A new CMS final rule will prevent federal Medicaid and Children’s Health Insurance Program funding from going toward gender-affirming care for youths.
The rule, which Becker’s reviewed Aug. 11, will go into effect Oct. 13. It blocks states from using Medicaid federal matching funds for puberty blockers, gender-affirming hormone therapy and related surgeries, such as mastectomies and vaginoplasties, for those younger than 18. The rule also prevents federal CHIP funds from covering those uses and procedures for those younger than 19.
“Children deserve our protection, not experimental interventions that pose serious risks and convey no proven benefits,” CMS Administrator Mehmet Oz, MD, said in a news release.
CMS estimated the rule will lower federal Medicaid spending by roughly $175 million from fiscal 2027 through fiscal 2036, based on real 2027 dollars.
In 2023, CMS identified about $31 million in federal and state Medicaid and CHIP spending for these services and patients. CMS said states that had not barred gender dysphoria treatments for children as of 2023 contributed to 76% of spending.
Federal Medicaid and CHIP funding will still be accessible during a tapering-off period of up to six months from when the rule goes into effect for children currently on hormone therapy. The rule does not apply to mental health services.
CMS initially proposed the rule in December 2025.
In April 2025, CMS asked state Medicaid agencies to not cover hormone therapies and gender-affirming surgery for youths. In May 2025, CMS said it was investigating hospitals across the country that offered gender-affirming care to children. Hospitals and health systems nationwide have limited or paused gender-affirming care programs amid federal probes and enforcement actions. Hartford-based Connecticut Children’s Medical Center was the third hospital to settle following Justice Department investigations.
The rule will be published in the Federal Register on Aug. 13.
At the Becker's 5th Annual Fall Payer Issues Roundtable, taking place November 2–3 in Chicago, payer executives and healthcare leaders will come together to discuss value-based care, regulatory changes, cost management strategies and innovations shaping the future of payer-provider collaboration. Apply for complimentary registration now.
