Oregon, Minnesota, New Mexico and Washington have filed a federal lawsuit challenging the use of Medicaid funding conditions to compel states to implement new work and community engagement requirements.

The case, State of Oregon et al. v. Oz et al., was filed on November 5, 2026, in the U.S. District Court for the District of Oregon. It adds another legal challenge as states prepare for requirements generally scheduled to begin January 1, 2027. Case information and filings

For state Medicaid agencies, health plans and providers, the immediate planning question is how to prepare while the litigation proceeds. Filing a lawsuit does not suspend a requirement. Organizations need to distinguish the relief the states have requested from any relief a court actually grants.

What the four states are challenging

The lawsuit focuses on the constitutional limits of federal funding conditions.

The states argue that the new eligibility requirements fundamentally change the Medicaid program they agreed to administer. They contend that threatening existing Medicaid funding to secure compliance leaves them without a meaningful choice.

Their complaint relies on the Supreme Court’s Spending Clause reasoning in National Federation of Independent Business v. Sebelius, the 2012 decision addressing the Affordable Care Act’s Medicaid expansion.

These are the states’ legal arguments. The court must decide whether they justify the requested relief. Read the complaint

What relief the states want

The complaint asks the court to declare that federal officials cannot constitutionally withdraw or suspend existing federal Medicaid funds because a plaintiff state fails to comply with the community engagement requirements.

It also seeks preliminary and permanent injunctions preventing that funding action. The requested remedy therefore focuses on protecting the plaintiff states’ existing funding if they decline to implement the requirements.

In their preliminary-injunction motion, the states request interim protection if the court cannot resolve their summary-judgment request before the end of 2026.

What is the current case status?

The public litigation tracker reviewed for this article lists briefing as ongoing. Its most recent stated update is November 6, 2026, and it links the complaint, preliminary-injunction motion and summary-judgment materials.

The materials reviewed do not include an order granting the requested relief. The case should therefore be described as a pending challenge, rather than a ruling blocking the requirements.

How this differs from the medical-frailty litigation

Readers following Medicaid policy may already have seen coverage of the separate challenge involving CMS’s medical-frailty definition.

The new Oregon case raises a broader constitutional question about whether existing Medicaid funding can be conditioned on state implementation of the work requirements. The frailty dispute concerns how a particular exception is defined and implemented.

These questions can affect different parts of an organization’s preparation. A decision addressing an exemption does not automatically resolve the constitutional funding challenge.

For background, see our coverage of the CMS Medicaid frailty-definition court ruling.

What remains on the 2027 implementation calendar

CMS’s community engagement materials identify January 1, 2027, as the general implementation date, subject to applicable exceptions and authorized implementation arrangements.

The requirements apply to specified adult eligibility groups. They do not apply uniformly to everyone enrolled in Medicaid.

CMS describes qualifying activities that include work, community service, certain work programs and education, with an 80-hour monthly standard for specified pathways. Exceptions and alternative ways of satisfying the requirement also apply.

Organizations should use current state instructions when determining the requirements relevant to a particular member. Our guide explains who is affected by Medicaid work requirements and who may be exempt.

What states, health plans and providers should prepare for

The following recommendations are US Health Insights’ operational analysis.

The most useful preparation is a change-control process that allows organizations to respond accurately when authoritative instructions change.

Planning area	What to prepare	What could require an update
Legal and policy monitoring	A record of relevant rules, court orders and state instructions	New relief, an appeal or revised agency guidance
Eligibility systems	Documented business rules, test cases and configurable workflows	Changes to implementation dates, affected groups or exceptions
Member communications	Version-controlled notices, scripts and explanations	A change in the instructions members must follow
Health-plan operations	State-approved outreach and assistance procedures	Revised contract requirements or state operational direction
Provider workflows	Processes for checking coverage and connecting patients with assistance	Changes in renewal timing or coverage-verification needs
Governance	Named owners for approving and distributing updates	Conflicting instructions or a new implementation decision

Keep member communications tied to authoritative instructions

Member-facing language should explain the steps a person needs to take under the rules currently applicable to them.

A pending lawsuit is not a sufficient basis to tell members that reporting obligations have disappeared. Equally, communications should not suggest that every Medicaid enrollee must meet the same requirement.

Before distributing revised material, teams should record its policy source, approval date and intended audience. They should also identify older versions that need to be withdrawn.

Clarify the health plan’s role

Managed-care organizations should confirm their responsibilities with the state Medicaid agency. Outreach, reminders and assistance need to align with the plan’s contract and the state’s eligibility processes.

A clear division of responsibilities helps prevent members from receiving inconsistent answers from their plan, provider and state agency.

For providers, a practical priority is a reliable referral pathway for patients who need help understanding a notice, documenting an exception or completing a renewal.

Plan for the scope of any future order

If the court issues relief, organizations should review the actual order before changing operations.

The review should establish:

• Which parties and jurisdictions the order covers.
• Which funding or implementation actions it restricts.
• When it takes effect.
• Whether another order or appeal changes its operation.

An accurate response depends on the court’s specific language. Headlines alone will not provide enough detail for system changes or member notices.

What to watch next

The next meaningful developments will be government responses, briefing deadlines and court decisions on the states’ requested relief.

Until then, the case adds uncertainty to 2027 planning. Organizations can address that uncertainty by maintaining clear policy ownership, documented workflows and a controlled process for updating systems and communications.

Reporting basis: Public court filings and government materials reviewed November 9, 2026. The linked litigation tracker was last updated November 6. Recheck the docket before publication and record any subsequent material update.

A federal court has struck down part of the Centers for Medicare & Medicaid Services’ definition of medical frailty under Medicaid’s community-engagement requirements.

The October 29 ruling in Commonwealth of Massachusetts et al. v. Oz et al. addresses an additional test CMS imposed on people seeking a medical-frailty exemption. The court also granted the plaintiff states six months of protection against penalties for implementation errors or delays.

For state Medicaid agencies and health plans, the decision creates an immediate policy-review task: identify the affected screening language, understand the relief granted and coordinate implementation changes.

What the court rejected

Congress identified five categories of people included within the medical-frailty exemption. CMS’s June 2026 interim final rule added a further condition: a person’s physical, mental or behavioral health condition had to significantly impair their ability to comply with community-engagement requirements.

U.S. District Judge Richard Stearns concluded that CMS lacked authority to use that additional condition to exclude people within the categories Congress specified. The court invalidated the challenged language while leaving other parts of the framework intact. Court opinion

For broader eligibility background, see our guide to Medicaid work requirements in 2027 and available exemptions.

The ruling’s main effects

Issue	What the decision establishes
Additional frailty test	The challenged language connecting a person’s condition to their ability to comply with community-engagement requirements was set aside.
Enforcement against plaintiff states	Federal defendants are prohibited from applying that provision to the plaintiff states.
Implementation penalties	The order protects plaintiff states against penalties for implementation errors or delays for six months following October 29.
Other challenged verification provisions	The court upheld the challenged 12-month lookback and self-attestation provisions.
January 1, 2027 implementation	The opinion expressly leaves the statutory implementation deadline in place.

These distinctions follow the court’s operative order and accompanying opinion.

Which states received relief?

The case involves 25 states and the District of Columbia:

Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin, together with the District of Columbia.

The injunction expressly addresses application of the disputed provision to the plaintiff states. Organizations should distinguish that language from the order’s separate provision setting aside the challenged regulatory text. Case overview and filings

How the six-month protection affects implementation

The operative order bars federal defendants from penalizing plaintiff states for errors or delays in implementing the interim final rule for six months following the order.

The opinion connects the relief to the short period available for states to revise medical-frailty verification systems. It explicitly states that the enforcement protection does not change the January 1, 2027 statutory implementation deadline. Court opinion

Operational plans therefore need to track two separate matters: implementation responsibilities and the temporary protection against penalties.

What states and health plans should review

The following checklist is US Health Insights’ operational analysis. It identifies practical review areas rather than additional obligations created by the court.

Workstream	Questions for the implementation team
Eligibility policies	Where does the challenged additional test appear in policy manuals, screening criteria or decision trees?
Forms and notices	Do applications, questionnaires or notices request information specifically to satisfy that test?
Technology	Which eligibility rules, vendor configurations and automated workflows would need revision following approved policy changes?
Member assistance	What instructions should call centers, navigators and provider-facing teams use when explaining exemptions?
Governance	Who approves revisions, communicates them to partners and confirms that changes were implemented correctly?

Review the full decision path

A policy revision should be traced through the complete operational process.

For example, removing language from a public questionnaire may leave the same condition embedded in an internal decision tree or vendor configuration. Teams should compare written policy, system logic, staff instructions and notices to identify inconsistencies.

A useful review record would identify the affected rule, its location, the responsible owner, the approved change and the date it was tested.

Clarify responsibilities across organizations

State agencies, health plans, eligibility vendors, providers and community partners may encounter different parts of the same member’s journey.

Implementation teams should document who will issue authoritative instructions, who will update operational materials and where uncertain cases should be routed. Health plans should confirm how state guidance will reach member-service and care-management teams.

Our explanation of care management versus case management provides background on assigning coordination responsibilities and supporting individual members.

Keep verification processes aligned with the remaining rules

The decision does not remove every verification requirement.

Because the court upheld other challenged provisions, organizations should review the complete applicable framework before changing evidence requirements or self-attestation workflows. Each proposed revision should identify the legal or policy instruction supporting it.

Testing should include cases that move between automated processing and staff review, particularly where information is incomplete or requires clarification.

Use specific, consistent member communications

Member-facing explanations should identify what information is being requested, where assistance is available and how questions about an exemption will be handled.

Teams should avoid broad statements suggesting that every person with a medical condition automatically qualifies for Medicaid coverage. The ruling concerns a particular exemption provision within a wider eligibility framework.

Health plans and providers can support members by directing questions to the appropriate state eligibility channel and using the state’s current approved instructions.

What to watch next

The next developments to monitor are:

• CMS instructions responding to the decision.
• State guidance and revised exemption-screening materials.
• Vendor implementation schedules and testing results.
• Any appeal, stay or subsequent order affecting the relief.

Organizations should record these developments separately from the original ruling, preserving the date and authority behind each operational change.

The Centers for Medicare & Medicaid Services plans to broaden its Cell and Gene Therapy Access Model beyond sickle cell disease, potentially extending its approach to negotiating outcomes-based agreements for additional treatments.

In an October 27 announcement, CMS said it will invite manufacturers of other cell and gene therapies to apply through a forthcoming Request for Applications. The announcement signals a broader direction for Medicaid drug purchasing, while leaving important details—including additional therapies and implementation dates—pending.

For Medicaid agencies, health plans and treatment centers, the immediate task is to understand the existing model and identify the operational questions that an expansion would raise.

What CMS announced

CMS expects to release the manufacturer application opportunity in the coming months. According to HHS, the next iteration is intended to support negotiations soon after a therapy receives FDA approval or licensure, while also allowing applications for therapies already approved or licensed.

The announcement does not identify a final list of additional conditions or establish an immediate coverage entitlement for people with other rare diseases. Those details will require further agency documents and participation decisions.

Issue	What is confirmed	What remains pending
Model scope	CMS plans to move beyond the initial sickle cell disease focus.	Additional participating therapies and conditions.
Manufacturer applications	A new application opportunity is expected in the coming months.	Opening date, application deadline and selection requirements.
Negotiation timing	CMS intends to accommodate newly approved and already approved therapies.	Detailed procedures and timelines.
Patient access	The announcement sets out an expansion plan.	When patients could receive additional therapies through expanded arrangements.

How the current CGT Access Model works

The existing model brings states together for CMS-led negotiations with manufacturers. CMS negotiates key terms, including discounts and outcomes-based rebates, which form the basis of agreements between participating states and manufacturers. States decide whether to sign those agreements.

As of October 28, CMS lists 34 participating Medicaid programs: 32 states, the District of Columbia and Puerto Rico. Participation is voluntary for states and manufacturers. The model initially focuses on gene therapies for sickle cell disease.

An outcomes-based agreement connects some of a therapy’s payment to defined patient outcomes over a specified period. If treatment is less successful than the agreement anticipates, the manufacturer reimburses the payer a portion of the payment under the contract’s terms. States remain responsible for their share of treatment costs.

For background on payment arrangements linked to performance, see our guide to fee-for-service versus value-based care.

What the first evaluation found and what it did not establish

CMS’s expansion announcement draws on the model’s first evaluation report, dated August 13, 2026. That report examined the negotiation and agreement-development process.

It found that pooling beneficiaries strengthened CMS’s negotiating position and gave states access to resources and expertise that some could not readily obtain independently. However, participants also described complex agreements, documentation demands and onboarding work that exceeded some states’ expectations.

The evaluation used documents and interviews, including interviews with officials from ten state Medicaid agencies. Its authors caution that those states’ views cannot be generalized to every Medicaid program.

These findings support an assessment of how negotiations were organized. They should not be presented as proof that the model has already improved long-term patient outcomes or reduced total healthcare spending.

What Medicaid leaders should prepare for

The forthcoming application documents will determine the expansion’s requirements. In the meantime, the existing model offers useful planning questions.

The checklist below is an operational assessment for organizations considering their readiness. It does not represent newly announced CMS obligations.

Planning area	Questions to assess now
Coverage and authorization	Who would translate negotiated access terms into state and health-plan policies? How would conflicting criteria be identified and resolved?
Financial responsibility	Who would pay providers initially, receive rebates and reconcile payments? How would cash-flow exposure be assessed?
Treatment access	Which qualified centers could serve members? What arrangements would be needed for out-of-state care?
Data and outcomes	Who would collect clinical information, connect it with claims and resolve missing records?
Member support	Who would coordinate referrals, explain next steps and help patients maintain follow-up care?

Align state and managed care responsibilities

Under the current model, states must coordinate with their managed care plans. CMS permits different approaches to that relationship, including changes to payment arrangements or carving model therapies out of managed care contracts.

For an expansion, organizations should identify ownership of coverage decisions, provider payment, reporting and member assistance before changing systems or contracts. Existing requirements should not be assumed to carry over unchanged to every future therapy. CMS implementation FAQs

Separate treatment financing from rebate collection

An outcomes-based rebate does not remove the need to fund treatment when it is delivered.

A useful financial assessment would examine the timing of provider payment, the period over which outcomes are measured and the information needed to collect a rebate. Leaders should also test how delayed or incomplete data could affect reconciliation.

The practical question is whether the organization can manage the full payment process, rather than simply whether a negotiated discount appears attractive.

Assess the complete care pathway

A coverage policy is only one part of access.

For each potential therapy, planners should map the steps between referral, eligibility assessment, treatment and follow-up. That assessment should identify where responsibilities pass between the state, health plan, treatment center and other providers.

Our explanation of care management versus case management provides background on assigning responsibility for broader coordination and individual patient needs.

Make outcome measurement an operational priority

Before entering a new arrangement, leaders should ask:

• Which outcomes trigger payment adjustments?
• Who supplies and verifies the underlying information?
• How are missing data and disputed results handled?
• How will follow-up continue when a patient changes coverage or providers?

These questions help determine whether an agreement can be administered reliably. They also create a clearer basis for assessing its eventual performance.

How FDA’s separate announcement fits

On the same day, FDA issued draft guidance addressing applications and postapproval management for individualized genome-editing products.

The guidance describes an approach to including multiple patient-specific variants within a single biologics license application. FDA identifies it as nonbinding draft guidance, distributed for comment rather than implementation, and requests comments by November 27, 2026.

FDA’s regulatory work and CMS’s purchasing model address different decisions. The draft guidance does not itself approve a therapy or establish Medicaid coverage.

What to watch next

The next important document is CMS’s manufacturer Request for Applications. Medicaid leaders should review it for:

• Eligible therapies and conditions.
• Manufacturer participation and negotiation requirements.
• State participation opportunities and implementation dates.
• Coverage, payment and outcome-reporting responsibilities.

Until those details are available, organizations can map their current responsibilities, identify gaps and prepare questions for CMS without treating the announcement as an immediate expansion of patient eligibility.

Beginning January 1, 2027, certain adults will need to meet Medicaid work or “community engagement” requirements to qualify for coverage or remain enrolled. States may implement the requirements earlier, and some have already begun.

The requirements apply to specific Medicaid eligibility groups. Many people qualify for exclusions, including certain caregivers, pregnant and postpartum beneficiaries, and people who meet medical-frailty criteria.

For beneficiaries, the first questions are: Does the requirement apply to my coverage category, do I qualify for an exemption, and what information does my state need?

When do the requirements begin?

CMS announced its implementing interim final rule on June 1, 2026. The rule was published June 3 and became effective July 31, 2026. Its general state implementation deadline is January 1, 2027.

Date or stage	What it means
July 31, 2026	The federal implementing regulations became effective
Before January 1, 2027	States may implement requirements early
January 1, 2027	General deadline for states to implement the requirements
First applicable renewal after implementation	Existing beneficiaries generally undergo their first compliance verification at the renewal initiated on or after their state’s implementation date

January 1 does not mean every existing beneficiary loses coverage or must submit documents that day. Individual timing depends on the state’s implementation and renewal process. CMS can also approve temporary state implementation exemptions for qualifying good-faith efforts; a state’s request alone does not establish a delay.

Who is affected by Medicaid work requirements?

The requirements generally apply to adults ages 19 through 64 who receive coverage through:

• The Affordable Care Act Medicaid expansion adult group.
• Certain Section 1115 demonstration populations providing comprehensive coverage.

The applicable population generally excludes pregnant individuals and people entitled to or enrolled in Medicare under the specified federal criteria. Children under 19 and adults 65 or older fall outside the relevant age range.

Being enrolled in Medicaid does not, by itself, establish that someone must meet the requirement. The person’s eligibility category and any applicable exclusion must be considered.

An adult receiving coverage through expansion may need to establish an exemption even if they have a disability or significant health needs. Their eligibility category and exemption status are separate questions.

Who is exempt?

Federal regulations identify several categories of people excluded from the requirement. Each category has conditions that the state must apply.

Exemption category	Key qualification
Pregnancy and postpartum coverage	Pregnancy or entitlement to qualifying postpartum Medicaid coverage
Parents and other qualifying caregivers	Care of a dependent child age 13 or younger, or a person with a qualifying disability
Medical frailty or special medical needs	A qualifying condition that significantly impairs the ability to meet the requirement
Certain veterans	A temporary or permanent VA disability rating of 100%
Certain former foster care youth	Must meet the federal former-foster-care eligibility definition
American Indians and Alaska Natives	Must meet the applicable federal definition
Drug or alcohol treatment participants	Participation in a qualifying treatment or rehabilitation program
Certain TANF and SNAP participants	Specific cross-program work-rule criteria apply
People incarcerated in public institutions	A separate exclusion applies; ordinary Medicaid coverage limitations during incarceration remain relevant

These exclusions remove the community engagement condition. Beneficiaries must still meet other Medicaid eligibility requirements.

How does the caregiver exemption work?

The child-related exemption uses age 13 or younger, rather than all children under 18. Parents caring only for older teenagers should check whether another exemption applies.

Caregiver definitions also cover certain relatives and other people providing qualifying assistance to someone with a disability. Depending on the relationship and living arrangement, additional conditions apply. More than one qualifying caregiver in a residence can receive the exclusion.

What does “medically frail” mean?

Under CMS’s implementing framework, medical frailty involves a qualifying physical, mental or behavioral health condition that significantly impairs the person’s ability to satisfy community engagement requirements.

A diagnosis alone does not automatically establish that standard. Relevant categories include certain disabilities, disabling mental disorders, substance use disorders, and serious or complex medical conditions. Someone without a Social Security disability award may still qualify through another medical-frailty category.

States must first attempt to verify medical frailty using reliable available information. If those data are insufficient, states may request documentation or, during 2027, accept qualifying self-declarations. Federal permission to accept self-declaration does not mean every state will use the same process. More restrictive verification rules begin in 2028.

Beneficiaries should ask their state how to request consideration and what information is needed. Clinicians can help describe functional limitations when documentation is requested.

What activities satisfy the requirement?

People subject to the requirement have several potential ways to comply.

Qualifying route	General federal standard
Work	At least 80 hours in the month
Community service	At least 80 qualifying hours
Qualifying work programs	At least 80 hours
Education	Enrollment at least half-time in a qualifying program
Combined activities	At least 80 hours across qualifying activities
Income-based route	Monthly income meeting the federal minimum-wage-times-80 threshold
Seasonal work	A separate income-averaging calculation applies

CMS currently illustrates the income threshold as $580 per month, based on $7.25 multiplied by 80. That figure is a community engagement compliance measure, not Medicaid’s general income eligibility limit.

Half-time educational enrollment can satisfy the requirement without an additional 80 hours of employment. Qualifying education below half-time may contribute hours toward the combined-activity route.

Already having a job does not eliminate the need to check whether the state has verified the relevant hours or income.

Are temporary hardship exceptions available?

States may offer short-term hardship exceptions for qualifying circumstances, including:

• Certain inpatient or similarly intensive medical services.
• Extended travel for necessary treatment of a serious or complex condition affecting the individual or a dependent.
• Residence in an area meeting specified unemployment criteria.
• Certain presidentially declared emergencies or disasters.

These are state options with defined conditions. Beneficiaries should check whether their state offers the relevant exception, how to request it and when it ends.

Separate mandatory protections can also apply following incarceration or during certain changes in age, Medicare status or exemption status.

Will everyone need to report every month?

The monthly activity standard and the schedule for verifying compliance are different.

For new applicants, states generally assess between one and three consecutive months immediately before the application month, according to the state’s policy.

For existing beneficiaries, states specify the months assessed between renewals and may conduct more frequent checks. An individual’s notice should identify the relevant period. Compliance assessment rules

States must use reliable available information before requesting additional information from the individual. Relevant sources can include payroll records, eligibility-system information, other program records and healthcare data.

A beneficiary may therefore have compliance verified without submitting the same documents repeatedly, while another person may receive a request because available records are incomplete.

What happens if the state cannot verify compliance?

If the state cannot verify compliance, it must issue a notice and provide 30 calendar days from receipt for the individual to show that they meet the requirement or that it does not apply.

For an enrolled beneficiary, coverage must continue until an ineligibility determination is made under the applicable process. Before denying or terminating coverage, the state must consider other Medicaid eligibility bases and provide required notices and fair-hearing rights. People disenrolled for noncompliance may reapply.

Read any notice promptly. Check:

• Which months the state is reviewing.
• What information is missing.
• Whether an exemption or exception applies.
• The response deadline and submission methods.
• How to challenge an incorrect decision.

Keep copies of submissions, confirmation numbers and correspondence.

What should beneficiaries do before 2027?

Start with your state Medicaid agency’s instructions. Medicaid.gov’s eligibility-change page provides a route to state-specific information.

Update your mailing address, phone number and electronic contact preferences. Confirm your renewal date and ask whether your coverage category is subject to community engagement.

If information is requested, relevant records may include pay statements, employer verification, educational enrollment confirmation, qualifying activity records or information supporting an exemption. Submit the documents your state requests through its approved process.

People who believe they qualify for an exemption should ask whether the state has already identified it and whether further action is needed.

What should providers and health plans prepare for?

Providers and health plans can help beneficiaries understand notices, reach the appropriate eligibility office and obtain requested clinical information. A practical preparation step is to establish a clear referral process for members who need renewal assistance or medical-frailty documentation.

For care teams, the central operational issue is continuity: a missed request or incomplete record can interrupt coverage even when the person works, participates in qualifying activities or meets an exemption.

The Centers for Medicare & Medicaid Services issued guidance on October 9 explaining how states must report the share of certain Medicaid home and community-based services payments spent on direct-care worker compensation.

The guidance, issued through State Medicaid Director Letter 26-005, explains a reporting requirement established in the 2024 Medicaid Access Final Rule. It addresses covered services, compensation calculations and implementation expectations for fee-for-service and managed care. Read the CMS guidance.

For states, health plans and providers, the immediate priority is preparing the information needed to support reporting. Waiting until 2028 could leave organizations reconstructing a year of payment and workforce records.

Which services are covered?

The reporting requirement covers four service categories: homemaker, home health aide, personal care and habilitation.

It applies to covered services delivered through specified Medicaid HCBS authorities, including sections 1915(c), 1915(i), 1915(j), 1915(k) and applicable section 1115 demonstrations. Both fee-for-service and managed care arrangements are included.

A service’s name alone does not establish whether it belongs in the report. CMS distinguishes these HCBS authorities from services furnished under section 1905(a), which are outside this requirement’s scope.

Organizations should therefore map services to their Medicaid authority before designing a reporting template. A broad request for every home health or personal care payment could produce an inaccurate reporting population.

The dates states and plans should track

The reporting schedule contains several milestones with different purposes.

Milestone	What it means
July 9, 2027	States must submit readiness information describing how they will meet the reporting requirements. CMS addresses both fee-for-service and managed care readiness.
July 9, 2028	The fee-for-service reporting requirement becomes applicable.
First contract rating period beginning on or after July 9, 2028	The reporting requirement becomes applicable for managed care. The operational start can therefore vary by contract cycle.

These are readiness and applicability milestones, rather than one universal annual submission date.

The technical specifications use the previous calendar year as the measurement period. Reporting due in 2028 therefore draws on January–December 2027 data.

CMS anticipates an annual submission window around September 1–December 31, starting in 2028. Treat this as an expected schedule, subject to the reporting form’s approval process.

The practical implication is that organizations should settle their data definitions and collection responsibilities before the first measurement year begins.

How the compensation percentage works

The reporting calculation compares eligible direct-care compensation with covered Medicaid payments after specified costs are excluded:

Compensation percentage = eligible direct-care compensation ÷ (covered Medicaid payments − excluded costs) × 100

For illustration, assume a reporting category has $1 million in covered payments, $50,000 in excluded costs and $665,000 in eligible compensation. The resulting percentage is 70%.

This example explains the arithmetic; it does not establish a compliance threshold. CMS lists no minimum performance level for this reporting metric. The specifications also require service-level aggregates and distinctions for certain self-directed and facility-cost-inclusive services. Sampling is not permitted.

What counts as compensation?

The regulatory definition includes wages and salaries, qualifying benefits and applicable employer payroll taxes. Direct-care roles extend beyond personal care attendants and can include nurses, direct support professionals and workers providing clinical supervision.

Excluded costs cover specified training, travel and personal protective equipment expenses. The regulation also excludes certain beneficiary-directed arrangements in which the beneficiary sets worker payment rates, alongside specified Indian Health Service and Tribal providers.

CMS distinguishes training and travel expenses from paid worker time. Qualifying training materials or mileage expenses may be excluded, while compensation for workers’ training or travel time can count when it forms part of their employment duties.

That distinction makes payroll and accounting classifications an important implementation issue.

Five preparation priorities for states and health plans

The following recommendations are editorial analysis based on the reporting framework.

1. Establish a shared inventory of covered services.

States and plans should document which programs, service codes, providers and payment arrangements fall within scope. Assign someone to resolve ambiguous classifications, including bundled services.

A written inventory gives providers a consistent starting point and reduces the risk that different plans request different information for the same service.

2. Agree on definitions before collecting spreadsheets.

Create a common data dictionary covering payments, compensation, excluded costs and adjustments. Include worked examples for employees whose responsibilities span direct care and other duties.

Well-defined healthcare data models can help organizations maintain consistent definitions across payment, payroll and reporting systems. This is an implementation recommendation, not a CMS requirement to adopt a particular technology or data standard.

3. Connect payment records with provider workforce information.

Claims and encounter records are unlikely to answer every workforce compensation question on their own. Plans should identify which information they already hold and which information providers must supply.

A practical collection process should assign responsibility for each field, identify supporting records and explain how errors will be corrected. Smaller providers may benefit from examples and simple templates.

4. Test reconciliation before the measurement year ends.

Run an early operational test using representative provider arrangements. Check for duplicate payments, missing compensation categories, inconsistent service assignments and expenses counted twice.

Use the exercise to improve the collection process. An implementation pilot should not be confused with permission to submit a sampled federal report.

Organizations should also keep a record of assumptions and corrections so the final figures can be reproduced.

5. Coordinate state oversight and managed care responsibilities.

States retain responsibility for meeting the federal HCBS reporting requirements, including when applicable services are delivered through managed care.

Operationally, state agencies and plans should agree on collection schedules, provider communications, quality checks and escalation procedures. Contract review may help determine whether existing provisions support the information exchange needed.

A shared calendar can prevent provider requests from arriving too late for validation and correction.

What leaders should do next

The most useful near-term deliverable is a reporting readiness plan: a defined service population, agreed data definitions, named owners and a tested collection process.

For health plans, an early conversation with the state Medicaid agency can establish how plan and provider information will support the state’s submission. For providers, reviewing payroll categories and payment records now can reduce reconstruction work later.

The voluntary initiative could influence future state contracts, quality measures and data requirements. Health plans can begin preparing while continuing to meet existing obligations.

The Centers for Medicare & Medicaid Services announced a partnership with 37 states on September 25 to reshape how Medicaid and the Children’s Health Insurance Program measure quality. Called Investing in Health Outcomes, the initiative asks participants to prioritize measurable improvements in prevention, chronic disease management and behavioral health.

For Medicaid health plans, the immediate task is to assess how their quality programs connect reporting, clinical information and care delivery. The implications will become more concrete as states translate the pledge into program decisions.

The distinction matters: signing the pledge is voluntary. The announcement does not establish a new nationwide reporting deadline or a single mandatory replacement measure set.

CMS says participating states will use the principles to develop health-outcome targets and identify opportunities in their quality strategies and upcoming procurements. It also plans workshops later in 2026.

The pledge’s four commitments

The framework sets out four priorities:

• Give greater weight to health outcomes.
• Simplify overlapping measure inventories while preserving accountability.
• Expand digital measurement using timely information where feasible.
• Connect financial accountability to outcomes.

Medicaid.gov lists 37 participating states as of September 24. Across those states, the agency reports approximately 56 million Medicaid and CHIP beneficiaries and roughly $701 billion in fiscal-year 2024 Medicaid spending. These figures describe the participating programs’ scale; they are not new funding awards.

Why measurement is under scrutiny

CMS’s May 2026 analysis of Medicaid managed-care contracts across 42 states and programs identified approximately 450 quality-reporting requirements representing 258 distinct measures. The agency describes an opportunity to reduce duplication and place more emphasis on beneficiaries’ health.

However, consolidating measures requires attention to their definitions. Two measures can address the same condition while counting different patients, applying different exclusions or using different observation periods.

CMS’s measure-development guidance identifies the population, calculation logic, data sources and collection instructions as central parts of a specification. It also warns that population-definition errors can produce misleading conclusions about quality.

For a health plan, this makes a detailed inventory more useful than a simple count of reports.

Existing quality obligations still apply

Medicaid managed-care quality requirements already operate through state contracts. Under 42 CFR 438.330, states must require covered managed-care organizations to maintain quality-assessment and performance-improvement programs, collect performance information and conduct improvement projects.

The regulation also requires annual performance reporting or submission of the information states need to calculate performance. The voluntary pledge does not itself amend those requirements. Plans should continue following applicable rules and contracts while reviewing subsequent state instructions.

A state’s participation therefore provides a reason to begin a planning discussion. Any operational change needs to be tied to the relevant specification, contract provision or implementation guidance.

Start with an inventory that explains the work

US Health Insights’ assessment is that plans should begin by bringing quality, clinical, contracting and data teams into the same review.

For each measure, document:

• Who requires it and which contract or program applies.
• The eligible population, exclusions and measurement period.
• The information needed and where it originates.
• The reporting frequency and responsible team.
• Any associated payment or performance consequences.

This exercise can identify measures that share data needs without assuming they are interchangeable. It can also reveal duplicated extraction work, inconsistent definitions and reports that arrive too late to support intervention.

The result should be a practical map of current obligations and improvement opportunities. Decisions to retire or replace required measures should follow the applicable approval process.

Test whether clinical information is usable

Digital measurement is part of a broader CMS direction. Through Meaningful Measures 2.0, the agency supports interoperable information exchange, greater use of electronic measures and alignment across quality programs. Its strategy includes FHIR-based standards and APIs for exchanging clinical information.

Technology teams should assess more than whether a connection exists. A useful readiness review asks whether incoming records can be matched to the correct person, interpreted consistently and traced to their source.

Consider a hypothetical diabetes measure. A laboratory result without a reliable patient match, collection date or usable value may arrive electronically yet remain unsuitable for the calculation. Faster transmission alone does not resolve those gaps.

Plans can test a small sample from source record to final score, documenting missing information and manual corrections before expanding the workflow. Our guide to healthcare data models provides additional background on organizing information across systems.

Connect each metric to an operational response

A quality dashboard becomes more useful when a team knows what to do with its findings.

For an existing chronic-condition measure, a plan could examine which members require outreach, who receives the work, how clinical follow-up is documented and when progress is reassessed. This is a suggested planning approach, not a new CMS requirement.

The review should also distinguish missing documentation from a confirmed care gap. Those situations may need different responses.

Where performance affects payment, contracting teams should understand how targets are calculated and how results will be validated. The broader relationship between reimbursement and performance is explained in our fee-for-service versus value-based care guide.

Judge improvement with comparable information

A higher score can reflect better care, more complete records or a change in the population being measured. Evaluations should account for those possibilities.

CMS’s guidance treats measure testing as an assessment of reliability, validity and potential threats to sound conclusions, including differences in data sources and population definitions.

Before comparing results across periods, plans should document whether specifications, data coverage or membership changed. An improvement claim is stronger when the organization can explain both the clinical activity and the measurement conditions behind it.

The next documents worth watching are state quality-strategy revisions, procurement materials and contract amendments. Until those details emerge, a concrete preparation step is to select one existing measure and trace its entire path from the contractual requirement through the source data to the action taken for a member.

Barbara is 79. She’s lived in the same house for 43 years, has about $60,000 in savings, and just found out she needs full-time nursing home care after a fall. The facility near her costs roughly $9,700 a month. At that rate, her savings run out in about six months. Medicaid, the program most families end up relying on for long-term care, won’t pay a dime until she’s spent nearly all of it down to $2,000.

This is the exact problem a Medicaid Asset Protection Trust is built to solve. Set up early enough, it lets someone like Barbara keep her home and savings for her children while still qualifying for Medicaid to cover her care. Set up too late, or done incorrectly, it can backfire and delay her eligibility instead of protecting it.

This guide walks through exactly how these trusts work, who should consider one, what they cost, and where the rules trip people up.

Quick answer: A Medicaid Asset Protection Trust (MAPT) is an irrevocable trust that removes assets from a person’s name so they no longer count toward Medicaid’s asset limit, while still protecting those assets for the person’s chosen beneficiaries. Because Medicaid imposes a 60-month look-back period on most transfers, a MAPT only works if it’s created at least five years before someone applies for long-term care Medicaid.

What is a Medicaid Asset Protection Trust?

A Medicaid Asset Protection Trust (also called a Medicaid Trust, Medicaid Planning Trust, or Home Protection Trust) is a legal arrangement where a person transfers ownership of their assets, often a home and savings, into an irrevocable trust. Because the trust, not the individual, technically owns the assets, they’re no longer counted when Medicaid calculates eligibility for long-term care coverage.

Three roles matter here:

• The grantor (also called the trustmaker or settlor): the person who creates the trust and puts their assets into it.
• The trustee: manages the trust and controls how its assets are used. This has to be someone other than the grantor or the grantor’s spouse, usually an adult child, a trusted relative, or a professional fiduciary.
• The beneficiary: the person who eventually receives what’s left in the trust, typically the grantor’s children. For the trust to work for Medicaid purposes, the beneficiary also can’t be the grantor.

How This Differs From a Revocable Living Trust

Family trusts and revocable living trusts serve a different purpose entirely, and mixing them up is one of the most common (and costly) planning mistakes. A revocable trust can be changed or canceled at any time, which means the grantor still effectively controls the assets inside it. Medicaid treats that control as ownership. Assets sitting in a revocable trust still count toward the $2,000 asset limit and still need to be spent down.

A MAPT only protects assets because it’s irrevocable. Once the trust is signed and funded, the terms can’t be changed, and the grantor gives up legal ownership and control for good. That trade-off, permanence in exchange for protection, is the whole point of the strategy, and it’s also the biggest thing people underestimate before signing.

Why Families Use Medicaid Asset Protection Trusts

Long-term care is expensive, and Medicaid’s eligibility rules are strict by design.

According to the CareScout Cost of Care Survey, one of the most widely cited nationwide surveys on long-term care pricing, the median annual cost of a private room in a nursing home runs well past $100,000 in most states, with several Northeastern and West Coast states running significantly higher. A couple with a paid-off house and a modest retirement account can burn through decades of savings in two or three years of care.

At the same time, Medicaid’s resource limit for an individual applying for long-term care is generally $2,000 in most states. That figure hasn’t moved with inflation in decades. States also set an income limit; in income-cap states, that threshold sits at roughly $2,982 a month for a single applicant in 2026. Anything above these limits has to be spent down, given away outright (which triggers its own penalties), or protected through a legitimate planning tool like a MAPT before an application can be approved.

A few things Medicaid does not count toward the asset limit, regardless of a trust: a primary residence (up to a state-specific equity limit), one vehicle, and personal items like wedding rings. Everything else, checking and savings accounts, CDs, stocks, a second property, generally counts unless it’s been properly protected in advance.

How a Medicaid Asset Protection Trust Actually Works

The 5-Year Look-Back Period

This is the rule that makes or breaks MAPT planning. When someone applies for long-term care Medicaid, the state reviews the previous 60 months of financial records to check whether assets were transferred out of the applicant’s name for less than fair market value. Moving money or property into a MAPT counts as exactly that kind of transfer.

If assets were moved into the trust less than five years before the Medicaid application, the state imposes a penalty period, a stretch of time during which Medicaid won’t pay for care, calculated by dividing the value of the transferred assets by the average monthly cost of nursing home care in that state. Transfer $150,000 with a $9,700 average monthly cost, and the penalty period runs roughly 15 months.

There are two state-level exceptions worth knowing:

• California currently has no asset limit for Medi-Cal, though the state began reimplementing a 30-month look-back period as of January 1, 2026, a shorter window than the federal 60-month standard used almost everywhere else.
• New York has no look-back period at all for community-based, in-home Medicaid services (though it does apply the standard look-back to nursing home Medicaid).

Because of this rule, the golden rule of MAPT planning is simple: do it while healthy, well before care is needed. A trust created after someone is already in crisis, needing care within the next few years, won’t help with eligibility and may create a costly penalty period instead.

What Assets Can Go Into a MAPT

Most types of property can be placed into a Medicaid Asset Protection Trust, including:

• A primary residence (the grantor can generally continue living in it after the transfer)
• A vacation or rental property
• Checking and savings accounts, CDs
• Stocks, bonds, and mutual funds

Two categories generally stay out of a MAPT. Retirement accounts (401(k)s and IRAs) usually aren’t moved into a trust because doing so triggers immediate income tax on the full balance; other Medicaid planning tools, like a Medicaid Compliant Annuity, typically handle retirement funds instead. And in Michigan specifically, a home placed into any type of trust, revocable or irrevocable, is treated as a countable asset, an exception to how most other states handle primary residences.

Income vs. Principal

If income-producing assets sit inside the trust (rental property, dividend-paying stocks), the grantor can usually still collect that income, while the underlying principal stays protected. That income does still count toward Medicaid’s monthly income limit, so a MAPT doesn’t help someone whose issue is too much income rather than too many assets.

Benefits of a Medicaid Asset Protection Trust

• Protects the full value of the trust, not just what’s needed to meet the asset limit, meaning the house, the savings, and whatever else was transferred all pass to beneficiaries.
• Shields assets from Medicaid Estate Recovery. After a Medicaid recipient dies, the state is federally required to attempt to recover what it paid for care from that person’s estate. Assets held in an irrevocable trust generally aren’t part of the probate estate, so they’re out of reach.
• Avoids the all-or-nothing math of a full spend-down, where every dollar above the limit has to be spent on care, medical bills, or exempt purchases before Medicaid will approve an application.
• Keeps a family home in the family rather than forcing a sale to cover care costs or repay the state after death.

Shortcomings and Real Trade-Offs

A MAPT isn’t a quiet workaround, and the downsides deserve equal attention:

• It’s permanent. Once the trust is funded, the grantor cannot get the assets back, change the trustee’s authority on a whim, or dissolve the arrangement if their situation changes.
• It doesn’t help with a crisis. Because of the 60-month look-back, a MAPT created after a diagnosis or hospitalization typically won’t prevent a penalty period.
• Setup isn’t free. Attorney fees for a properly drafted MAPT typically run $2,000 to $12,000, depending on the state, the complexity of the estate, and whether the trust is bundled with a broader estate plan.
• Capital gains exposure. Transferring a home into an irrevocable trust can affect the stepped-up basis rules that normally reduce capital gains tax for heirs, depending on how the trust is drafted.
• Loss of control, full stop. The grantor is trusting the trustee, and by extension the terms of the document, to manage the asset the way the family intended years or decades earlier.

Medicaid Asset Protection Trust vs. Other Planning Options

Strategy	Protects Assets?	Look-Back Applies?	Reversible?	Best For
Medicaid Asset Protection Trust	Yes, fully	Yes (60 months)	No	Healthy individuals planning 5+ years ahead
Outright gifting	Yes, but riskier	Yes (60 months)	No	Rarely recommended without legal guidance
Spending down assets	N/A (assets are used, not protected)	No	N/A	Those needing Medicaid soon, with fewer assets to protect
Medicaid Compliant Annuity	Converts assets to income	No (if structured correctly)	No	Married couples, or those needing care within the look-back window
Revocable living trust	No, for Medicaid purposes	N/A (doesn’t remove countable status)	Yes	Probate avoidance and estate organization, not Medicaid planning

Gifting assets directly to family members, without a trust, seems simpler but carries more risk. It still triggers the look-back rule, offers no legal protections for the grantor if a relationship changes, and can create capital gains and gift tax complications the trust structure is specifically designed to avoid.

Do Medicaid Asset Protection Trust Rules Vary by State?

Yes, significantly, and this is where generic advice from a national article can lead someone astray.

• California: Medi-Cal currently has no asset limit at all, an unusual exception nationally, though the state’s newly reimplemented 30-month look-back period (as of January 1, 2026) still applies to certain transfers.
• New York: no look-back period for community-based Medicaid (in-home and community services), though nursing home Medicaid still follows the standard 60-month rule.
• Michigan: treats a home placed in trust, revocable or irrevocable, as a countable asset, removing the exemption most other states offer.
• Wisconsin: allows irrevocable trusts to be altered or canceled if the trustmaker, trustee, and all beneficiaries unanimously agree, a flexibility most states don’t permit.

Given this variation, a MAPT drafted using another state’s template, or by an attorney unfamiliar with the client’s specific state, can unintentionally disqualify someone from the protection they were trying to secure.

Do You Need an Attorney to Set One Up?

In practice, yes. A Medicaid Asset Protection Trust has to satisfy both trust law and Medicaid eligibility rules in the specific state where the applicant lives, and the two don’t always overlap the way people assume. An attorney experienced in elder law will typically:

• Confirm the trust language qualifies as irrevocable under state Medicaid rules, not just under general trust law.
• Structure trustee and beneficiary designations correctly, since a grantor named as either can void the trust’s protection.
• Coordinate the trust with other documents already in place, such as a will, power of attorney, or advance directive.

A trust drafted incorrectly, even with good intentions, can leave a family believing assets are protected when Medicaid would still count them at the time of application.

What Does It Cost to Set Up a Medicaid Asset Protection Trust?

Attorney fees for a Medicaid Asset Protection Trust generally range from $2,000 on the low end to $12,000 for more complex estates, with the wide range coming down to a few factors:

• Whether the attorney bundles the trust with a pour-over will, power of attorney, and health care directives, or handles the trust as a standalone document
• How many properties or accounts need to be retitled into the trust’s name
• Geographic location (urban markets generally run higher than rural ones)
• The attorney’s experience level with Medicaid-specific trust drafting, as opposed to general estate planning

Set against the numbers above, roughly $100,000+ a year for nursing home care in many states, a $5,000–$8,000 trust that protects a $300,000 estate is a different kind of expense than it first appears.

Timing: Why Earlier Is Always Better

Because of the 60-month look-back period, the single biggest factor in whether a MAPT actually works is timing, not the quality of the drafting.

The ideal candidate is someone who’s healthy, doesn’t anticipate needing long-term care in the next several years, but wants to get ahead of the possibility. Waiting until after a diagnosis, a fall, or a hospital stay dramatically narrows what planning can accomplish. For anyone who needs Medicaid now or within the next five years, a MAPT typically isn’t the right tool, and other strategies (discussed below) tend to fit better.

Alternatives to a Medicaid Asset Protection Trust

For families who don’t have a five-year runway, or whose total assets fall well under the $100,000 range where a MAPT typically makes financial sense, other approaches include:

• Spending down countable assets on exempt purchases: home repairs, a vehicle, prepaid funeral arrangements, or paying off debt.
• Medicaid Compliant Annuities, which convert a lump sum into an income stream that doesn’t count as a resource, often used by a healthy spouse to protect savings when the other spouse needs immediate care.
• Irrevocable Funeral Trusts, which set aside a fixed amount for burial and funeral costs outside the countable asset calculation.
• Working with a Medicaid planner or elder law attorney on a crisis-planning strategy, which can still meaningfully reduce a family’s out-of-pocket exposure even without five years of lead time.

The Bottom Line

A Medicaid Asset Protection Trust works well for exactly one situation: someone in reasonably good health who wants to protect a home and savings from long-term care costs, and who’s willing to start the clock at least five years before they expect to need that care. Outside that window, or without state-specific legal guidance, the same tool that’s supposed to protect a family’s assets can end up delaying the Medicaid coverage they need.

The five-year look-back period doesn’t start until the trust is funded. The earlier that happens, the more options a family has later.

Talk with a licensed elder law attorney in your state to review your assets, your timeline, and whether a Medicaid Asset Protection Trust fits your situation. Many offer a free initial consultation to walk through the numbers before you commit to anything.

Frequently Asked Questions

What is a Medicaid Asset Protection Trust?

A Medicaid Asset Protection Trust (MAPT) is an irrevocable trust used to remove assets like a home or savings from an individual’s name so those assets don’t count toward Medicaid’s eligibility limits, while still preserving them for the person’s chosen beneficiaries.

How does a Medicaid Asset Protection Trust work?

A grantor transfers ownership of assets into the trust, managed by a trustee (someone other than the grantor or their spouse), for the benefit of named beneficiaries, typically the grantor’s children. Because the transfer is irrevocable, Medicaid no longer counts those assets as belonging to the grantor, as long as the transfer happened more than 60 months before the Medicaid application.

What is the Medicaid look-back period?

It’s a 60-month (five-year) window before a Medicaid application during which the state reviews financial records for asset transfers made for less than fair value. Transfers within that window, including funding a MAPT, generally trigger a penalty period of Medicaid ineligibility.

Can I put my house in a Medicaid Asset Protection Trust?

Yes, in most states, and the grantor can typically continue living in the home after the transfer. Michigan is a notable exception, where a home placed in any type of trust is still treated as a countable asset.

Is a Medicaid Asset Protection Trust the same as a living trust?

No. A revocable living trust can be changed or canceled at any time, which means Medicaid still considers those assets under the grantor’s control and therefore countable. Only an irrevocable trust, correctly structured, removes assets from Medicaid’s eligibility calculation.

How much does it cost to set up a Medicaid Asset Protection Trust?

Attorney fees typically range from $2,000 to $12,000, depending on the state, the complexity of the estate, and whether the trust is bundled with other estate planning documents.

What happens if I apply for Medicaid within 5 years of creating the trust?

The state will likely impose a penalty period, a length of time Medicaid won’t cover care, calculated by dividing the transferred asset value by the average monthly cost of nursing home care in that state.

Can Medicaid take assets that are already in an irrevocable trust?

Generally no, as long as the trust was properly drafted, funded more than five years before the application, and the grantor has no ability to reclaim the assets. This is also why properly structured MAPTs are typically protected from Medicaid Estate Recovery after death.

Do I need a lawyer to create a Medicaid Asset Protection Trust?

It’s strongly recommended. Medicaid rules are state-specific and interact with trust law in ways that are easy to get wrong without legal training. An improperly drafted trust can fail to protect assets at all, defeating the purpose of creating one.