Medicaid Program; Prohibition on Federal Medicaid and Children's Health Insurance Program Funding for Sex-Rejecting Procedures Furnished to Children

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Title XIX of the Social Security Act (the Act) authorizes Federal grants to the States for Medicaid programs to provide medical assistance to persons with limited income and resources and title XXI of the Act authorizes Federal grants to States to provide child health assistance to targeted low-income children under age 19 through a separate CHIP, a Medicaid-expansion program, or a combination of the two. Separate CHIPs are programs under which a State receives Federal funding from its title XXI allotment to provide child health assistance through coverage that meets the requirements of section 2103 of the Act and 42 CFR 457.402. For the purposes of this final rule, the term CHIP is used to refer to separate CHIPs. Medicaid and CHIP programs are administered primarily by the States, subject to Federal oversight and approval. Each State establishes its own Medicaid and CHIP eligibility standards, benefits packages, and payment rates in accordance with (and subject to) Federal statutory and regulatory requirements. If States comply with requirements in the Federal Medicaid and CHIP statutes and regulations (such as reflected in the provisions of their Federally- approved State plans), the Federal Government will match their expenditures with Federal funds. Each State Medicaid program and CHIP must be described and administered in accordance with a Federally approved State plan. This comprehensive document describes the nature and scope of the States' Medicaid program and CHIP and provides assurances that they will be administered in conformity with applicable Federal requirements.

Under title XIX, the Federal Government makes matching payments to States for medical assistance expenditures according to the formula described in sections 1903 and 1905(b) of the Act. Section 1903 of the Act requires that the Secretary of Health and Human Services (the Secretary) (except as otherwise provided) pay to each State which has a plan approved under title XIX of the Act, for each quarter, an amount equal to the Federal medical assistance percentage (FMAP) of the total amount expended by the State during such quarter as medical assistance under the State plan. Section 1905(b) of the Act defines the FMAP. Under title XXI, the Federal Government makes matching payments to States for child health assistance at the enhanced FMAP established under section 2105 of the Act. For CHIP, section 2105 requires the Secretary to pay each State with an approved plan under title XXI of the Act, for each quarter, an amount equal to the enhanced FMAP of expenditures in the quarter, paid from that State's individual allotment, calculated pursuant to instructions set out at section 2104 of the Act. The enhanced FMAP, as defined at section 2105(b), for a State for a fiscal year, is equal to the FMAP (as defined in the first sentence of section 1905(b)) for the State increased by a number of percentage points equal to 30 percent of the number of percentage points by which (1) such FMAP for the State is less than (2) 100 percent; but in no case shall the enhanced FMAP for a State exceed 85 percent. These matching payments, however, are only available to the extent that a state plan for medical assistance (under Medicaid) or a CHIP meets the applicable federal requirements imposed on State plans that are set forth in section 1902 of the Act (Medicaid) and section 2102 of the Act (CHIP).

As relevant to this final rule, among the statutory requirements applicable to Medicaid State plans, section 1902(a)(19) of the Act \2\ requires that a State plan for medical assistance provide such safeguards as may be necessary to assure that care and services under the plan will be provided in a manner consistent with the best interests of the recipients. Furthermore, under section 1902(a)(30)(A) of the Act,\3\ the State plan must provide such methods and procedures relating to payment for care and services as may be necessary to assure that payments are consistent with quality of care. Among the statutory requirements for CHIP State plans, under section 2101(a) of the Act, funds are provided to States to provide health care services to uninsured, low-income children in an effective and efficient manner that is

coordinated with other sources of health benefits coverage for children.

\2\ Section 1902(a)(19) of the Act states that a State plan for medical assistance must “provide such safeguards as may be necessary to assure that eligibility for care and services under the plan will be determined, and such care and services will be provided, in a manner consistent with simplicity of administration and the best interests of the recipients.”

\3\ Section 1902(a)(30)(A) of the Act states that a State plan for medical assistance must “provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1903(i)(4) of the Act) as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

Section 1102 of the Act requires the Secretary to make and publish such rules and regulations, not inconsistent with the Act, as may be necessary for the efficient administration of the functions with which the Secretary is charged under the Act. For the Medicaid Program, these Secretarial functions would include oversight of Medicaid State programs for consistency with the requirements of sections 1902(a)(19) and 1902(a)(30)(A) of the Act. In CHIP, these Secretarial functions would include oversight of CHIP under section 2101(a), which calls for effective and efficient administration of CHIP and coordination with other health care programs, including Medicaid, and under section 2107(e) of the Act, carrying out the functions required by the Medicaid provisions that apply to title XXI in the same manner as they apply under title XIX.

As discussed later in this final rule, we proposed to implement sections 1902(a)(19) and 1902(a)(30)(A) of the Act by adding a new subpart N to 42 CFR part 441 to prohibit the use of Federal Medicaid dollars to fund sex-rejecting procedures, as defined in this final rule, for individuals under the age of 18. In addition, we proposed to implement section 2103 of the Act by revising subpart D of part 457 of the Act to prohibit the use of Federal CHIP dollars to fund sex- rejecting procedures, as defined in this final rule, for individuals under the age of 19. These final changes will not prevent States from providing coverage for sex-rejecting procedures with State-only funds outside of the Federally-matched Medicaid program or CHIP, nor does it prevent the use of other non-Federal funding, including private insurance.

The regulatory provisions under this rule are effective on the specified effective date and will not be implemented, made effective, or enforced in contravention of any court orders. For example, on January 28, 2025, President Trump issued Executive Order (E.O.) 14187, Protecting Children from Chemical and Surgical Mutilation. Section 5(a) of that order directs the Secretary to take all appropriate actions consistent with applicable law to end what the order refers to as the chemical and surgical mutilation of children, including regulatory and sub-regulatory actions for specific programs, including Medicaid. The Centers for Medicare & Medicaid Services (CMS) is aware that the U.S. District Court for the Western District of Washington has issued a preliminary injunction that enjoins defendant agencies from enforcing or implementing section 4 of E.O. 14187 within the plaintiff States, as well as sections 3(e) or 3(g) of E.O. 14168, Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (E.O. 14168), to condition or withhold Federal funding based on the fact that a health care entity or health professional provides “gender-affirming care” within the plaintiff States. Washington v. Trump, 768 F. Supp. 3d 1239, 1282 (W.D. Wash. 2025). In addition, the U.S. District Court for the District of Maryland has issued a preliminary injunction that enjoins the Federal defendants in that case from conditioning, withholding, or terminating Federal funding under section 3(g) of E.O. 14168 and section 4 of E.O. 14187, based on the fact that a healthcare entity or health professional provides “gender- affirming care” to a patient under the age of 19 and required that written notice of this order be given to the aforementioned groups that Defendants may not take any steps to implement, give effect to, or reinstate under a different name the directives in section 3(g) of E.O. 14168 or section 4 of E.O. 14187 that condition or withhold Federal funding based on the fact that a healthcare entity or health professional provides “gender-affirming medical care” to a patient under the age of 19. PFLAG, Inc. v. Trump, 769 F. Supp. 3d 405, 455 (D. Md. 2025). We note that this final rule does not conflict with these preliminary injunctions because, among other things, it is based on independent legal authority and section 5(a) of E.O. 14187 and not the enjoined sections of the EOs.

In addition, on December 18, 2025, the Secretary issued a Declaration of the Secretary of the Department of Health and Human Services RE: Safety, Effectiveness and Professional Standards of Care for Sex-Rejecting Procedures on Children and Adolescents (Kennedy Declaration) in which the Secretary declared that “[s]ex-rejecting procedures for children and adolescents are neither safe nor effective as a treatment modality for gender dysphoria, gender incongruence, or other related disorders in [children], and therefore, fail to meet professional recognized standards of health care.” CMS is aware that the U.S. District Court for the District of Oregon determined that the Secretary lacked statutory authority to issue the Kennedy Declaration and vacated the Declaration and permanently enjoined HHS from “enforcing, implementing, giving intent to, or relying, in whole or in part, on the Kennedy Declaration or any materially similar policy which supersedes or purports to supersede the professionally recognized standards of care for gender-affirming care that exist in the Plaintiff States--against any providers in the Plaintiff States” in the case. Oregon v. Kennedy, 6:25-cv-2409-MTK (D. Or.), ECF No. 94 (April 18, 2026). As discussed in our pending motion to modify the judgment in that case, id. ECF No. 96, the Kennedy Declaration's pronouncement pertained to standard-of-care exclusions under 42 U.S.C. 1320a- 7(b)(6)(B) and the implementing regulations at 42 CFR 1001.2 and 1001.701. Those provisions establish an administrative framework to exclude providers from Federal health care programs for providing services that fail to meet professionally recognized standards of health care. We believe that the judgment in that case only intended to address exclusion of providers from Federal health care programs within the context of the Kennedy Declaration. This final rule is not implicated by this permanent injunction because this rule concerns Federal Medicaid and CHIP payment for certain services to avoid the possibility of children receiving irreversible or potentially irreversible procedures. This final rule does not rely on the Kennedy Declaration, in whole or part, and this final rule does not “supersede[ ] or purport[ ] to supersede the professionally recognized standards of care for [sex-rejecting procedures].” This final rule neither excludes providers from Federal health care programs, nor does it subject providers to exclusion for providing sex-rejecting procedures. As discussed in more detail below, this final rule does not prohibit providers from delivering sex-rejecting procedures nor does it require providers to communicate certain advice or information to patients.