As we previously reported, on December 18, 2025, the Centers for Medicare & Medicaid Services (CMS) issued two proposed rules impacting the ability of providers to deliver gender-affirming care—also called “sex-rejecting procedures” by the federal government—to minors. Comments to the proposed rules are due by February 17, 2026.
What You Need to Know:
- Proposed Ban on Gender-Affirming Care: CMS’s proposed rules aim to prohibit Medicare- and Medicaid-certified hospitals from offering sex-rejecting procedures to minors, such as puberty blockers, hormones, and surgeries, with limited exceptions.
- Unprecedented Use of Federal Regulations: The proposed rules leverage Medicare participation requirements and Medicaid funding restrictions in a novel way to indirectly ban gender-affirming care, marking a significant shift in federal health care policy.
- Legal and Policy Implications: These proposals are expected to face legal challenges, as they raise concerns about conflicts with state and federal laws and potential discrimination against transgender individuals.
The Conditions of Participation Proposed Rule
The first proposed rule, entitled “Medicare and Medicaid Programs; Hospital Condition of Participation: Prohibiting Sex-Rejecting Procedures for Children” (the “Conditions of Participation Proposed Rule”), would revise the requirements that Medicare- and Medicaid-certified hospitals must meet to participate in those respective programs. This proposed rule would add a new Condition of Participation (CoP) prohibiting hospitals enrolled in the Medicare program from providing most services for the treatment of gender dysphoria, including puberty blockers, cross-sex hormones, and gender-transition surgeries to minors. The Conditions of Participation Proposed Rule makes a narrow exception for treating individuals with medically verifiable sexual development disorders, treating complications caused or worsened by the performance of a sex-rejecting procedure, and for purposes other than attempting to “align an individual’s physical appearance or body with an asserted identity that differs from the individual’s sex.”
The Medicare CoPs, a set of federal regulations that apply to health care organizations, including hospitals, establish standards for quality, safety, operations, and patient rights. But they have not been used to ban a specific medical procedure or type of care—until now. To participate in Medicare and Medicaid, hospitals must comply with the CoPs. Noncompliance can result in termination of a provider agreement with CMS—generally seen as vital to a hospital’s existence.
The Medicaid Proposed Rule
The second proposed rule, entitled “Medicaid Program; Prohibition on Federal Medicaid and Children’s Health Insurance Program Funding for Sex-Rejecting Procedures Furnished to Children” (the “Medicaid Proposed Rule”), focuses on state Medicaid plans and Children’s Health Insurance Program (CHIP) plans. The Medicaid Proposed Rule would add new language to the provisions governing Medicaid service requirements to prohibit state Medicaid agencies from paying for sex-rejecting procedures for children under age 18 enrolled in Medicaid and individuals under age 19 enrolled in CHIP.
States wishing to continue to provide access to sex-rejecting procedures to minors enrolled in a state Medicaid program may do so through state-only funding outside of the federally matched Medicaid program. Currently, 27 states do not provide Medicaid coverage for sex-rejecting procedures on children.
A Ban by Indirect Means
Since January 2025, the Trump administration has prioritized preventing 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 sex-rejecting procedures 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 sex-rejecting procedures. It is unlikely that there are any hospitals in the country that could survive that action.
Unprecedented Use of Conditions of Participation
The CoPs, found at 42 CFR Part 482, have never been used to ban or restrict a specific type of medical procedure. In fact, the Medicare law prohibits interference with the practice of medicine, stating that the Social Security Act does not “authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided . . .” (42 U.S.C. § 1395). This provision was critical to the passage of the Medicare law in 1965, when the government wished to protect medical autonomy and avoid federal overreach. This prohibition of interference with the practice of medicine is one of numerous grounds for legal challenges to this rulemaking that are certain to take place, discussed below.
Using the CoPs as a tool to achieve a policy objective focusing on a single class of medical care is something entirely new. In its focused cross-agency effort to ban or limit sex-rejecting procedures, however, the administration does not seem inhibited by a lack of precedent or potential legal barriers.
The implications of these administrative actions are enormous. Once CoPs are used as a mechanism to prohibit categories of care that treating clinicians and professional medical organizations consider medically necessary, the scope of potential agency action expands well beyond the present context. CoPs could be deployed in the future to further condition participation in Medicare and Medicaid on compliance with shifting policy judgments about contested areas of medical practice.
Trump Administration Policy on Sex-Rejecting Procedures
The intent to ban or greatly restrict sex-rejecting procedures 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 proposed rules. First, among the earliest actions by the administration were two executive orders (EOs) 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 the proposed rules.
Potential Legal Challenges from Existing Court Cases
Assuming the rulemaking process for either proposed rule results in a final rule consistent with the applicable proposed rule, legal challenges prior to the effective date are a certainty. There are, however, 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.
First, shortly after they were issued, EO 14168 and EO 14187 were challenged in federal courts. Ultimately, permanent injunctions were entered in the Western District of Washington and the District of Maryland against portions of the EOs. The case in the District of Maryland has been appealed to the U.S. Court of Appeals for the Fourth Circuit, where it has been placed in abeyance pending a decision in a case challenging West Virginia’s Medicaid Program coverage exclusion of gender-affirming care. The Ninth Circuit upheld the injunction put in place by the Western District of Washington, and the Government has filed a petition for certiorari with the U.S. Supreme Court. Both injunctions remain in effect for now.
The proposed rules cite Section 5(a) of EO 14187 as the source of their authority, directing the Secretary of HHS to “take all appropriate actions to end the chemical and surgical mutilation of children, including regulatory and regulatory actions. . . .” However, while the administration claims it is not acting contrary to the injunctions, the federal judges who issued them might disagree.
Second, on August 1, 15 states and the District of Columbia filed a civil action in the District of Massachusetts challenging EO 14187 and various agency announcements and actions directed at gender-affirming care. While the CoPs are not expressly a part of this case, the injunction sought by the plaintiff states could impact the rulemaking process for gender-affirming care. This case is still ongoing, and Epstein Becker Green is monitoring the proceedings, including the government’s November 21, 2025, motion to dismiss.
Potential Arguments Against the Proposed Rules
The proposal to amend the CoPs to ban gender-affirming care will be subject to legal challenges on multiple grounds, including the following:
- Interference with State Interests: Traditionally, the regulation of medicine has been a state function and protected by the Tenth Amendment. While some states restrict gender-affirming care, others do not, and some have state law protections for it. The Conditions of Participation Proposed Rule provides that “[t]o the extent that State-run hospitals that receive Medicare and Medicaid funding are required by the State or local law to provide [sex-restricting procedures]. . . there is direct conflict between the provisions of this proposed rule. . . . As is relevant here, this proposed rule preempts the applicability of any State or local law. . . .”
A final rule, if consistent with the Conditions of Participation Proposed Rule or the Medicaid Proposed Rule, would effectively set a federal standard in this area. This raises a significant federalism issue. In United States v. Skrmetti, decided in June and involving gender-affirming care, the Supreme Court reiterated that it “has given state and federal legislatures wide discretion to pass legislation in areas where there is medical and scientific uncertainty.” Dobbs v. Jackson Women’s Health Organization, which overturned Roe v. Wade in 2022, in large part stands for the proposition that regulation of abortion (a medical procedure) is a matter for each state to decide.
- Clash with Direct Federal Statute: As mentioned above, Medicare law directly prohibits interference with the practice of medicine, 42 U.S.C. § 1395. The authorization for rulemaking in the Medicare statute, 42 U.S.C. § 1395hh(a)(1), states broadly that “[t]he Secretary shall prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this subchapter.” Although this is fairly typical language that Congress uses when it intends a broad delegation of authority, the delegation is limited to the administration of the programs. Arguably, CMS would be regulating conduct that has nothing to do with Medicare or would have a de minimis effect at best.
- Outside the Scope of Agency Authority: Related to the language quoted above, if the proposed rules are made final, then there may be an additional argument that CMS exceeded the scope of the authority delegated by Congress to publish regulations that have the force and effect of law.
- Conflict with Other Federal Laws: There are multiple federal laws that may be viewed as being in conflict with a regulation that proposes to exclude hospitals providing gender-affirming care, including provisions relating to Medicare, Medicaid, and protections against discrimination.
- Internal Conflicts in the Conditions of Participation: The CoPs themselves contain provisions that may be inconsistent with the proposed rules, adding to arguments by opponents. For example, 42 CFR § 482.11(c) requires that a hospital must “meet other applicable standards that are required by State or local laws.” As mentioned above, multiple states protect the right to gender-affirming care.
- Arbitrary and Capricious Standards: The Administrative Procedure Act (APA) provides that an agency action which is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” will be set aside by the courts. 5 USC § 706(2)(A). We expect a rule challenge alleging that CMS is violating this standard by its gender-affirming care rulemaking.
- Lack of Reasoned Decision-Making: Another core APA principle is that agency action must be supported by an adequate administrative record. While we expect that the notice-and-comment process will include supportive comments about the proposed rules, the adequacy of the administrative record may be challenged.
To the extent that HHS relied on the HHS Report to challenge the validity of the “gender-affirming” model of care, it is vulnerable to legal challenges regarding the sufficiency of the evidence supporting the Conditions of Participation Proposed Rule. Many clinicians, academics, researchers, and major professional organizations support gender-affirming care as evidence-based treatment and as a decision that properly should be made by a medical professional in consultation with the patient and family.
- Interference with Rights of Parents: The issue of parental rights to make medical decisions for a child regarding gender-affirming care is still working its way through the courts and ultimately will need to be decided by the U.S. Supreme Court. The current administration has emphasized a policy supporting the right of parents to control and influence health care decisions for their children. For example, as recently as December 3, 2025, the HHS Office for Civil Rights (OCR) issued a guidance letter about access to children’s health care records intended to empower parents “to be more in control of decisions regarding their children’s health and well-being.” A clear tension exists between this policy priority and the initiatives to stop gender-affirming care.
- Discrimination: Legal protections for transgender health care, including gender-affirming care, remain a focus of much litigation. The Supreme Court’s decision in Skrmetti, upholding part of Tennessee’s ban on gender-affirming care against a Fourteenth Amendment Equal Protection Clause challenge, addressed only one issue. Many remain. In addition, federal antidiscrimination laws, separate from constitutional issues, will serve as a basis for legal challenges. Section 1557 of the Affordable Care Act, in particular, will be important. An administrative regulation that discriminates against a protected group can be declared void. And there is more to this issue than whether discrimination on the basis of sex includes gender identity, which is the question that has been most prominently litigated so far. Federal protections against disability discrimination have yet to be thoroughly explored, although the Fourth Circuit has held that gender dysphoria can be a disability for purposes of the Americans with Disabilities Act. No federal appellate court has decided otherwise.
The Disability Proposed Rule
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, 2025—entitled “Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance” (the “Disability Proposed Rule”)—OCR 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.” According to HHS, the proposal is intended to provide assurance to recipients of HHS funding that limiting or prohibiting gender-affirming care-related procedures does not, by itself, constitute unlawful disability discrimination under federal law. The proposed modification reflects HHS’s interpretation of Section 504’s scope.
Next Steps in the Rulemaking Processes
The Conditions of Participation Proposed Rule, the Medicaid Proposed Rule, and the Disability Proposed Rule are each the first step in their respective rulemaking processes.
The Conditions of Participation Proposed Rule and the Medicaid Proposed Rule call for comments, and many are expected. Comments must be received by CMS no later than 5 p.m. on February 17, 2026. Unless the comments result in a change of policy by CMS, which is unlikely, the final rules will be published early this spring and will be effective 60 days later—unless enjoined in court.
The Disability Proposed Rule calls for comments, which must be submitted to OCR no later than January 20, 2026. If finalized, the Disability Proposed Rule 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.
Takeaways for Health Care Providers
The Conditions of Participation Proposed Rule and the Medicaid Proposed Rule are the latest move by the administration in its efforts to eradicate gender-affirming care for minors—and the most serious. In addition to the Conditions of Participation Proposed Rule and the Medicaid Proposed Rule issued by CMS, and the Disability Proposed Rule issued by OCR, 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 12 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. In our July 14 blog post, we listed a set of actions for stakeholders in this complex area to consider. With the announcement of the three proposed rules, health care organizations should also closely monitor the Federal Register and pending litigation. Stakeholders should assess their risk exposure and consider submitting comments regarding the proposed rules.
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For additional information about the issues discussed in this Insight, please contact the attorney(s) listed on this page or the Epstein Becker Green Health Care and Life Sciences attorney who regularly handles your legal matters.
Julia Rioux Thayer, a Law Clerk – Admission Pending (not admitted to the practice of law) in Epstein Becker Green’s New York office, and Staff Attorney Ann W. Parks contributed to the preparation of this Insight.
