While a federal judge rejected an HHS funding threat against healthcare organizations providing gender-affirming care to minors last month, the ruling has not cleared a path for hospitals to resume such services.
Hospitals and health systems continue to face a complex and uncertain legal landscape, with multiple overlapping federal investigations, pending regulations and unresolved court questions. More than 20 hospitals nationwide have paused or scaled back gender-affirming care for minors amid this uncertainty.
Where things stand:
1. The latest ruling. On March 19, District Court Judge Mustafa Kasubhai determined that HHS Secretary Robert F. Kennedy Jr. exceeded his legal authority by issuing a memo late last year that could have barred hospitals from receiving Medicare or Medicaid funding for providing gender-affirming care to minors. However, the judge issued his decision verbally from the bench and still must issue a formal written order. Both sides in the lawsuit, which was filed by 20-Democratic led states and the District of Columbia, have been asked to submit additional arguments by April 2 on how broadly the ruling should apply. Specifically, Mr. Kasubhai will decide whether the federal government should be barred from using the declaration’s reasoning in any future action against hospitals, according to legal analysts. That question, which could determine how much leverage the administration retains over healthcare organizations going forward, remains unresolved.
2. Federal probes continue. The court ruling is separate from several ongoing federal enforcement efforts. In May, CMS Administrator Mehmet Oz, MD, sent letters to an unspecified number of hospitals requesting informed consent documentation, clinical guidelines, adverse outcome records and financial data related to gender-affirming care for minors. Since Mr. Kennedy released his December memo, HHS officials have referred 13 hospitals or health systems to the Office of the Inspector General for investigation, The New York Times reported March 19.
The Justice Department also issued subpoenas to more than 20 physicians and healthcare organizations in early July as part of a broader investigation into alleged fraud and unlawful promotion of puberty blockers and hormones. Federal courts have quashed these subpoenas at several children’s hospitals in recent months.
In late July, the Federal Trade Commission also announced an investigation into whether gender-affirming care providers are violating consumer protection laws. These investigations remain active.
3. A separate regulatory threat looms. Alongside Mr. Kennedy’s declaration, HHS proposed a new rule in December that would end Medicare and Medicaid payments to hospitals that provide gender-affirming care to minors, including puberty blockers, hormone therapy and gender-related surgeries. CMS also proposed a rule to prohibit Medicaid and the Children’s Health Insurance Program from covering gender-affirming care for children under ages 18 and 19, respectively. The public comment period for both rules closed in February, but HHS has not yet issued any final rules.
Because the rules were not yet finalized, they were not directly addressed by Mr. Kasubhai’s ruling, and no lawsuit has been filed against them. If finalized, legal challenges are widely expected. Legal analysts have argued that because the proposed rules share the same underlying legal theory as the declaration — that gender-affirming care for minors falls outside the definition of legitimate medical practice and therefore not subject to federal protections for medicine — a court ruling finding that reasoning unlawful could complicate the administration’s path to finalizing them.
4. Gender care remains paused. Many hospitals that paused or limited gender-affirming care programs for minors have not reversed course following the March ruling. Twenty-seven Republican-led states ban gender-affirming treatments for minors. In states where such care remains legal, many hospitals have opted to maintain pauses on care amid ongoing legal risks and threats to federal funding.
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