CMS plans to bar hospitals from Medicare and Medicaid participation for providing gender-affirming care to minors

Note: The final section of this article has an update on related litigation filed against HHS.

Hospitals would face significant financial consequences for providing gender-affirming care as treatment for minors who have gender dysphoria, according to a newly proposed rule from CMS.

Specifically, any hospital offering care such as puberty blockers, hormone therapy and surgery to minors would be locked out of Medicare and Medicaid, the agency said in announcing formal new conditions of participation Thursday.

“CMS is proposing this rulemaking pursuant to its longstanding authority in sections … of the Social Security Act, which authorize the agency to establish standards necessary to protect patient health and safety in Medicare- and Medicaid-participating hospitals,” according to the announcement.

Exceptions will be permitted in narrow circumstances, including for patients with medically verifiable disorders of sexual development; patients for whom such care is required to address a physical disorder or injury; and patients with medical complications stemming from prior care for gender dysphoria.

In the rule, CMS estimated that roughly 75% of hospitals would need to update their policies and procedures to comply with the new rule. Comments on the proposed rule are due 60 days after publication of the rule in the Federal Register, which is scheduled for Dec. 19.

A separately proposed rule issued Thursday by CMS would prohibit federal Medicaid and Children’s Health Insurance Program (CHIP) dollars from being used to cover gender-affirming care for minors.

The regulations targeting hospital reimbursement and Medicaid funding represent the Trump administration’s attempt to work around a patchwork of state laws on gender-affirming care. More than 25 states already have curtailed the availability of the care, while conversely, 18 have enacted laws or regulations to shield such care from federal legal action.

An administration priority

The regulatory action stems from an executive order (EO) signed by President Donald Trump in January, requiring HHS to “take all appropriate actions to end the chemical and surgical mutilation of children.”

The EO mandated that HHS review evidence and best practices for treating pediatric gender dysphoria, and the department issued its final report in November. As described in the new CMS rule on Medicare conditions of participation, HHS’s report “provides evidence of the clinical realities of SRPs [sex-rejecting procedures] in the United States, documenting the abandonment of medical guardrails.”

In conjunction with the preliminary release of the report in May, CMS wrote hospitals to request information including policies and procedures regarding informed-consent protocols for children with gender dysphoria.

Citing its own calculations, CMS wrote in the new rule that between 2016 and 2020, nearly 3,700 children who were between ages 12 and 18 and had been diagnosed with gender dysphoria underwent what the agency now calls sex-rejecting procedures (e.g., breast/chest surgery, genital surgery and other cosmetic procedures). Separately, it put the rate of such procedures at almost 0.2% of 17-year-olds with private insurance from 2018 through 2022.

“While Medicare does not pay for a significant number of SRP procedures for children, we conclude that, based on the previously cited data, hospitals that participate in Medicare perform a considerable number of these procedures every year,” the agency wrote.

Oz’s take

“Children deserve our protection, not experimental interventions performed on them, that carry life-altering risks with no reliable evidence of benefit,” Mehmet Oz, MD, administrator of CMS, said in the announcement. “This proposal seeks to clarify that hospitals participating in our programs cannot conduct these unproven procedures on children.”

In a Dec. 18 news conference with administration officials, Oz said the medically sound approach to helping teenagers with mental distress would be to “start slowly, the least invasive [way] possible.” He touted psychotherapy, screening for conditions such as attention-deficit hyperactivity disorder and autism, and treatment for anxiety and depression as needed.

Regarding surgical and pharmaceutical care for gender dysphoria, Oz said, “Hospitals that we deem must meet the minimum quality standards of care and safety should not be conducting these experiments when we know so little about what is happening with our youth.”

CMS also wants to ensure financial incentives do not motivate clinicians to provide such services, he added.

Pushing back

The administration most likely will have to defend the new regulations in court.

The American Civil Liberties Union (ACLU) announced it would mount a legal challenge against the proposals, noting that the American Medical Association (AMA) and American Academy of Pediatrics (AAP) are among the medical associations that have supported evidence-based gender-affirming care as an option for minors.

“Gender-affirming care is medically necessary, evidence-based care that improves the physical and mental health of transgender and gender-diverse people,” the AMA said in a 2021 statement.

AAP earlier this year expressed concern about the preliminary version of HHS’s report, saying it “misrepresents the current medical consensus and fails to reflect the realities of pediatric care.” The association also said its own policies “were cited throughout in inaccurate and misleading ways.”

A sweeping effort

Along with the pair of new CMS rules, the Food and Drug Administration said it would formally warn 12 manufacturers of breast binders that they were engaging in illegal marketing for touting the products as a treatment for gender dysphoria in children.

In addition, HHS’s Office of Civil Rights proposed to exclude gender dysphoria from the definition of disability unless the dysphoria results from a physical impairment.

Apart from the various regulatory moves, the House of Representatives this week passed a bill to make healthcare providers criminally liable and potentially subject to a prison sentence for providing puberty blockers, hormone therapy and gender-transition surgery. Parents and other adults likewise would be liable for providing consent or transportation for such care.

The bill passed mostly along party lines (with three Democrats in favor and four Republicans opposed) and is considered unlikely to get the 60 votes required to advance in the Senate.

Update: Litigation filed

On Dec. 23, Democratic attorneys general representing 19 states and Washington, D.C., filed litigation intended to halt the proposed rule barring providers from participation in Medicare and Medicaid if they deliver gender-affirming healthcare services.

Because the rule cannot be finalized until undergoing a notice-and-comment period, the lawsuit is not seeking to block those regulations but rather HHS’s accompanying declaration that services such as puberty blockers, hormone therapy and surgery are unsafe and unproven treatments for gender dysphoria in children and adolescents.

The declaration was cited as a basis for the proposed rule, meaning a court ruling that the declaration is illegal could make it more difficult to implement the rule pertaining to provider participation in Medicare and Medicaid and the companion rule preventing Medicaid from covering gender-affirming services.

“The [HHS] Secretary has no legal authority to substantively alter the standards of care and effectively ban, by fiat, an entire category of healthcare,” the lawsuit states.