New Report: Reducing the Harms of the New Medicaid Work Requirements for People with Substance Use Disorders

By Deborah Steinberg

Over the summer, Congress passed and the President signed Pub. Law 119-21 (H.R. 1), which included the largest cuts to Medicaid in the program’s history. Medicaid, the public insurance program for low-income individuals, is the nation’s largest payer of substance use disorder care, making it a critical backstop against the overdose epidemic.

In particular, the Medicaid expansion – eligibility resulting from the Affordable Care Act’s expanded coverage to adults up to 138% of the federal poverty level – covers the majority of individuals on Medicaid with opioid use disorder. Provisions in H.R. 1 will result in significant coverage losses, the majority of which – 5.3 million – will come from the new work reporting requirements for the Medicaid expansion population.

This new provision requires adults ages 19-64 who are applying for or enrolled in Medicaid via the expansion pathway to be participating in work, school, training, or community service for at least 80 hours a month. A number of sub-populations are exempt from this hourly requirement, including those who are considered “medically frail or otherwise have special medical needs.” While this term has not been fully defined yet – more information may be forthcoming in interim final rules that will be issued no later than June 1, 2026 – Congress made clear that it includes individuals with a substance use disorder, as well as several others. However, it is still necessary for these individuals – as well as those who fit into the other exemptions – to navigate red tape and administrative burdens to ensure they can be identified as exempt from the reporting requirements. Thus, it is now up to the states to protect individuals with substance use disorders from having their Medicaid terminated as they implement H.R. 1.

Legal Action Center’s new report, Protecting Individuals with Substance Use Disorders and Formerly Incarcerated Individuals from Losing Medicaid Coverage: Recommendations on Implementing the H.R. 1 Work Reporting Requirements, offers a legal framework with a public health perspective for how to do just that. In particular, the report is organized around three guiding principles:

Maximizing the exemptions,
Minimizing the burdens, and
Advancing policies that help more people access care and coverage.

Importantly, many individuals with substance use disorders can and do work, as well as participate in other forms of “community engagement” that would count for these requirements. However, experiments in other states show that the administrative burdens of demonstrating that the work requirements have been met lead to coverage loss even for those who are working or are exempt.

To minimize the number of people with substance use disorders who lose coverage, states can take several key steps. First, to maximize the exemptions, states can adopt the broadest possible definitions of each category. For those with substance use disorders in the medically frail exemption, this means adopting a definition that includes any individual who had, has, or would be classified as having any substance use-related condition under the most recent edition of the DSM or ICD. Another way to maximize exemptions is to ensure that when an individual is eligible for multiple, the state applies the one that will last the longest, just like states do for the Supplemental Nutrition Assistance Program (SNAP). For example, there is a separate exemption for individuals who are participating in certain types of substance use disorder treatment, but states should adopt policies and practices to ensure that these individuals instead are categorized in the broader, longer-lasting medically frail exemption as having a substance use disorder, to minimize the chance of this individual losing coverage when they leave treatment.

Second, to minimize the burdens, states can take advantage of the option in H.R. 1 to elect not to verify the information that results in an individual being deemed exempt. That is, states are already required to use data matching (“ex parte verifications”) to identify individuals who may fall into an exemption, and then not to require the individual to submit any additional documentation or information. However, many individuals will not be captured in existing data and thus would fall through the cracks, so states should adopt simple screening questions as part of the application or redetermination process to identify those who are exempt, and not require additional documentation.

This model for identifying exempt individuals is already routinely used for other situations in which a “medically frail” determination must be made by the state. Individuals with substance use disorders may be reluctant to disclose this personal health information to the state, especially when it so often leads to discrimination and other harmful consequences. Thus, we recommend states streamline the questions so that individuals simply have to identify as being a part of the medically frail category, while still including a list of conditions or situations that would enable these individuals to recognize themselves in the category. If the ability to do this is precluded by the interim final rules, then the report identifies other options states can pursue, arguing the least burdensome alternatives must be pursued first in order to comply with other existing Medicaid regulations and the statutory intent of H.R. 1.

Third and finally, the report recommends that states leverage other opportunities to improve access to coverage and care. For example, state Medicaid agencies, in partnership with consumer assistance programs, can proactively screen Medicaid expansion applicants and enrollees for other eligibility pathways, as well as other types of coverage and benefits, such that these work reporting requirements would no longer apply to them. Additionally, states can implement more universal screenings for substance use disorders at key intercept points – including schools, safety net programs, emergency departments, and throughout the criminal legal system – to ensure timely diagnosis such that people can be connected to the exemption as well as connected to treatment. This must be combined with sufficient funding – reimbursement rates and grants – for community-based substance use disorder treatment programs, as well as meaningful enforcement of the Mental Health Parity and Addiction Equity Act to remove discriminatory barriers to care. Ultimately, there are a range of actions states can take that not only help more people get into these exemptions, but also help increase access to the lifesaving treatment people need to live their lives with dignity and achieve wellness.

These new Medicaid work requirements are a significant setback for our country, and will undoubtedly lead to millions of people losing affordable health care. But, states can take this opportunity to implement H.R. 1 in a way that mitigates the harms by maximizing the exemptions, minimizing the burdens, and advancing policies that improve access to coverage and care.

Deborah Steinberg is a Senior Health Policy Attorney at the Legal Action Center where she advocates for federal and state public policies to improve access to substance use disorder care and coverage. She is also a Bloomberg Fellow in Addiction and Overdose at the Johns Hopkins Bloomberg School of Public Health.