Proposed Rule Expands Transgender Health Coverage

No more blanket exclusions for gender transitioning costs

By Stephen Miller, CEBS Sep 21, 2015

A proposed rule implementing the Affordable Care Act’s (ACA’s) health care nondiscrimination provisions could significantly expand the coverage provided to transgender individuals, according to benefits attorneys.

The proposed rule, Nondiscrimination in Health Programs and Activities, was issued by the Department of Health and Human Services (HHS) through its Office for Civil Rights, and published in the Federal Register on Sept. 8, 2015. At the same time, HHS issued a fact sheet and answers to frequently asked questions about the proposal. Comments are being accepted by HHS through Nov. 9.

A statement from the Transgender Law Center said that the group has represented several clients who have faced the kind of discrimination that would be prohibited under the proposed HHS regulations. The statement noted that 10 states and the District of Columbia have already issued nondiscrimination bulletins that ban the practice of categorically excluding coverage for transition-related care in private insurance plans.

What Must Be Covered?

According to the HHS fact sheet, the rule makes clear that prohibited sex discrimination includes discrimination by health plans based on gender identity. For example:

  • Individuals cannot be denied health care or health coverage based on their sex, including their gender identity.
  • Individuals must be treated consistent with their gender identity, including in access to facilities.
  • Sex-specific health care cannot be denied or limited just because the person seeking such services identifies as belonging to another gender. For example, a provider may not deny an individual treatment for ovarian cancer, based on the individual’s identification as a transgender man, where the treatment is medically indicated.
  • Explicit categorical exclusions in coverage for all health care services related to gender transition are facially discriminatory. Other exclusions for gender transition care will be evaluated on a case-by-case basis.

New Transgender Protections

The proposed rule implements nondiscrimination provisions under Section 1557 of the ACA. Although it applies specifically to health insurers and third-party administrators (TPAs) that receive federal funds related to health programs, most insurers and TPAs to some extent fall under these specifications, “which makes the regulations indirectly applicable to employers who sponsor group health plans,” explained Lisa Campbell and Tammy Killion, both partners in the Washington, D.C., office of Groom Law Group, in a joint interview with SHRM Online.

“An insurer that is also a TPA might receive federal tax subsidies, thus potentially subjecting both its insured and self-insured business to the nondiscrimination rules,” added John Barlament, a partner with Quarles & Brady in Milwaukee.

“Insurers participating in the ACA marketplaces that also offer coverage to employers in the group market, and those who act as TPAs for self-funded plans, may need to apply these rules to their group insurance coverages and even to the plans for which they serve as TPAs,” noted Serena Yee and Chris Rylands, benefits attorneys with Bryan Cave in St. Louis and Atlanta, respectively. “This is a potentially very broad-sweeping rule that could change what employer plans have to cover.”

Under the rule, prohibited actions include denying or limiting health coverage or imposing additional cost-sharing on the basis of an individual’s race, color, national origin, sex, age or disability, and automatically excluding coverage for all health services related to gender transition.

“The proposed rule breaks new ground by including requirements related to transgender individuals and the treatment of gender dysphoria,” explained Killion. HHS and its Office for Civil Rights (OCR) “were careful to say they are not requiring that any particular benefits be covered that may be applicable to an individual with gender identity disorder or gender dysphoria. But they also were clear that a blanket exclusion of all treatments for transgender individuals is prohibited,” she said.

“Some plans have among their list of excluded services any treatment for gender identity disorder. In recent years, more plans have been covering some of the treatments for gender identity disorder, but generally not all plans do that. So this will be a change for many plans,” Killion explained. Costs associated with expanded coverage of gender transition services would be passed along by insurers to employers, or paid directly by employers who self-fund their plans, she noted.

Comparable Treatment

The proposed rule states that plans must cover medications, surgeries and other treatments for transgender people if they cover similar services for nontransgender people.

The regulators were “concerned that an individual who has transitioned from female to male should nonetheless be able to access any medically necessary treatments that would have generally been limited to women,” noted Killion. “For example, women’s preventive services, hysterectomies, mammograms, if medically necessary, must be covered for someone who has transitioned to male. And also the other way, regarding men’s preventive and other health services, for those who have transitioned or are transitioning from male to female.”

The regulators also “made clear that they would use a case-by-case analysis to look for discriminatory practices,” added Campbell. Insurers and plan sponsors “may come up with different designs, but at the end of the day when a claim comes in, under the proposed rule, you may have to determine whether it would have been covered for someone who was not transgender, or if there is a comparable service that is covered for someone who is not transgender.”

“The Office for Civil Rights will start its inquiry by asking whether and to what extent coverage is available when the same service is not related to gender transition,” concurred Barlament. “The example given in the preamble is a hysterectomy—if a plan denies coverage for a hysterectomy that is medically necessary to treat gender dysphoria, OCR will evaluate the extent of the plan's coverage of hysterectomies under other circumstances.” In addition, OCR will scrutinize whether the covered entity's explanation for the denial or limitation is “legitimate” and not a pretext for discrimination, he said.

The proposal doesn’t answer all questions regarding gender-specific health services that might be required for a woman or man after gender transition, Barlament also remarked. “Right now, several preventive care services are only available to people of a particular gender, either male or female,” he noted. “The new guidance generally states that a plan must look to the current gender of the person, not the gender when the person was born—or when the person joined the plan or first became an employee. The guidance also refers to deferring to the recommendation of the person's physician.”

This could lead to some confusion, he said, “if, for example, the person has not fully transitioned—it could be difficult to determine if the services are medically necessary. It's also not perfectly clear what happens if the plan thinks the services are not medically necessary, but the physician thinks they are.”

Gender Transition Coverage

While the intent of the proposed rule is to prevent transgender individuals from being denied care that is available to others, the extent to which gender transition services, such as hormonal treatment and gender reassignment surgery, must be covered is not as clear.

The preamble to the proposed regulation states that it would:

…bar a covered entity from denying or limiting coverage, or denying a claim for coverage, for specific health services related to gender transition where such a denial or limitation results in discrimination against a transgender individual.

It adds that:

Historically, covered entities have justified these blanket exclusions by categorizing transition-related treatment as cosmetic or experimental. However, such across-the-board categorization is now recognized as outdated and not based on current standards of care.

This implies that “explicit categorical exclusions in coverage for all health services related to gender transition are facially discriminatory,” Pepper Crutcher Jr., general counsel to the Mississippi Manufacturers Association and a partner with Balch & Bingham in Jackson, Miss., told SHRM Online.

“One of the key compliance issues is likely to be the inclusion or exclusion and placement on formularies of drugs that treat conditions prevalent for protected individuals,” including those undergoing gender transition, he noted.

But several related issues remain unresolved. “The current form of the rule does not explain if insurers will be required to provide coverage for gender transition services specifically or will simply be required to provide general medical services for transgender persons including services that stem from or are related to those gender transition services,” according to Ben Conley, an attorney in the Chicago office of Seyfarth Shaw.

“The [proposed rule’s] preamble seems to talk on both sides of this question but not right to it,” said Crutcher. “I would expect OCR to investigate whether the same or similar treatment would be covered if it were not prescribed for a gender identity diagnosis or patient. Very expensive hormone treatment is available for growth disorders. If the plan covers that, how would the plan justify excluding very expensive hormone treatment for a gender transition patient?”

Added Barlament, along similar lines, “If a health service is covered for a nontransgender individual when it is medically necessary, it appears problematic to exclude or deny coverage for the service if it is a medically necessary treatment for gender dysphoria. An insurer that covers breast removal as a medically necessary treatment for breast cancer may need to cover breast removal as a treatment for gender dysphoria if the breast removal is medically necessary.”

As evidence of lingering confusion on this matter, Barlament noted that “OCR says that [anti-discrimination] prohibitions do not require covered entities to cover any particular procedure or treatment for transition-related care. OCR also says covered entities can apply ‘neutral standards’ that govern the circumstances in which it will offer coverage to all its enrollees in a nondiscriminatory manner. However, these prohibitions do seem to amount to a benefit mandate, though the scope and details of the mandate are far from clear.”

“This is still only a proposed rule, and it’s possible after comments and reflection that OCR may make some changes” and clarify some of these gray areas, noted Campbell.

Potential Costs

According to the Encyclopedia of Surgery, the cost for male-to-female reassignment is $7,000 to $24,000. The cost for female-to-male reassignment can exceed $50,000. notes that “sex reassignment surgery usually involves a series of operations that take place over several months or years,” and that the total typical cost of a transition usually includes expenses incurred in the year before surgery, including hormone therapy and counseling. Moreover:

In the year before surgery, counseling can cost $50 to $200 per session, and letters from two therapists usually are needed for surgery; the total cost of the therapy and the letters can range from under $1,000 to more than $5,000 for that year. Hormone therapy could cost $300 to $2,400 for the year.

Follow-up care after surgery includes ongoing hormone therapy.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.

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