Medicare Lifts Ban on Coverage for Sex Reassignment Surgery

(July 1, 2014): On Monday, June 2, the Obama administration lifted its 33 year ban on Medicare coverage for Sex Reassignment Surgery (SRS). The decision is being hailed as a major victory for transgender rights. However, the decision does not necessarily mean that Medicare will pay for these operations – only that it could do so.

I. Medicare Originally Considered Sex Reassignment Surgery to be “Experimental” and Therefore Not Covered:

In 1989, the Department of Health and Human Services (HHS) issued a blanket Medicare ban when it determined that SRS was an “experimental” surgery. This guidance was outlined under HHS’s National Coverage Determination[1] (NCD) titled “140.3, Transsexual Surgery.” Specifically,

Transsexual surgery for sex reassignment of transsexuals is controversial. Because of the lack of well controlled, long term studies of the safety and effectiveness of the surgical procedures and attendant therapies for transsexualism, the treatment is considered experimental. Moreover, there is a high rate of serious complications for these surgical procedures. For these reasons, transsexual surgery is not covered.

The NCD language was based on a 1981 report from the National Center for Health Care Technology (NCHCT) of the HHS Public Health Service (PHS). The NCHCT forwarded its report to the officials of the Health Care Financing Administration (HCFA), now the Centers for Medicare & Medicaid Services (CMS), recommending “that transsexual surgery not be covered by Medicare at this time.”

II. Challenging an NCD:

The Department Appeals Board (Board) may review any NCD “[u]pon the filing of a complaint by an aggrieved party.”[2] The aggrieved party must submit a statement “explaining why the NCD record is not complete, or not adequate to support the validity of the NCD under the reasonableness standard” and CMS may submit a response defending the NCD.[3]

The NCD record “consists of any document or material that CMS considered during the development of the NCD” including “medical evidence considered on or before the date the NCD was issued…”[4] The Board then “applies the reasonableness standard to determine whether the NCD record is complete and adequate to support the validity of the NCD.”[5]

If the Board determines that the record is complete and adequate to support the validity of the NCD, the Board will issue “a decision finding the record complete and adequate to support the validity of the NCD…”[6] The review process will then conclude. However, if the Board determines that the record is not complete and adequate to support the validity of the NCD, it will permit “discovery and the taking of evidence” and evaluate the NCD under applicable provisions[7], including conducting a hearing.[8] During an NCD review, the aggrieved party bears the burden of proof and the burden of persuasion for the issues raised in an NCD complaint, and the burden of persuasion is judged by a preponderance of the evidence.[9]

III. NCD Complaint Filed to Overturn the Exclusion:

The aggrieved party included a 74-year old transgender woman and army veteran from Albuquerque, New Mexico. She filed her initial NCD complaint in March 2013. The following month, the Board notified CMS of this filing and then CMS submitted the NCD record[10] in May 2013. In June 2013, the aggrieved party submitted in a statement as to why the NCD record was not complete or adequate to support the validity of the NCD under the reasonableness standard.

The complaint contended that the bases for the NCD neither “reflect [n]or are supportable by the current state of medical science,” and that the NCD “is not reasonable in light of the current state of scientific and clinical evidence and current medical standards of care.” The complaint asserted that “in the intervening 32 years since PHS/NCHCT studied the issue” of coverage:

(a) dozens of new studies have been conducted that address the methodological limitations of earlier studies and confirm that sex reassignment surgery is a safe and extremely effective treatment for persons with severe gender dysphoria; (b) advancements in surgical techniques have dramatically reduced the risk of complications from sex reassignment surgery and the rates of serious complications from such surgeries are low, and (c) a robust medical consensus has developed among mainstream medical organizations which endorses the treatment standards established by the WPATH [World Professional Association for Transgender Health] Standards of Care [for the Health of Transsexual, Transgender, and Gender-Nonconforming People, Version 7, 13, Int’l J. Transgenderism 1 65 (2011)] and recognizes that sex reassignment surgery is a medically necessary treatment for persons with severe gender dysphoria.

The complaint was supported by the testimony of two expert witnesses – a clinical psychologist and a physician certified by the American Board of Obstetrics and Gynecology – as well as copies of two letters from two other physicians to an ALJ in the HHS Office of Medicare Hearings and Appeals. All of these health care professionals had substantial experience in treating persons with gender identity disorder (GID). In the case of the three physicians, this experience included years of performing some of the procedures involved in SRS. In addition, the clinical psychologist submitted copies of 32 journal publications and other writings cited in her two declarations.

Notably, CMS did not submit a response to these submissions. One could conclude that the agency had no reason to question the aggrieved party’s expert testimony or the experts’ descriptions of the medical and scientific literature submitted by the aggrieved party.

IV. HHS Acknowledges that Sex Reassignment Surgery is Not Experimental:

HHS reviewed the complaint and made several conclusions. It determined that the record on which the safety concerns in the NCD were based was not complete and adequate. According to HHS, this appeared to stem, in part, from the substantial passage of time since publication of the sources on which the NCHCT relied in recommending that transsexual surgery be excluded. For example, surgical outcomes are far superior now than they were in at the time the NCD was published.

HHS also concluded that the declarations and supporting materials made the record on which the NCD was based was not complete or adequate to support the NCD’s determination that transsexual surgery has not been shown to be effective (i.e., that the surgery is experimental). Seemingly, the medical community today has reached consensus that transsexual or gender reassignment surgery is an effective treatment for persons with a sufficiently severe degree of gender identity disorder (GID) or gender dysphoria, the most common diagnoses for SRS.

HHS also noted that “long-term” follow-up studies published from 2002 to 2010 found that SRS was effective and had low complication rates based on assessing transsexual persons. Moreover, the complaint also cited decisions by US courts of appeals in seven circuits recognizing that GID or gender dysphoria was a serious medical condition.[11]

Based on this evidence, HHS concluded that the NCD record was not complete and adequate to support the validity of NCD 140.3, “Transsexual Surgery.” Therefore, HHS would now proceed to discovery and the taking of evidence.

V. HHS’s Decision Meant that Sex Reassignment Surgery Could Be Covered Under Medicare:

HHS’ ruling here does not address the ultimate question of whether the NCD, as written, is valid under the reasonableness standard in the statute and regulations. The June 2, 2014 decision merely acknowledges that the procedures are not experimental and could be covered under the Medicare program.

What are some of the implications, at least thus far, of the HHS ruling? For one, Medicare may end up considering surgery as a medically necessary treatment for a diagnosis classified as a mental disorder. As noted above, gender dysphoria is the most common diagnosis given for SRS. Interestingly, it is listed as code 302.85 “Gender identity disorder in adolescents or adults” in ICD-9 and classified under “Neurotic Disorder, Personality Disorders, And Other Nonpsychotic Mental Disorders”. Its ICD 10 code will be F64.1 (with the same description) and is listed as a “Disorder of Adult Personality and Behavior”. If HHS determines that it will pay for surgeries for gender dysphoria, could this lead to coverage for payment for procedures for other mental conditions like Autism?

VI. Final Remarks:

Again, the latest move by HHS does not necessarily mean that Medicare will pay for SRS procedures. Nevertheless, the fact that the Agency has removed the restriction on SRS as an “experimental” procedure is still a considerable step. Regardless of any restrictions that Medicare may place on SRS procedures, this could be seen as a substantial updated in CMS’s policies of considering mental health disorders as true diseases that may require surgery and not just counseling services or medication. For those interested, stand by to see if HHS eventually promulgates an actual NDC or coverage policy for SRS.

Robert Saltaformaggio - Associate - Liles Parker

Robert Saltaformaggio, Esq., serves as an Associate at Liles Parker, Attorneys & Counselors at Law. Liles Parker attorneys represent health care providers and suppliers around the country in connection with Medicare audits by ZPICs and other CMS program integrity contractors. The firm also represents health care providers in HIPAA Omnibus Rule risk assessments, privacy breach matters, State Medical Board inquiries and regulatory compliance reviews. For a free consultation, call 1 (800) 475-1906

  • [1] An NCD is “a determination by the Secretary [of HHS] with respect to whether or not a particular item or service is covered nationally under [title XVIII (Medicare)].” Social Security Act (the Act) § 1869(f)(1)(B) (42 U.S.C. § 1395ff(f)(1)(B)). NCDs are issued by CMS, apply nationally, and are binding at all levels of administrative review pf Medicare claims. 42 C.F.R. § 405.1060.
  • [2] Section 1869(f)(1) of the Act.
  • [3] 42 C.F.R. § 426.525(a), (b).
  • [4] 42 C.F.R. § 426.518(a).
  • [5] 42 C.F.R. § 426.525(c)(1).
  • [6] 42 C.F.R. § 426.525(c)(2).
  • [7] of 42 C.F.R. Part 426.
  • [8] 42 C.F.R. §§ 426.525(c)(3), 426.531(a).
  • [9] 42 C.F.R. § 426.330.
  • [10] The NCD record included: a May 6, 1981 NCHCT memorandum recommending “that transsexual surgery not be covered by Medicare at this time”; the 1981 NCHCT report; notes from a May 11, 1982 HCFA Physicians Panel meeting recommending against referring the American Civil Liberties Union (ACLU) submissions to PHS, where the ACLU disagreed with HCFA’s non-coverage policy, “on the basis that it does not contain information about new clinical studies or other medical and scientific evidence sufficiently substantive to justify reopening the previous PHS assessment.”; and a copy of the 1989 Federal Register notice publishing the NCD language (minus four pages) and an undated page from the HCFA coverage issues manual. 54 Fed. Reg. 34,555-612; NCD Record at 11, 76-129.
  • [11] See, e.g., De’lonta v. Johnson, 708 F.3d 520, 522-23 (4th Cir. 2013) (stating that sex or gender reassignment surgery is an accepted, effective, medically-indicated treatment for GID, and that the surgery is not experimental or cosmetic and that the WPATH Standards of Care “are the generally accepted protocols for the treatment of GID.”).