On June 1, 2026, the Centers for Medicare and Medicaid Services (CMS) released an Interim Final Rule regarding the implementation of H.R.1 as it relates to Medicaid. The RARE Foundation has created guides to better understand the rule: “Medicaid Program; Community Engagement Requirement for Certain Individuals.” For general information about Medicaid, visit our webpage.
Interim Final Rule Explained
What is an Interim Final Rule?
A rule is a government statement that explains how to implement laws passed by Congress. An interim final rule (IFR) is a rule that goes into effect as soon as it is released, but sometimes the public can still provide comments on it before the government makes it final.
What is the Medicaid Program; Community Engagement Requirement for Certain Individuals?
This is one of several rules that CMS has released related to H.R.1 (One Big Beautiful Bill Act). This Medicaid Interim Final Rule outlines what state governments must do under H.R.1 to implement community engagement requirements. States have some flexibility, but they must adopt these guidelines to follow federal law and maintain funding. This can determine how much money the federal government gives a state for its Medicaid programs.
This document is nearly 400 pages long, and it will take time to continue understanding all the information shared within it.
What are community engagement requirements?
In 2025, Congress passed H.R.1, budget reconciliation language that, among many other provisions, requires states to implement work reporting requirements. This rule from CMS establishes federal guidelines for State Medicaid Agencies as they work to set up these Medicaid requirements for their beneficiaries.
This new requirement specifies that certain adults receiving Medicaid must complete 80 hours per month of work (also referred to as “community engagement” or “work requirements”) to remain eligible for their Medicaid benefits. Work/community engagement can include: employment, work programs, community service, or an educational program. Certain individuals may be excluded from these requirements, including those who are disabled, medically frail, have a serious or complex medical condition, or are caretakers for these individuals. This new rule defines the groups of individuals eligible for exclusion and provides information about how states can operationalize these requirements and exclusion criteria.
What’s important to know about this rule?
- First, there are several definitions in the rule around disability, medical complexity, and medical frailty, and their connection to the ability to work. We are exploring the effect of these definitions on the eligibility of our rare community. For more information on work requirements, see our website.
- Second, the rule includes guidelines for how and when individuals receiving Medicaid can self-attest (or sign off) that they meet the exclusion requirements without further documentation. The rule allows self-attestation only until 2028, but individuals will have to provide more documentation in many cases.
- Third, the rule outlines new information regarding how states can decide whether someone qualifies as disabled or medically complex, encouraging the use of healthcare code lists which do not account for significant numbers of rare diseases. To learn more about diagnostic codes and ICD-10 Codes, see our website.
- Fourth, the rule describes caregiving exemptions for parents of young children and those caring for people with disabilities. We are working to better understand how our rare disease community can qualify for these important exemptions from work requirements.
What’s next?
States will be required to implement work requirements to maintain federal Medicaid funding. While the law establishing work requirements was passed in mid-2025, 42 states and the District of Columbia were waiting for the publication of this rule to begin their implementation strategy.
- We are actively working to understand the full breadth of the impact this rule will have on the rare disease community. As we continue to assess this rule and its impacts, we will share information from our team and additional trusted resources with the community on our website and through social media, including opportunities for engagement in shaping the final state of this rule.
- This is a interim rule, it is not yet finalized and there are always opportunities for advocacy. The EveryLife Foundation will be identifying opportunities to activate, protect our community’s eligibility, and engage in legislative processes and comments. Comments on the proposed rule are due by July 31.
A Guide to Rule Terms
Rules also help explain what different words mean within the law. Below are some key terms as defined in the rule that may be helpful to understand.
General Definitions
Medical Frailty
Medical frailty is a term used in this document to describe people who might be unable to complete a community engagement requirement. This might be a person who has a physical, mental, or other behavioral health condition. There are very specific terms this rule uses to define what medical frailty means. Medical frailty would make a person exempt from the community engagement requirement, meaning they do not have to complete the requirements.
Serious and Complex Medical Condition(s)
A serious or complex medical condition is life-threatening or severely disabling. It includes factors like pain, discomfort, and the need for caregiving. The label also looks at how the condition affects someone’s ability to work or complete community engagement requirements.
Self-Attestation
Self-attestation means a person promises that what they are saying is true without government verification. People can use this process to claim that their medical condition qualifies them for Medicaid, even if the state does not list it in their health codes. State governments can create a process that allows individuals to submit self-attestation, which might include a description of their medical condition.
Individual’s continuous period of enrollment
A continuous period of enrollment is the amount of time an individual can remain on Medicaid without having to reapply. This period allows a patient to stay enrolled in Medicaid regardless of changes to eligibility factors, like income. H.R.1 changed the continuous enrollment period from 12 months to 6 months.
Caretaker Relative
This is a term that has been used before by Medicaid. A caretaker relative is either a parent or other relative who lives with and has the main responsibility for a child or disabled individual’s care. There are many types of relatives this person could be, such as a grandparent, an aunt/uncle, a first cousin, a niece/nephew, and more. There are many more relative types that qualify if caring for a disabled individual.
Family Caregiver
This is a newly defined term for Medicaid in this rule document. The document uses the same definition of family caregiver that is in a bill called the RAISE Family Caregivers Act. A family caregiver is an adult family member or person with a significant relationship who regularly helps someone with a long-term or other health condition, disability, or other limitation impacting function. This relationship is not limited to relatives who live with the person who needs care.
Applicable Individuals
Applicable individuals are the people who will have to comply with the new community engagement requirements. They are adults in states with expanded Medicaid populations under the Affordable Care Act, who aren’t eligible through a waiver pathway, such as Home and Community Based Services waivers (HCBS). These expanded populations cover nearly all adults with incomes up to 138% of the Federal Poverty Level. HCBS waivers allow eligible individuals to receive medical care in their home, instead of in a medical facility.
Health Care Codes
State Lists of Conditions
States must keep lists of diseases and other health conditions. This helps define categories like serious or complex Medicaid conditions. These lists can use health care codes and must be edited regularly. If a condition is not on the list, the state must have a process for patients to request that it is added to the list.
Health Care Codes
Health care codes are systems used to identify medical diagnoses. States will use healthcare codes to group medical conditions and Medicaid coverage.
One system of healthcare codes that states use is ICD codes. ICD stands for “International Statistical Classification of Diseases and Related Health Problems.” We are currently using ICD-10, the tenth revision of the system. ICD-10 is used around the world to track and report diseases. When a disease has an ICD code, it allows for easy storage of health information.
Comments Submitted to States
The RARE Foundation sent letters to each state that is implementing community engagement requirements, highlighting their impact on the rare disease community and suggesting a series of actions to minimize coverage losses. The letters leveraged early data from the pre-print of the RARE Foundation’s analysis of rare disease beneficiaries in each state’s Medicaid program. The communication also included an explanation of the rare disease coding gap and why data-driven strategies to verify exclusions from community engagement requirements may miss rare disease patients and caregivers.
The recommendations in the letters include:
- Account for the rare disease coding gap when designing ex parte verification processes
- Account for the episodic nature of many rare diseases by limiting the lookback period to one month and reverification of compliance to once per 12-month period
- Minimize unnecessary reverification requirements
- Create simple, inclusive documentation requirements
- Automatically exempt patients receiving home and community-based services
- Provide clear guidelines for caregivers of children under the age of 13 and people with disabilities
- Adopt all short-term hardship exemptions
- Collaborate with rare disease patients and organizations
What is the Rare Disease Coding Gap?
The supplemental one-pager highlights why a claims-based screen cannot capture all rare disease patients. Prior to the guidance on this IFR, most states relied on lists of diagnosis and procedure codes to confirm the population considered medically frail. Now, states were directed to first rely on an automated healthcare data-based process to flag work requirement exclusions, without requiring patients to submit documentation. While this data-driven process would save patients and healthcare practitioners time and ensure paperwork does not get in the way of coverage, for individuals living with and caring for those with rare diseases, an automated, code-driven process alone will systematically miss the very patients the statute was written to protect.
Healthcare data relies on the use of diagnosis codes (ICD-10-CM codes in the U.S.), and unfortunately, about 97% of rare diseases do not have dedicated ICD-10-CM codes. When there is no diagnosis code, healthcare data won’t be able to find a patient that should be excluded, so the importance of a state’s process for submitting documentation becomes even more important.
ICD Coding Gap Recommendations
To account for the rare disease coding gap in the short term, we recommend that states:
- Do not rely on dedicated rare disease codes alone
- Leverage the Mondo disease ontology where it is available in Epic (click here to learn more)
- Accept high-signal qualifying indicators
- Minimize unnecessary reverification requirements
- Default to the least burdensome path when data are insufficient
- Create well-vetted, easy-to-follow instructions for submitting documentation
For longer-term solutions, we hope that CMS, CDC, and Congress can create structural fixes to ensure rare disease patients are not left out of healthcare data. This especially includes supporting the progress towards the next iteration of ICD code (ICD-11) adoption, which integrates Mondo rare disease codes directly.
Examples of Materials
See an example of the full letter: Maryland Rare Disease Medicaid Considerations July 2026
See an example of the ICD code one-pager: MD Rare Disease Coding Gap Suggestions
If you are a patient advocate interested in viewing the letter the EveryLife Foundation sent to your state, please email policy@rareadvocates.org.
Comments Submitted to CMS
In addition to our work with state policy, the RARE Foundation submitted comments to the Centers for Medicare and Medicaid Services (CMS) about the Interim Final Rule (IFR) that provides states with guidance on implementing community engagement, or ‘work’ requirements for adults with Medicaid.
Our Focus
Over 6 million Medicaid beneficiaries live with a rare disease, but most rare diseases have no specific diagnosis code, so the automated systems states need to use will miss patients who should qualify for exclusions. In the IFR, CMS added more rules and requirements to an already complex process that risks coverage losses, even for those who should be eligible.
We’re asking CMS to use more effective tools to identify rare disease patients for exclusions, preserve self-attestation, stop unnecessary annual reverification for those whose conditions aren’t expected to change, and include patients and advocates in the rollout.
