Proposed CMS Rule Would Reshape Gender-Affirming Care Nationwide

On December 18, 2025, the Department of Health and Human Services (“HHS”) announced a notice of proposed rulemaking targeting hospitals who provide gender-affirming care to transgender youth. While the proposed rule has not yet taken effect – it must first go through a 60-day notice-and-comment period – it nonetheless represents a substantial escalation in the Trump administration’s constrictions on gender-affirming care. Back in April, the Centers for Medicare and Medicaid Services (“CMS”) issued an open letter stressing that federal funds are expressly precluded from covering procedures that render a patient under 21 years old permanently incapable of reproducing. In response, the Department of Justice subpoenaed the records of more than 20 providers and clinics who provided gender-affirming care to trans youth under a fraud and abuse theory in July.

The new proposed rule, which is not expected to appear in the Federal Register until Friday, December 19, 2025, seeks to alter the Medicare Conditions of Participation (CoPs) under 42 C.F.R. § 482 to prohibit what it calls “sex-rejecting procedures” or “SRPs” regardless of payor. The proposed rule would deny federal funding to any hospital providing gender-affirming care, even if the care was billed to private insurance or paid for in cash by a patient or their family. Because nearly all hospitals nationwide rely on Medicare and Medicaid for a substantial portion of their total revenue, the proposed rule, if/when it takes effect, would cripple any hospital continuing to provide gender-affirming care. Stated differently, the rule would render gender-affirming care nearly impossible to obtain in any hospital anywhere in the nation.

The proposed rule also includes proposed definitions for a number of terms that represent the broader objectives of the Trump administration. It broadly defines SRPs to include both surgical interventions and hormone therapies. The term “sex” would be defined as “immutable,” and the terms “female” and “male” would be defined in terms of a mature body’s ability to produce “eggs” or “sperm,” respectively – echoing policy initiatives in Executive Order 14168, issued on Inauguration Day earlier this year.

The proposed rule includes three narrow exceptions to the prohibition on gender-affirming care. First, hospitals may provide SRPs to an individual with “a medically verifiable disorder of sexual development.” The proposed language provides some examples of situations that may qualify as medically verifiable disorders but also describes them as “rare.” Second, a hospital may provide SRPs “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.” Few details are provided beyond permitting SRP “procedures that are done for reasons entirely separate from changing a child’s physical appearance to match a gender identity that differs from their biological sex, including procedures for children with a physical disorder, injury or physical illness.” Third, SRPs may be provided when “treating complications…that were caused by or made worse by previous SRPs.”

If the proposed rule is enacted, the rule would almost certainly be subjected to legal challenges, and the administration provided a preemptive glimpse into its legal theory, arguing, “we believe that providing the SRPs for children is not healthcare and hence are not subsumed under the term of ‘the practice of medicine.’” (By law, CMS regulations may not regulate “the practice of medicine.”)

We will continue to follow the progress of the proposed rule and update you as developments warrant. If you have any questions about this alert, please contact a member of Shipman's Health Law Practice Group.