Last week saw two major federal policy actions related to the provision of gender-affirming care to minors. On August 11, 2026, CMS issued a final rule entitled “Prohibition on Federal Medicaid and Children’s Health Insurance Program Funding for Sex Rejecting Procedures Furnished to Children” (the “Final Rule”). On August 13, 2026, the U.S. Department of Health and Human Services (“HHS”) published the report and accompanying documentary “Wolves in White Coats: How Doctors and Hospitals Pushed and Profited from the Fraud of ‘Gender Medicine’” (the “Report”). The Report includes a list of hundreds of health care providers that have billed for gender-affirming drugs or services provided to minors. That list of providers has been referred by Secretary Kennedy to the HHS Office of Inspector General (“OIG”) and by Vice President Vance to the Department of Justice (“DOJ”), in each case for investigation into possible violation of federal statutes by the named entities.
These actions—summarized below—signal the ongoing focus of the Trump administration on restricting or prohibiting pediatric gender-affirming care.
The Final Rule Prohibiting State Medicaid and CHIP Agencies from Covering “Sex-Rejecting Procedures” for Minors
Currently, around half of state Medicaid programs explicitly cover gender-affirming care in certain circumstances, and a number of other state Medicaid programs are silent on or have unclear policies regarding coverage of gender-affirming care for minors and/or all patients. The Final Rule, effective on October 13, 2026, would require all state Medicaid and Children’s Health Insurance Programs (“CHIP”), regardless of state law governing provision of gender-affirming care to minors, to adopt rules explicitly prohibiting payment for “sex-rejecting procedures” for minors (defined as persons under age 18 for Medicaid purposes and persons under age 19 for CHIP purposes). States that do not conform their plans to align with the requirements of the Final Rule risk loss of the federal match for their Medicaid and CHIP programs.
The Final Rule defines “sex-rejecting procedures” to mean “any pharmaceutical or surgical intervention that attempts to align a child’s physical appearance or body with an asserted identity that differs from the child’s sex by either of the following: (1) Intentionally disrupting or suppressing the normal development of natural biological functions, including primary or secondary sex-based traits; or (2) Intentionally altering a child’s physical appearance or body, including amputating, minimizing or destroying primary or secondary sex-based traits such as the sexual and reproductive organs.”
The definition of “sex-rejecting procedure” does not include procedures intended: “(i) To treat a child with a medically verifiable disorder of sexual development; (ii) For purposes other than attempting to align a child’s physical appearance or body with an asserted identity that differs from the child’s sex; or (iii) To treat complications, including any infection, injury, disease, or disorder that has been caused by or exacerbated by the performance of sex-rejecting procedure(s).” Note that the term “medically verifiable disorder of sexual development” is not defined within the Final Rule although, in commentary, CMS observed that the term “gives discretion to the reasonable medical judgment of qualified providers to make such assessments in accordance with standard medical practice.”
The Final Rule also includes a limited transition exception—for beneficiaries actively receiving cross-sex hormone therapy as of October 13, 2026, states may continue to claim Federal Financial Participation for those medications for up to six months for tapering purposes. The rule does not provide a transition period for surgical care or initiation of new courses of gender-affirming care. In addition, the Final Rule does not affect existing coverage of mental health services, including Medicaid Early and Periodic Screening, Diagnostic and Treatment and CHIP mental-health requirements for gender dysphoria.
CMS left many operational implementation details to the states, including State Plan Amendment content, provider communications, claims-processing edits and managed care plan revisions. The rule also includes an express severability clause, underscoring that CMS anticipates litigation and intends for the remainder of the rule to remain in effect if any provision is stayed or struck.
HHS Report and Referrals to OIG and DOJ
The Report argues that hospitals, clinics, advocacy organizations, professional medical associations and federal agencies under the Biden administration promoted provision of pediatric gender-affirming care for financial reasons. The Report specifically alleges that some providers used improper or fraudulent billing practices to obtain reimbursement from governmental and other third-party payors for puberty blockers, cross-sex hormones and related procedures.
As noted above, the Report includes a list of nearly 250 health care providers—including hospitals, pediatric and primary care provider groups, specialty pharmacies and others—that have billed for puberty blockers under circumstances the Report identified as suspect. The Report also identifies 11 health care providers that allegedly billed for cross-sex hormones during a period when applicable state law prohibited such treatment. The list of providers has been referred by Secretary Kennedy to the OIG and by Vice President Vance to the DOJ, in each case for investigation into possible violation of federal statutes by the named entities.
Practical Takeaways
All providers of pediatric care, regardless of whether they are named in the referrals to OIG and DOJ and regardless of whether they provide gender-affirming care to minors, should be familiar with the types of care that are (and are not) the focus of these efforts. Specifically, providers of pediatric care should:
- Monitor for Updates:
- Pediatric providers should monitor communications from state Medicaid programs and Medicaid Managed Care Organizations for updates relative to changes in coverage, claims-processing, documentation and operations.
- Pediatric providers should also monitor for litigation regarding the Medicaid changes and OIG/DOJ referrals. Continue to check Hall Render’s website for updates on the regulatory and enforcement environment related to provision of gender-affirming care to minors.
- Communicate: Providers should maintain open communication with clinical leadership, billing and coding teams, pharmacy, compliance and managed care personnel to ensure the organization understands how the Final Rule and referral-related investigations may affect current practices, historical claims activity and reimbursement strategy.
- Work Closely with Counsel: Work with legal counsel to evaluate whether any policy, operational or billing changes are needed in light of the Final Rule and heightened scrutiny on billing and coding for provision of gender-affirming care.
- Prepare for Questions: If the provider is among the many listed in the Report, the organization should consider how it will respond to questions from regulators, payers, patients, providers or internal stakeholders regarding pediatric gender-affirming care, including questions about billing, coverage, documentation and potential changes in federal funding rules.
If you have questions regarding federal or state action governing the provision of gender-affirming care to minors or litigation related thereto, please contact:
- Jennifer Skeels at (317) 977-1497 or jskeels@hallrender.com;
- Caitlin Bell-Butterfield at (919) 228-2408 or cbell-butterfield@hallrender.com;
- Camilla Moreno Jimenez at (317) 429-3679 or cjimenez@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
