The US Centers for Medicare & Medicaid Services (CMS) published a final rule on August 13 that ends federal matching funds for specified gender-affirming treatments on October 13. The rule covers Medicaid beneficiaries under 18 and Children's Health Insurance Program (CHIP) beneficiaries under 19.

The final text bars federal payments for covered pharmaceutical and surgical interventions, gives a limited transition to existing cross-sex hormone therapy and keeps federal support for mental health services. States may finance the affected services separately, so the rule changes the source of payment rather than imposing a nationwide ban on the treatments.

Federal matching payments stop October 13

Medicaid is a jointly funded US federal-state health coverage program for eligible people with limited incomes and resources. CHIP provides coverage for eligible children through separate state programs, Medicaid expansions or a combination of the two. The federal government reimburses a share of approved state spending under both programs.

The new rule targets pharmaceutical or surgical interventions when they are provided to align a young person's body with a gender identity different from their sex assigned at birth. Its definition covers puberty blockers, cross-sex hormones and surgery when used for that purpose. The same drugs or procedures remain eligible for federal payment when used for another condition, including precocious puberty or cancer, or to treat complications from earlier care.

Medical records and clinical forms on a desk (illustrative image)

Mental health counseling and psychotherapy remain eligible for federal matching funds. The rule does not prohibit clinicians from providing the affected treatments where state law permits them, and states may pay with state-only money outside their federally matched Medicaid or CHIP programs. Private insurance is also outside this rule, although coverage depends on the plan and jurisdiction.

The six-month transition is limited to existing hormone therapy

A beneficiary already receiving cross-sex hormone therapy on October 13 may remain eligible for federal support for those medications for up to six months. The provision does not cover anyone who starts that therapy after the effective date. CMS also says the period is not a clinical guideline and allows a treating clinician to use a shorter timeline.

Puberty-blocking medication and surgery receive no transition under the final rule, so federal payments for them end on October 13. The transition is therefore narrower than a general six-month grace period for gender-affirming care.

The published figures do not show how many patients are affected

CMS says Medicaid and CHIP together cover 35.5 million children in the United States, but that is the full enrollment base rather than the population receiving the affected treatments. The agency also said it was aware of about 17 state Medicaid programs that cover at least one such service for children. The final rule does not provide a verified current count of patients who will lose federal support.

The Associated Press reported that at least 27 US states already prohibit gender-affirming care for people under 18, while surgeries among minors are rare and puberty blockers and hormones are more common. State restrictions, existing coverage rules and the willingness of governments to replace federal money will determine the practical effect in each state.

The administration and medical groups dispute the evidence

CMS based the rule on provisions of the US Social Security Act requiring Medicaid payments to be consistent with quality of care and services to serve beneficiaries' best interests. The agency says the evidence does not support federal payment for the targeted interventions. Its rule uses the term “sex-rejecting procedures,” while acknowledging that this is not the standard clinical term used by major medical organizations.

CMS said more than 90 percent of comments on the proposal opposed it, although a public comment docket is not a representative survey. The Associated Press reported that the American Medical Association and most other major US medical organizations support access to gender-affirming care. It also noted that the American Society of Plastic Surgeons has taken a narrower position, saying it found insufficient evidence that the benefits of gender-related surgery for minors outweigh the risks.

A court challenge is expected but none had been verified

A coalition of 21 state attorneys general argued in February that the proposed funding rule intruded on state authority to regulate medicine and exceeded the US Department of Health and Human Services' legal power. They submitted comment letters and said they were prepared to oppose a final rule, but those letters were not a lawsuit against the measure published on August 13.

The final rule acknowledges earlier federal court orders that blocked related Trump administration actions and an April 2026 judgment that vacated a separate US health department declaration on standards of care. CMS argues that the new payment rule rests on independent statutory authority and is not controlled by those orders. APPI News could not find a court complaint specifically challenging this final rule as of August 13, 2026, and any later injunction could alter its scope or effective date.