Statutory Authority:

Social Services Law (SSL) section 363-a and Public Health Law section 201(1)(v) provide that the Department is the single State agency responsible for supervising the administration of the State’s medical assistance (“Medicaid”) program and for adopting such regulations, which shall be consistent with law, and as may be necessary to implement the State’s Medicaid program. SSL section 365-a authorizes Medicaid coverage for specified medical care, services and supplies, together with such medical care, services and supplies as authorized in the regulations of the Department.

Legislative Objective:

Section 365-a of the SSL requires Medicaid to pay for part or all of the cost of medical, dental, and remedial care, services, and supplies that are necessary to prevent, diagnose, correct or cure conditions that cause acute suffering, endanger life, result in illness or infirmity, interfere with a person's capacity for normal activity, or threaten some significant handicap.

Needs and Benefits:

The proposed regulations would change Medicaid policy with respect to payment for treatments to address gender dysphoria. Gender dysphoria is the diagnosis given to persons whose gender at birth is contrary to the one they identify with, and who experience clinically significant distress as a result. Gender dysphoria may be manifested by a strong desire to be treated as the other gender or to be rid of one’s sex characteristics, or by a strong conviction that one has feelings and reactions typical of the other gender.

Treatments for gender dysphoria include counseling, hormone therapy, and gender reassignment surgery. Gender reassignment surgery (GRS) is a term for the surgical procedures by which the physical appearance and function of a person’s existing sexual characteristics are altered to resemble those of the other sex.

Section 505.2(l) of 18 NYCRR, related to Medicaid payment for physicians’ services, currently prohibits payment for any care, services, drugs, or supplies rendered in connection with GRS. At the time the regulation was originally promulgated in 1998, there was a lack of consensus regarding the safety and efficacy of GRS, and many health care payers, including the federal Medicare program, considered it an experimental procedure requiring further long-term study.

Since that time, a body of credible medical evidence has been developed supporting the conclusion that GRS is a safe and effective treatment for gender dysphoria in medically necessary cases, and is no longer considered experimental. Significantly, in May of 2014, the Federal Government through the Departmental Appeals Board of the Department of Health and Human Services ruled that Medicare could no longer deny coverage of GRS on the grounds that it is it is ineffective, unsafe, experimental, or controversial, that it has a high rate of complication or has not been subjected to controlled, long-term studies, or that the criteria for diagnosing gender dysphoria is inconsistent or problematic.

Given these developments, the Department is updating its Medicaid coverage policy. The proposed amendments would repeal the existing text of section 505.2(l) and replace it with a description of the express parameters within which the Medicaid program would now cover hormone therapy and/or GRS for the treatment of gender dysphoria.

Hormone therapy prescribed for adults with gender dysphoria would now be covered whether or not in preparation for GRS.

GRS would now be covered for persons who are referred for the treatment by two New York State licensed health professionals acting within the scope of their practices. The minimum age for coverage would be 18 years of age unless the GRS would result in sterilization, in which case federal Medicaid rules require a minimum age of 21. The health professionals would have to provide letters stating that the patient: has a persistent and well-documented case of gender dysphoria; has received hormone therapy appropriate to the patient’s gender goals, which shall be for a minimum of 12 months in the case of genital surgery, unless such therapy is medically contradicted or the patient is unable to take hormones; has lived for 12 months in a gender role consistent with the individual’s gender identity and has received mental health counseling, as deemed medically necessary, during that time; has no other significant medical or mental health conditions that would be a contraindication to GRS, or any such conditions are reasonably well-controlled; and has the capacity to provide informed consent for the treatment.

Medicaid would not pay to reverse gender reassignment surgeries or sterilization procedures. Further, Medicaid would not pay for the cryopreservation, storage, or thawing of reproductive tissue. Finally, Medicaid would not pay for cosmetic services and procedures that are solely directed at improving the patient’s appearance. The proposed amendments list services and procedures that would generally be considered cosmetic and ancillary to the GRS, and therefore not medically necessary.

Costs:

Costs to Regulated Parties:

The proposed amendment would add a new covered benefit under the State’s Medicaid program. The amendment would not increase costs to regulated parties.

Costs to State Government:

Adding coverage of transgender care and services to the Medicaid benefit package will increase costs to the State. To estimate these costs, the Department looked at the number of Medicaid recipients who receive mental health services based on a diagnosis of gender dysphoria (currently 353 natal males and 308 natal females). The Department estimated the percentage of natal males and natal females who would seek hormone therapy only, partial GRS, or full GRS. Then, using typical costs for the types of care and services that would be implicated (including mental health counseling, hormone therapy, laboratory services, and surgeries specific to male-to-female and female-to-male reassignment), the Department calculated the total, annual State share of expenditures related to the expansion of coverage for transgender care and services to be approximately $6,737,000.

Costs to Local Governments:

Local social services districts’ share of Medicaid costs is statutorily capped; therefore, there will be no additional costs to local governments as a result of the proposed amendment.

Costs to the Department of Health:

There will be no additional costs to the Department.

Local Government Mandates:

This amendment will not impose any program, service, duty, additional cost, or responsibility on any county, city, town, village, school district, fire district, or other special district.

Paperwork:

In order to perform and claim Medicaid reimbursement for GRS, physicians would have to receive letters from two qualified mental health professionals who independently assessed the patient and are referring him or her for the surgery. One of these letters would be from the patient’s psychotherapist, with whom the patient has an established and ongoing relationship. The other letter could be from a mental health professional who has only had an evaluative role with the patient. These letters would need to establish that the patient meets the prerequisites set forth in the regulation for the surgery.

Duplication:

There are no duplicative or conflicting rules identified.

Alternatives:

Alternatives to the proposed amendment would not comply with existing New York law and current medical science. Specifically, one alternative to the proposed amendment would be to maintain the current prohibition on Medicaid payment for care, services, drugs, or supplies rendered in connection with GRS. However, SSL section 365-a authorizes Medicaid payment for medically necessary care to correct or cure conditions that can cause acute suffering and interfere with a person’s capacity for normal activity, a criterion that gender dysphoria meets.

Another alternative would be to provide coverage for all services and procedures performed in connection with gender reassignment, even services and procedures that are solely cosmetic. However, federal and State law limit Medicaid coverage to payment solely for medically necessary care, services, and supplies. Therefore the Department is required to make a distinction between surgical procedures that are primary to gender reassignment, and thus medically necessary and coverable, and procedures performed solely for cosmetic reasons, which are not. This is consistent with the State’s broader Medicaid coverage policy, which prohibits coverage of cosmetic procedures for Medicaid recipients.

Federal Standards:

The proposed regulations do not exceed any minimum federal standards.

Compliance Schedule:

Regulated parties should be able to comply with the proposed regulations when they become effective.

No regulatory flexibility analysis is required pursuant to section 202-(b)(3)(a) of the State Administrative Procedure Act. The proposed amendment would add a new covered benefit under the State’s Medicaid program. It would not impose an adverse economic impact on small businesses or local governments, and it would not impose reporting, record keeping or other compliance requirements on small businesses or local governments.

A Rural Area Flexibility Analysis for the proposed amendment is not being submitted because the amendment would not impose any adverse impact or significant reporting, record keeping or other compliance requirements on public or private entities in rural areas. There would be no professional services, capital, or other compliance costs imposed on public or private entities in rural areas as a result of the proposed amendments.

A Job Impact Statement for the proposed amendment is not being submitted because it is apparent from the nature and purpose of the amendment that it would not have a substantial adverse impact on jobs and/or employment opportunities.