Proposed CMS Regulations on Gender-Affirming Care: Impact on Insurance

On December 18, 2025, the Centers for Medicare and Medicaid Services (CMS) introduced two proposed regulations aimed at restricting access to gender-affirming healthcare services for minors. These proposals focus on changes to hospital Conditions of Participation (CoPs) and impose restrictions on the use of federal funds under Medicaid and CHIP. The anticipated regulations have significant implications for both healthcare providers and the insurance industry. The proposed updates to the hospital CoPs would affect facilities participating in Medicare and Medicaid, limiting their ability to offer specified gender-affirming treatments to individuals under 18 years old. Treatments affected include puberty blockers, hormone therapy, and certain surgeries. Despite being considered best practices by several medical associations, these potential regulatory changes could substantially restrict access to essential gender-affirming care for youth across the United States. The CMS seeks to alter the funding landscape by prohibiting the use of federal funds for certain gender-affirming services for minors under Medicaid and CHIP. This regulatory compliance requirement would impact access to these services regardless of the care provider's type. While states could use their own funds to cover these services, resulting in a varied patchwork of coverage based on individual state decisions, the overall impact would depend heavily on state-level policy decisions. The proposed rules are open for a 60-day public comment period. After this phase, CMS will assess the feedback to decide whether to finalize the regulations, either as initially drafted or with modifications. If implemented, these regulations could face legal opposition due to their implications, potentially delaying enforcement. The potential litigation risk highlights the regulatory compliance challenges faced by the industry and affected providers. The CoPs regulation change would impact most hospitals nationwide, especially those heavily reliant on Medicaid and Medicare payments. Opting out of these programs to continue providing gender-affirming services could have severe financial repercussions. Additionally, the Medicaid funding restriction would significantly affect minors currently using Medicaid or CHIP to access these services, thus prompting a reassessment of operational and strategic planning. For hospitals and insurers, these regulatory developments suggest a need to navigate a complex compliance landscape and may require shifts in their care delivery models. Hospitals with substantial gender-affirming programs must reassess their clinical operations, especially those engaged in research or specialized services. For health insurers, particularly those focused on Medicaid, strategic planning around coverage offerings amid these regulatory changes is essential. Ultimately, if enacted, these regulations may reshape access to gender-affirming care for minors, affecting healthcare providers, payers, and impacted populations. The broader insurance industry must consider operational adjustments, stakeholder management, and compliance strategies in response to these potential changes. Risk management, regulatory compliance, and industry adaptation will be crucial in maintaining service access and ensuring compliance with the new policy directives.