How CMS rule on gender-affirming health care with fare in court

The Trump administration’s efforts to eliminate transgender health care for minors have encountered multiple legal challenges. Judges have blocked Justice Department subpoenas, a health secretary’s declaration, and parts of the president’s executive order that aimed to cease all federal support for this care. However, a new rule finalized by the Centers for Medicare and Medicaid Services this week could present a tougher challenge to contest. 

The agency announced on Tuesday its decision to prohibit the use of federal Medicaid and CHIP funds for gender-affirming medications and surgeries for minors. On Thursday, the Department of Health and Human Services issued a report on diagnostic coding practices by gender-affirming care clinicians, referring numerous health care groups to the Justice Department for investigations. Despite several legal setbacks, the administration has pressured several hospitals to either shut down or halt their gender-affirming care programs. 

“What we see here is an ideological campaign to eliminate access to a type of treatment because the president disapproves of it,” stated Elana Redfield, federal policy director at the Williams Institute, a UCLA School of Law think tank focused on LGBTQ+ issues. “But I would describe [the final CMS rule] as sort of a gray area,” Redfield added.

Following the proposal of the coverage rule, the agency received nearly 35,000 public comments and addressed these concerns in the final document. By following the standard regulatory process, the agency is “attempting to position this rule to withstand the inevitable legal challenges,” according to Travis Jackson, a partner in health care law at McDermott Will & Schulte. “I think they’ve learned more about vulnerabilities that have thwarted their past efforts in this and other areas,” Jackson noted.

Agreement came from others as well. “This rule feels less radical than some of the other proposals,” said Carmel Shachar, director of the Health Law and Policy Clinic at Harvard Law School. 

Scheduled to take effect on October 13, the rule prohibits the use of federal Medicaid funds for gender-affirming medication and surgery for those under 18, extending the ban to those under 19 for the Children’s Health Insurance Program. Mental health services can still be funded federally, and states can decide to use their own Medicaid funds to support any gender-affirming care.

While legal experts anticipate the short-term endurance of this coverage restriction, they do not view it as unassailable. Lawsuits are expected, with a press officer from Andrea Campbell’s office confirming that the Massachusetts attorney general intends to challenge the rule in court. 

Potential challenges to the rule

Certain health care services are often excluded from federal Medicaid coverage, such as over-the-counter medications and abortion services. CMS claims the agency has “independent legal authority” to determine which health care types are federally funded. However, lawyers speaking with STAT indicated that the agency’s unilateral decision to withdraw coverage without a directive from Congress is possibly unprecedented. 

“If they had a bunch of examples, they would cite them,” said Katie Keith, director of Georgetown University’s Center for Health Policy and the Law. The final rule’s most pertinent example involves the ban on federal abortion coverage, enacted by Congress through the Hyde Amendment. The document also references a 1976 regulation that stopped federal financial support for sterilization for those under 21, issued in response to public outcry over the practice. 

CMS also claims the rule is based on legal authority from other administration actions on gender-affirming care. “Superficially, they are correct,” Jackson remarked. Only one section of the president’s executive order concerning this care is currently enjoined. At the time, the court ruled that challenges to other sections, including Medicaid funding directives, were not yet ripe for litigation. With the finalization of this rule, that situation might change. Thus, according to Jackson, “they are correct, but they could also be wrong.” 

Doubts also persist regarding the scientific evidence cited in the rule and whether the agency is attempting to regulate medical care, which would fall under state jurisdiction. 

“There are parts of the rule where they make it clear they think this care should be tapering off,” Keith commented, highlighting a “tapering period” in the final document. This allows federal funds to cover hormones for six months after the rule takes effect, until April 2027. Clinicians who provide gender-affirming care stress that safely discontinuing transgender individuals from their medications is not possible. 

“It gets a little bit muddled,” Keith observed. “Is this just about federal funding, or are you trying to take kids off their treatment?”

The final rule frequently references a gender dysphoria report released by HHS last year that questioned the standards of care for transgender youth, criticized the methodology of a report commissioned by the Utah State Legislature that reached different conclusions, and entirely omitted a recent report from the Netherlands that also contradicted the HHS review. 

“I do think there are legitimate questions as to whether or not the record in front of HHS truly supports the actions that HHS is taking in the rule,” Jackson stated. 

Impact on patients and families

The health policy group KFF estimates that about 130,000 young transgender individuals covered by Medicaid or CHIP reside in states where gender-affirming care remains legal. Clinicians, patients, and advocates assert that the final rule will effectively strip potentially life-saving care from low-income transgender youth. 

While states can compensate for the lost federal funding, “this could be tough for states to do in a normal environment,” Keith noted, especially as states are also dealing with other significant coverage changes that could lead to millions losing Medicaid coverage. 

Lawyers informed STAT that the final CMS rule is viewed as more legally sound than another rule proposed alongside it, which seeks to limit Medicaid participation for hospitals offering gender-affirming care to minors. CMS stressed that these rules should not be conflated. Thus, finalizing the rule ending federal dollar usage does not necessarily pave the way for the broader one, but its success might guide the administration’s future actions.

“I see this rule coming out as a test as to the agency’s authority, and perhaps if it withstands that test — it’s not enjoined, etc. — then you may be more likely to see them take the more draconian action of the conditions of participation,” Jackson explained.