CMS Ends Federal Medicaid and CHIP Funding for Certain Types of Gender-Affirming Care for Minors

The Centers for Medicare & Medicaid Services (CMS) issued a Final Rule ending the use of federal Medicaid and CHIP matching funds to pay for certain types of gender affirming care (GAC) services provided to minors.  The Final Rule, Prohibition on Federal Medicaid and Children’s Health Insurance Program Funding for Sex-Rejecting Procedures Furnished to Children, is scheduled to go into effect on October 13, 2026.

The Final Rule prohibits federal financial participation (FFP), the federal matching dollars that fund state Medicaid programs, for puberty-suppressing medications, cross-sex hormone therapy and surgical interventions when furnished to Medicaid beneficiaries under age 18, or CHIP beneficiaries under age 19, for treatment of gender dysphoria.

The Final Rule includes a six-month grace period, beginning October 13, 2026, during which existing Medicaid/CHIP beneficiaries who are on hormone therapy may continue to access federally matched coverage for a clinically managed taper.

The Final Rule:

• Does not affect coverage of mental health services for minors.
• Does not apply to adults.
• Does not prohibit states from covering GAC for minors using state-only funds.

Legal challenges to the Final Rule are expected and could impact compliance deadlines and requirements.

Two days after the Final Rule was announced, the U.S. Department of Health and Human Services (HHS) released a report examining insurance coding and billing practices related to providing GAC for minors. Approximately 185 hospitals and clinics identified in the report were referred to the Department of Justice and the HHS Office of Inspector General for possible violations of federal law.