Raleigh -- June 30. 2026: North Carolina has joined a coalition of states in a federal lawsuit challenging a new Medicaid rule that state officials say could make it more difficult for people with cancer and other serious medical conditions to maintain their health coverage while undergoing treatment.
The lawsuit, led by a coalition of 25 states and the District of Columbia, names the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS) as defendants. The states argue the new federal rule unlawfully narrows protections that Congress established for Medicaid recipients who are considered medically frail.
The legal challenge focuses on new guidance issued by CMS to help states implement Medicaid work requirements scheduled to take effect next year. Under federal law, many adults enrolled through Medicaid expansion will be required to work, attend school, volunteer, or participate in other qualifying activities for at least 80 hours each month to remain eligible for coverage. However, Congress also created exemptions for individuals who are medically frail or have other special medical needs.
According to the lawsuit, CMS adopted a more restrictive definition of "medically frail" than Congress intended. The states contend the rule requires patients to demonstrate that their medical condition significantly impairs their ability to work, creating additional administrative hurdles that could result in eligible individuals losing Medicaid coverage despite having serious illnesses.
North Carolina Attorney General Jeff Jackson said the revised rule places vulnerable residents at unnecessary risk by making it harder for people receiving treatment for illnesses such as cancer and other severe medical conditions to qualify for exemptions that Congress intended them to receive. State officials argue that patients should not face additional paperwork or procedural barriers while managing life-threatening health conditions.
The lawsuit also argues that the rule creates significant challenges for states that are already working to implement the new Medicaid requirements. According to the complaint, states have invested substantial time and resources preparing their systems based on previous federal guidance and now face tight deadlines to notify Medicaid recipients and modify their programs before the requirements take effect.
The coalition contends the federal agencies exceeded their authority by issuing a rule that conflicts with the language approved by Congress. The lawsuit alleges the regulation violates the Administrative Procedure Act and asks the court to block enforcement of the rule while the case proceeds through the federal court system.
The Trump administration has defended the new Medicaid work requirements as a way to preserve benefits for those who need them most and to ensure able-bodied recipients participate in work, education, or community engagement activities. At the time the lawsuit was filed, spokespeople for HHS and CMS had not publicly responded to the specific legal claims raised by the coalition.
The outcome of the case could have significant implications for Medicaid expansion programs across the country, including North Carolina, where hundreds of thousands of residents receive healthcare coverage through the program. A federal court will now determine whether the challenged rule is consistent with congressional intent and whether it can be implemented as written.