CMS faces legal challenges over gender-affirming care funding rules

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule prohibiting the use of federal Medicaid and Children’s Health Insurance Program (CHIP) funds to pay for gender-affirming care for children and youth. While the rule takes effect on October 13, it includes a provision allowing federal funding to remain available for up to six months for children currently undergoing hormone therapy. The rule specifically targets federal funding; states and private insurers may still choose to cover these treatments using non-federal dollars.

Simultaneously, a U.S. District Court for Massachusetts ruled against efforts to remove gender-affirming care from the Essential Health Benefit (EHB) designation within the Affordable Care Act (ACA) marketplaces. Judge Nathaniel Gorton found that the Department of Health and Human Services (HHS) and CMS failed to follow proper procedures, specifically neglecting a mandate to certify to Congress that revised benefits remain equivalent to typical employer-provided benefits. This ruling prevents the categorical stripping of EHB status for these services in the ACA marketplace, which would have removed consumer protections such as annual out-of-pocket limits.