July 31, 2026
The Honorable Mehmet Oz, M.D.
Administrator
Centers for Medicare & Medicaid Services
U.S. Department of Health and Human Services
200 Independence Avenue, SW
Washington, D.C. 20201
Dear Administrator Oz,
The Paragon Health Institute appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services’ (CMS) Interim Final Rule, CMS-2454-IFC, implementing the Medicaid community engagement requirements enacted by Congress. We strongly support CMS’s efforts to faithfully implement these reforms and believe the proposed rule represents an important step toward restoring accountability and integrity within the Medicaid program.
As Paragon submits these comments, we are aware that on June 29, 2026, a coalition of 26 states and the District of Columbia filed suit in the U.S. District Court for the District of Massachusetts challenging the Interim Final Rule’s medical frailty standard as exceeding the Secretary’s statutory authority. Paragon respectfully disagrees with that theory of the case. As explained below, the functional impairment standard reflects a lawful and necessary exercise of the interpretive authority Congress expressly delegated to the Secretary. CMS should defend it vigorously during litigation.
States routinely administer complex eligibility determinations, community engagement requirements, income verification systems, and numerous other public assistance programs requiring individualized assessments. The challenge facing CMS is therefore not one of administrative feasibility. Rather, the greater challenge is ensuring that states faithfully implement Congress’s reforms instead of interpreting statutory exemptions so broadly that they substantially undermine the law’s intended effect.
Congress enacted community engagement requirements in part because the program has lost its focus on the truly vulnerable—and to incentivize upward mobility for able-bodied, working-age adults who have increasingly left the labor force.
These reforms come amid well-documented concerns regarding Medicaid program integrity and eligibility administration. States have large financial incentives to maximize enrollment in the Affordable Care Act’s (ACA) Medicaid expansion population. Expansion adults receive a 90 percent federal matching rate that generates roughly seven times as much funding per dollar of state spending than spending on traditional Medicaid enrollees. These financing incentives have encouraged some states to prioritize enrollment growth over eligibility integrity, contributing to widespread improper enrollment and tens of billions of dollars in improper federal spending.
Forthcoming research by Paragon estimates that approximately 9.2 million individuals were improperly enrolled in Medicaid expansion in 2024, imposing tens of billions of dollars in excessive federal costs each year. California and New York account for a disproportionate share of these improper enrollments. These findings demonstrate that concerns regarding state implementation are not hypothetical.
I. Congress Intended a Limited Medical Frailty Exemption. Expanding It Would Defeat the Statute’s Purpose
Congress made an important policy decision when drafting the statute. Rather than allowing each state to set its own eligibility standards for the exemptions, Congress gave the Secretary express authority to establish uniform standards under which states make exemption eligibility determinations. Similarly, rather than allowing each state to independently define what constitutes “medical frailty,” Congress expressly delegated responsibility for establishing a uniform definition to the Secretary.
Congress could not reasonably have intended the medical frailty exemption to become a broad alternative pathway through which states effectively exempt large portions of the expansion population from the community engagement requirement. Had Congress intended such a result, there would have been little reason to enact the community engagement requirement in the first place. Instead, Congress carefully selected exemptions addressing specific individual situations or circumstances, e.g., full-time caregiver responsibilities, pregnancy, incarceration, total disability, medical frailty, and participation in rehabilitation programs. The common thread among these exemptions is that they describe situations or circumstances that would make continued compliance with community engagement requirements difficult or impossible.
Therefore, the Secretary should interpret the statutory medical frailty exemption in a manner that gives effect to the statute as a whole and honors Congress’s decision to establish a national community engagement requirement. The implementing regulations must faithfully execute the legislative choices Congress made rather than expand the medical frailty exemption beyond its statutory purpose. Interpreting the medical frailty exemption in a manner that untethers it from ability to work would be inconsistent with the statutory text and would undermine Congress’s clear intent.
Nationally uniform standards are necessary because states possess strong financial incentives to maximize ACA expansion enrollment given the enhanced federal matching structure. The Secretary’s responsibility is therefore not simply to define medical frailty, but to ensure that the exemption remains sufficiently objective and limited to preserve Congress’s broader policy aim in creating the community engagement requirements.
For these reasons, Paragon’s comments focus on two implementation issues that will largely determine whether Congress’s reforms achieve their intended purpose. First, we explain why community engagement requirements are administratively feasible and why generalized claims to the contrary are inconsistent with existing state administrative practices. Second, we discuss why CMS should adopt clear, objective, nationally uniform standards governing medical frailty to ensure that the statutory exemption protects individuals who genuinely cannot satisfy the community engagement requirement without becoming a loophole that effectively exempts the policy out of existence.
II. Community Engagement Requirements Are Administratively Feasible
Much of the criticism surrounding the community engagement requirements has focused on the assertion that states cannot realistically administer them. These concerns are overstated and, in many respects, overlook the substantial administrative infrastructure states already use to administer Medicaid and other public assistance programs.
State Medicaid agencies routinely verify income, household composition, citizenship, immigration status, residency, pregnancy, disability status, incarceration status, and numerous other eligibility factors. They conduct periodic eligibility redeterminations, perform electronic data matching, adjudicate appeals, coordinate with other public assistance programs, and maintain increasingly sophisticated eligibility systems. Community engagement requirements represent an additional eligibility determination, not a fundamentally new administrative function.
States already administer community engagement requirements through other means-tested benefit programs. The Supplemental Nutrition Assistance Program (SNAP), for example, has long required states to determine whether beneficiaries satisfy community engagement requirements, qualify for exemptions, or have demonstrated good cause for noncompliance. Many states administer SNAP and Medicaid through the same agencies using substantially similar eligibility systems and administrative infrastructure. States therefore possess considerable experience implementing work-related eligibility standards for overlapping populations.
Building on states’ extensive experience administering community engagement requirements, advances in technology—including artificial intelligence—should further ease implementation. Digitization of records and phasing out outdated technologies like reliance on fax machines create a policy environment that is vastly different from past experiences implementing community engagement requirements in Medicaid.
CMS should not permit generalized assertions of administrative difficulty to become a basis for weakening or delaying implementation. Administrative challenges accompany virtually every major eligibility reform. The relevant question is not whether implementation requires effort; it is whether workable standards can be developed using existing administrative systems. The experience of Medicaid, SNAP, and numerous other public assistance programs demonstrates that the answer is yes.
States Can Implement Necessary Administrative Infrastructure
The experience of several states demonstrates that implementation is feasible. States are developing reporting systems, integrating employment data sources, coordinating with workforce agencies, and modifying eligibility systems to accommodate the new statutory requirements. Nebraska and Montana implemented the requirements months before the required date, and Arkansas launched a soft rollout of its program as of July 1, 2026. These activities further demonstrate that the principal implementation challenge is not administrative feasibility, but administrative resistance.
Some states have made clear that their primary objective is not implementing Congress’s reforms as enacted but minimizing their practical effect. That distinction is important. CMS should carefully distinguish between legitimate implementation challenges requiring technical assistance and policy disagreements that manifest themselves through expansive interpretations of statutory exemptions or prolonged implementation delays.
III. CMS is Right to Pursue Objective Standards, Which Are Common Throughout Public Benefit Programs
Critics also contend that medical frailty and other exemptions necessarily involve individualized judgment and therefore cannot be administered objectively. While such processes are imperfect, that argument misunderstands how public benefit programs operate. Federal and state programs routinely require individualized determinations governed by objective regulatory standards. Disability determinations, medical necessity reviews, Medicaid eligibility decisions, and numerous other administrative processes require professional judgment bounded by clear regulatory criteria. For the benefit of enrollees and faithful implementation of the law, the rule must establish objective standards to produce consistent, enforceable, and nationally uniform determinations.
Congress specifically delegated that responsibility to the Secretary. CMS’s implementation of a two-part test consisting of both federal and diagnostic standards provides the basis for the objective assessment of exemptions. These standards are administratively workable and faithful to both the statute and Congress’s intent.
Congress Sought to Achieve Balance Between These Objectives by Assigning the Secretary Responsibility for Defining Medical Frailty
A broader context is also important in evaluating statutory exemptions. Opponents frequently argue the Secretary does not have the authority to strictly define medical frailty but must instead allow states to administer according to their local preferences. Congress took a different approach. Rather than permitting each state to establish its own standards for applying the medical frailty exemption, Congress expressly delegated to the Secretary responsibility for defining “medically frail or otherwise has special medical needs.” Section 71119 of the One Big Beautiful Bill excludes from the community engagement requirements anyone who is “medically frail or otherwise has special medical needs (as defined by the Secretary).”
Contrary to commenters who argue that Congress itself exhaustively defined medical frailty, the statute demonstrates the opposite. Congress established the statutory framework but expressly delegated to the Secretary responsibility for defining the phrase “medically frail or otherwise has special medical needs.” That delegation necessarily requires the Secretary to establish administrable standards for applying the exemption. The contrary interpretation would largely deprive the phrase “as defined by the Secretary” of independent meaning, contrary to the settled principle that statutes should be interpreted so that every provision has operative effect.
That decision reflects an important policy judgment. Congress assigned responsibility for defining medical frailty to the Secretary to ensure that a nationally uniform standard, not fifty different state interpretations shaped by divergent fiscal incentives, would govern implementation. The Secretary’s task is to define medical frailty in a manner that ensures that the exemption protects individuals who genuinely cannot satisfy the community engagement requirement without becoming a vehicle for circumventing the statute itself.
Opponents have argued that CMS should adopt a broad and flexible definition of medical frailty because individualized medical determinations necessarily involve professional judgment. That argument conflates individualized medical judgment with regulatory vagueness. Federal and state benefit programs routinely require individualized determinations governed by objective regulatory standards. CMS must establish sufficiently clear criteria to guide professional judgment to ensure consistent and nationally uniform application. That is precisely what Congress directed the Secretary to do.
A vague standard that permits materially different interpretations across states would not merely create administrative inconsistency. It would undermine Congress’s decision to establish a national community engagement requirement and invite precisely the type of expansive exemptions that some states have already publicly discussed.
Objective Standards Reflect Congress’s Concern Over Significant Program Integrity Failures
Congress did not enact Medicaid community engagement requirements in a vacuum. These reforms were adopted after years of mounting evidence that Medicaid expansion had departed from its intended purpose to care for the truly vulnerable and that many states had failed to maintain basic program integrity. A full accounting shows that federal improper payments likely approached $1.1 trillion over the 2015-2024 period. CMS should interpret and implement the statute in a manner that advances Congress’s objective of restoring accountability to the Medicaid expansion population.
The ACA fundamentally altered state incentives by establishing a 90 percent federal matching rate for expansion adults. Unlike traditional Medicaid populations, for which states bear a much larger share of program costs, the expansion population is financed almost entirely by the federal government. On average, for every additional expansion enrollee, states receive roughly seven times as much federal funding for every additional state dollar they spend compared to traditional Medicaid populations. This financing structure creates powerful incentives to maximize expansion enrollment while reducing states’ financial incentives to identify and remove individuals who are improperly enrolled.
Recent Paragon research demonstrates the consequences of those incentives. In a forthcoming research paper, we estimate that approximately 9.2 million individuals were improperly classified as Medicaid expansion enrollees in 2024, imposing tens of billions of dollars in unnecessary federal spending each year. While the causes of improper enrollment vary, the overall picture is unmistakable: many states have not maintained the level of eligibility integrity Congress expected when it created the expansion population. States such as California and New York account for a disproportionate share of these improper enrollments, illustrating how enhanced federal financing can encourage enrollment growth without corresponding attention to ongoing eligibility verification.
Experience with the ACA exchanges further illustrates the importance of objective eligibility standards and meaningful verification. Paragon’s recent research estimates that approximately 6.2 million individuals, roughly 27 percent of exchange enrollment, were improperly enrolled in subsidized exchange coverage in 2026, including millions of phantom enrollees who generated federal premium subsidies despite never accessing medical care. Weak verification standards, automatic re-enrollment, and financial incentives to maximize federally subsidized enrollment contributed to widespread improper enrollment and billions of dollars in unnecessary federal spending. Congress responded by enacting significant exchange program integrity reforms in the One Big Beautiful Bill alongside the Medicaid community engagement requirements. CMS should view these reforms as complementary efforts to restore eligibility integrity across federally subsidized health coverage programs.
Objective Standards Reflect Congress’s Intent to Encourage Work and Community Engagement
Congress enacted community engagement requirements for multiple reasons, including to encourage work and upward mobility among able-bodied adults, to enhance program integrity, and to ensure that Medicaid’s finite resources remain focused on the program’s most vulnerable enrollees. CMS should implement them in a manner that restores confidence that Medicaid expansion serves the population Congress intended rather than allowing administrative discretion to perpetuate existing enrollment abuses.
Community engagement requirements also reflect longstanding evidence that employment and meaningful community participation are generally associated with better physical health, improved mental well-being, stronger social connections, and greater long-term economic self-sufficiency. The objective of these reforms is therefore not merely to reduce improper enrollment, but also to encourage greater participation in work, education, training, and community activities where individuals can do so. A substantial body of research has found that good work is generally associated with improved physical and mental health, while prolonged unemployment is associated with poorer health outcomes.
IV. The Medical Frailty Exemption Must Be Objective, Uniform, and Narrowly Applied
Congress appropriately recognized that some Medicaid enrollees are genuinely unable to satisfy community engagement requirements. Aside from the categorical exemptions for former foster youth and tribes, the exemptions all describe conditions or situations that would prevent an individual from maintaining continuous employment – e.g., because of childcare responsibilities, incarceration, or because of serious physical or mental impairments. Those individuals should unquestionably remain exempt.
At the same time, Congress did not authorize states to excuse broad categories of able-bodied adults from the statute’s requirements. The medical frailty exemption was intended to protect individuals whose medical conditions substantially impair their ability to work, attend school, participate in job training, or engage in community service—not to preserve enrollment among individuals who are otherwise capable of satisfying the modest monthly requirement. The statutory exemption exists because certain individuals cannot reasonably satisfy the community engagement requirement. It is therefore not only consistent with the statutory text, but the best reading of the statute, that eligibility for the exemption be tied to an individual’s functional ability to satisfy the community engagement requirement rather than to diagnostic categories alone.
Congress chose an exemption tied to medical frailty because functional capacity—not diagnostic categories—is what determines whether an individual can satisfy a community engagement requirement. Two individuals with the same medical condition may have vastly different functional capacities. A diagnosis-based standard would therefore produce arbitrary results and exempt many individuals who are fully capable of satisfying the modest monthly requirement.
A qualifying diagnosis should not, by itself, establish eligibility for the exemption. Tens of millions of Americans successfully work while managing diabetes, heart disease, cancer, depression, autoimmune diseases, orthopedic conditions, substance use disorders in recovery, and numerous other chronic illnesses. In these cases, focusing on a particular diagnosis does not advance Congress’s objectives of promoting upward mobility and community engagement. Instead, focusing on whether that condition substantially limits the individual’s functional ability to satisfy Congress’s community engagement requirement best advances Congress’s objectives of promoting work and community engagement. CMS should therefore adopt its objective and nationally uniform standards governing medical frailty and require a demonstrated functional limitation. CMS is right to reject reliance on diagnostic categories.
Objective Medical Evidence Should Support Medical Frailty Determinations
Medical frailty determinations should require objective medical documentation. Medical frailty is fundamentally different from eligibility factors such as household composition or address that applicants may accurately self-report. Whether an individual is medically incapable of satisfying a community engagement requirement is a clinical determination that should be supported by appropriate medical evidence.
Accordingly, CMS should prohibit self-attestation (or sworn attestation) as a basis for establishing medical frailty. While CMS somewhat limits self-attestation after 2027, the agency should further restrict it. Requiring objective medical certification and rejecting self-attestation would align Medicaid with other federal benefit programs that require professional documentation before granting comparable exemptions. For example, CMS’s approach to the ACA in the 2027 Notice of Benefit and Payment Parameters (91 Fed. Reg. 29526) rejects self-attestation in the ACA due to significant evidence of improper and phantom enrollment.
Finally, medical frailty determinations should not be permanent absent evidence that the underlying condition chronically inhibits the enrollee’s ability to work. Many medical conditions improve over time through treatment, rehabilitation, or recovery. CMS should therefore require periodic reverification to ensure that exemptions continue only as long as the qualifying condition persists.
Collectively, these safeguards would protect individuals Congress intended to exempt while preserving meaningful implementation of the broader statutory reform.
Recent Statements by New York Officials Demonstrate Why Strong Federal Standards Are Necessary
The importance of objective national standards is not theoretical. Recent public statements by New York officials provide perhaps the clearest evidence of why Congress delegated responsibility for defining medical frailty to the Secretary rather than the states.
As reported by The New York Times, New York officials have openly discussed strategies for minimizing the practical impact of the new community engagement requirements. Rather than focusing principally on implementing Congress’s reforms, state and local officials described efforts to maximize exemptions, broadly interpret qualifying medical conditions, and develop administrative mechanisms that preserve Medicaid enrollment. One New York official explained that state officials were “getting very creative” in preparing for implementation.
The article further reports that New York City Health Commissioner Dr. Alister Martin described the medical frailty exemption as “kind of squishy” and explained that city officials hoped to develop electronic tools allowing physicians to generate “almost a form letter by clicking a button” to certify medical frailty.
These statements are important because they reveal how at least one state is approaching implementation. New York officials have publicly discussed strategies for maximizing exemptions, inconsistent with the statutory framework and Congress’s intent. Their comments illustrate precisely why Congress delegated responsibility for defining medical frailty to the Secretary instead of allowing each state to establish its own standards. Without objective federal guardrails, states with strong financial incentives to maximize expansion enrollment will understandably face pressure to interpret exemptions as broadly as possible.
Broad state interpretations of the federal statute endanger the very effectiveness of the community engagement requirements. If physicians can satisfy the medical frailty standard through standardized electronic templates requiring little individualized assessment, the exemption risks becoming a mechanism for preserving enrollment rather than protecting individuals who genuinely cannot comply with the law.
Similarly, broad interpretations of conditions such as substance use disorders or mental health conditions—without regard to whether those conditions impair an individual’s functional capacity—would transform a carefully limited exemption into a near open-ended eligibility mechanism.
Therefore, CMS should reject such approaches. Congress delegated responsibility for defining medical frailty to the Secretary precisely because nationally uniform standards are necessary to prevent inconsistent implementation driven by state fiscal incentives. The New York experience demonstrates that this concern is not hypothetical. Without clear federal standards, some states will understandably face strong incentives to maximize exemptions to preserve enhanced federal funding under the ACA’s expansion. CMS should adopt regulations that are objective, administrable, and nationally uniform while leaving little room for interpretations that would substantially dilute Congress’s reforms.
V. Recommendations
To ensure faithful implementation of the statute, Paragon respectfully recommends that CMS:
- Maintain objective, nationally uniform standards governing medical frailty.
- Clarify that a medical diagnosis alone is insufficient to establish eligibility for the exemption and that determinations must be made on individualized clinical assessments. Otherwise, the exemption would turn almost entirely on the prevalence of a medical diagnosis rather than Congress’s purpose of identifying individuals who are genuinely unable to comply.
- Require that qualifying conditions substantially impair an individual’s functional ability to satisfy the community engagement requirement.
- Require objective medical documentation and prohibit self-attestation.
- Require periodic reverification of medical frailty determinations unless the condition is permanent.
- Continue rejecting generalized claims that community engagement requirements are administratively infeasible where existing state systems demonstrate otherwise.
Conclusion
The success of Congress’s Medicaid community engagement reforms will depend less on the statutory language than on whether CMS adopts implementing regulations that faithfully execute Congress’s intent.
States already possess the administrative capacity necessary to implement these requirements. The more significant challenge is ensuring that statutory exemptions remain sufficiently objective to protect individuals who genuinely cannot comply without allowing the exemption to swallow the rule itself.
Congress understood that challenge. It therefore entrusted the Secretary—not individual states—with responsibility for defining medical frailty. That delegation reflects a recognition that nationally uniform standards are essential because states have substantial financial incentives to maximize expansion enrollment supported by enhanced federal matching funds.
Recent public statements by New York officials underscore why that decision was necessary. They demonstrate that some states are already exploring expansive interpretations of medical frailty and other exemptions to preserve enrollment despite Congress’s reforms. CMS should anticipate those efforts and adopt clear, objective standards that leave little room for inconsistent implementation.
The Interim Final Rule represents an important step toward aligning Medicaid’s accountability and program integrity standards more closely with those governing other welfare programs, including TANF and SNAP. By maintaining administrable community engagement requirements and adopting objective, nationally uniform standards governing medical frailty, CMS can faithfully implement Congress’s reforms while protecting the individuals Congress intended to exempt.
Sincerely,
Brian Blase, PhD
Ryan Long
Niklas Kleinworth
Gabrielle Minarik
Christopher Jones
