self-pay policy for lapsed Medicaid.
- Build the one-page medically frail documentation template and the request log, and name the signer.
- Add the five measures in the table to the January monthly report so the first wave is measured, not guessed at.
