CMS ends Medicaid coverage of gender-affirming care for minors

Federal Medicaid funding no longer will be available to cover gender-affirming healthcare for minors, according to a CMS final rule issued Aug. 11.

The rule blocks Medicaid and Children’s Health Insurance Program (CHIP) federal matching funds from reimbursing providers for what the rule refers to as “sex-rejecting procedures” in beneficiaries younger than 18 in Medicaid and 19 in CHIP. As described in the rule, such services include puberty blockers, cross-sex hormone therapy and certain surgical procedures affecting primary or secondary sex characteristics.

In response to industry comments on the proposed version of the rule, CMS is permitting a “tapering period” that authorizes continued federal funding over six months for children already receiving cross-sex hormone therapy at the rule’s effective date.

The tapering period does not apply to puberty blockers or surgeries, for which Medicaid and CHIP funding ends immediately when the rule becomes effective in October (60 days after the scheduled Aug. 13 publication in the Federal Register).

Stakeholders warn of access issues

Industry representatives voiced significant opposition to the rule during the comment period, with CMS noting that more than 90% of the roughly 11,000 comments dissented with the proposed provisions.

As summarized in the final rule, primary concerns included potential mental-health harms and reduced access to care for transgender youth.

“Many commenters stated the proposed rule would force providers to choose between following medical best practices and maintaining access to federal funding,” according to the final rule. “Several commenters stated that the proposed rule would introduce significant administrative burden and increase burnout and moral injury in providers, which could influence providers to move states or exit the Medicaid program.”

CMS says the finalized provisions are empirically justifiable based on reviews that raised questions about evidence supporting pediatric hormonal and surgical gender-transition interventions. Risks include infertility, bone density effects, cardiovascular and metabolic issues, and psychiatric disorders, according to the rule.

“The rule is not directed at individuals who identify as transgender as a class, but rather at specific pharmaceutical and surgical interventions used for particular purposes where the evidence does not support a favorable risk-benefit profile for pediatric populations,” CMS argues.

CMS projects modest direct financial impacts on providers

Other concerns voiced by commenters involved the financial impact on providers.

CMS said its data shows that more than 88% of patients who were identified as undergoing gender-affirming care between 2016 and 2020 received the services at urban teaching hospitals.

Among a reported list of 42 hospitals that discontinued or announced plans to phase out gender-affirming procedures in anticipation of the final rule, CMS said three-quarters are part of academic medical centers or teaching hospitals. More than 30 have annual revenues exceeding $1 billion.

With Medicaid revenues projected to decrease by $31.6 million per year industrywide due to the rule’s provisions, most affected providers should not have trouble absorbing the impact, according to CMS.

“The operating scale of the providers in the [reported] list is characteristic of some of the largest provider organizations in the country,” according to the rule.

One commenter said the estimate does not account for other services that patients would no longer receive if the procedures are discontinued. CMS did not revise its estimates in response to that concern.

The agency projects that the rule will reduce Medicaid spending by $235 million over 10 years, including $138 million in federal savings and $97 million in state expenditures.

Continuing options for coverage

CMS said Medicaid and CHIP will still cover mental health services, counseling and psychotherapy for gender dysphoria.

Coverage also remains available for procedures to treat medically verifiable disorders of sexual development or complications caused by prior procedures, or for purposes unrelated to gender transition (e.g., precocious puberty or physical injury).

In addition, CMS clarifies that states and private payers can still cover all gender-affirming care using nonfederal funds. Gender-affirming care already is restricted at the state level, with a majority of states (27) having enacted laws or policies limiting access in the past half-decade, according to a KFF report (courts have struck down Montana’s law and temporarily blocked Kansas’s law.)

Litigation could shape implementation

Perhaps anticipating lawsuits, CMS says the final rule is on solid legal ground, in part because it technically does not stop providers from offering any services and amounts to a funding restriction rather than an effort to dictate medical practice.

Legal challenges and stakeholder pushback have at least temporarily stymied a previous part of the Trump administration’s strategy to dissuade gender-affirming care for minors. A proposed rule published in December 2025 would make providers ineligible to participate in Medicare and Medicaid if they offer the specified procedures.

The proposed rule’s basis was an accompanying administrative declaration by HHS Secretary Robert F. Kennedy Jr., who said providing gender-affirming care to youth constituted malpractice. An Oregon federal court struck down that declaration in an April ruling on a lawsuit brought by coalition of Democratic state officials.

The actual rule affecting Medicare and Medicaid conditions of participation cannot be challenged in court until it is finalized. Eight months after the rule was proposed and reportedly generated 30,000 stakeholder comments, there is no indication that CMS has drafted a final version. The Office of Management and Budget (OMB), which reviews regulations before they’re published, has not included any such rule on its list of items received for review.

Hospitals nonetheless have gotten pressure from the administration on the issue, according to reports, including via subpoenas for access to patient records and personnel files.