CMS Attempts to Use Medicare and Medicaid Conditions of Participation to Ban Hospitals from Providing Gender-Affirming Care to Minors

On December 18, 2025, the Centers for Medicare and Medicaid Services (CMS) issued two proposed rules impacting the ability of providers to deliver gender-affirming care to minors—now termed “sex-rejecting procedures” by the federal government. 

The Conditions of Participation Proposed Rule

The first rule, entitled “Medicare and Medicaid Programs; Hospital Condition of Participation: Prohibiting Sex-Rejecting Procedures for Children,”  would revise the requirements that Medicare-and Medicaid-certified hospitals must meet to participate in these programs.

Under this proposal, hospitals enrolled in Medicare and Medicaid would be prohibited from providing most services for the treatment of gender dysphoria, including puberty blockers, cross-sex hormones, and gender-transition surgeries. Exceptions are narrow, limited to treating medically verifiable sexual development disorders or complications from prior procedures.

Historically, Conditions of Participation (CoPs) establish standards for quality, safety, and operations. They have not previously been utilized to ban specific medical procedures or types of care. Noncompliance with CoPs can result in the termination of a provider agreement, effectively cutting off a hospital’s federal funding—a consequence that would threaten the financial viability of most health care institutions.

The Medicaid Proposed Rule

The second rule, “Medicaid Program; Prohibition on Federal Medicaid and Children’s Health Insurance Program Funding for Sex-Rejecting Procedures Furnished to Children,” focuses on state-level funding. It would prohibit state Medicaid agencies and Children’s Health Insurance Program (CHIP) plans from paying for these procedures.

While states wishing to continue providing access to this care could theoretically do so through state-only funding, federal matching funds would be unavailable. Currently, 27 states do not provide Medicaid coverage for these procedures.

Unprecedented Use of Conditions of Participation

Since January 2025, the Trump administration has prioritized the prevention of gender-affirming care for children and adolescents that involves these treatments, previously referred to by the administration as “sex-trait modification procedures” (see our July 14 blog post).

There is no federal law that prohibits gender affirming care for children and adolescents. The proposed rules are intended to achieve a ban by indirect means: cutting off federal funding for hospitals (and related outpatient clinics) that provide that care and cutting off Medicaid funding for an entire class of care delivered to minors. Under the Conditions of Participation Proposed Rule, the funding ban is not limited to reimbursement for specific services. The Conditions of Participation Proposed Rule would cut off all reimbursement from federally funded programs to any hospital that provides gender-affirming care. It is unlikely that there are any hospitals in the country that could survive that action.

Trump Administration Policy Re: Gender-Affirming Care

The intent to ban or greatly restrict gender-affirming care was a major theme of both the presidential campaign and Project 2025, the conservative blueprint for the new administration. As detailed in our July 14 blog post, since taking office, the administration has taken a series of actions across federal agencies in pursuit of this objective.

Along this timeline, there are two main reference points for the Conditions of Participation Proposed Rule and the Medicaid Proposed Rule. First, among the earliest actions by the administration were two Executive Orders directed at transgender health care: EO 14168, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” and EO 14187, “Protecting Children From Chemical and Surgical Mutilation.” Section 5 of EO 14187 directed the Secretary of Health and Human Services (HHS) to “take all appropriate actions to end the chemical and surgical mutilation of children, including regulatory and sub-regulatory actions,” and specifically identified the “Medicare or Medicaid conditions of participation or conditions for coverage” as an action item.

Second, on May 1, the HHS issued a 409-page report entitled “Treatment for Pediatric Gender Dysphoria: Review of Evidence and Best Practices” (“HHS Report”). On November 19, HHS published a final version following the conclusion of a peer review process. Generally speaking, the HHS Report challenged the validity of the “gender-affirming” model of care as lacking scientific and medical support, noted irreversible risks associated with “pediatric medical transition,” and recommended psychotherapy as a “noninvasive alternative to endocrine and surgical interventions for the treatment of pediatric gender dysphoria.” Multiple agency actions have relied on this document even though it has been heavily criticized as result-oriented and lacking balance. The HHS Report is cited as justification for both proposed rules.

Potential Legal Challenges

The Medicare statute prohibits the promulgation of rules that impact the practice of medicine. Assuming the rulemaking process for either proposed rule results in a final rule consistent with the applicable proposed rule, legal challenges are a certainty. There are pending federal court cases that could affect both the rule-making process and implementation of a final rule amending the CoPs to prohibit gender-affirming care. Additional legal challenges could include:

• Interference with State Interests: Regulating medical practice is traditionally a state function. The proposal to amend the CoPs to ban gender-affirming care explicitly claims to preempt conflicting state or local laws, creating potential Tenth Amendment conflicts.

• Arbitrary and Capricious Standards: The Administrative Procedure Act requires agency actions to be supported by reasoned decision-making. Critics argue that the reliance on the controversial report by the U.S. Department of Health and Human Services on pediatric gender dysphoria may be vulnerable to claims that the rule is arbitrary and capricious.

• Discrimination: Challenges under the Equal Protection Clause and Section 1557 of the Affordable Care Act are likely, as the proposal to amend the CoPs specifically targets a protected class of care.

HHS has also proposed a modification to its regulations implementing Section 504 of the Rehabilitation Act. In a third Proposed Rule issued on December 18—entitled “Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance” (the “Disability Proposed Rule”)—the HHS Office for Civil Rights would revise 45 C.F.R. Part 84 to clarify that gender dysphoria not resulting from a physical impairment is excluded from the definition of “disability.”

Strategic Considerations for Health Care Providers

HHS has taken three additional regulatory and policy actions aimed at restricting pediatric access to gender-affirming care. These actions include: (1) issuing a declaration concluding that gender-affirming care–related procedures do not meet professionally recognized standards of care; (2) issuing twelve FDA warning letters to manufacturers and retailers alleged to have marketed breast binders to children; and (3) publishing a public health message asserting that current evidence does not support claims that gender-affirming care–related procedures are safe and effective treatments for pediatric gender dysphoria.

The stakes for health care providers are high.  Health care organizations should closely monitor the Federal Register and pending litigation. Stakeholders should assess their risk exposure and consider submitting comments regarding the proposed rules.

The Conditions of Participation Proposed Rule and the Medicaid Proposed Rule call for comments, and many are expected. Comments must be received no later than 5 p.m. on February 17, 2026. 

The Disability Proposed Rule calls for comments no later than January 20, 2026.  If finalized, it might narrow the circumstances under which gender dysphoria could serve as an appropriate basis for disability-discrimination claims against federally funded health-care entities. But this regulatory action, too, will be the subject of litigation.

Look for our upcoming Insight, where we explore the proposed rules and their potential legal challenges in detail.

Staff Attorney Ann W. Parks contributed to the preparation of this post.