On May 30, 2014, the Departmental Appeals Board (DAB) issued a decision invalidating the long-standing National Coverage Determination (NCD) prohibiting Medicare payment for transsexual surgery (now known as gender reassignment surgery).  The NCD, originally issued in 1989, banned Medicare payment for all transsexual surgeries on the basis that these surgeries are controversial, experimental, and have a high rate of serious complications.  To reach its conclusion that the ban was improper, the DAB considered medical expert testimony and scientific literature published since 1981, when the data supporting the NCD was compiled.  The DAB, which is an entity within the U.S. Department of Health and Human Services (HHS) that provides an impartial, independent review of disputed decisions, concluded that the Medicare coverage exclusion is no longer reasonable. 

This case came before the DAB when a Medicare beneficiary denied coverage for gender reassignment surgery filed a complaint challenging the NCD in March 2013.  Both the Medicare beneficiary, the “aggrieved party” (AP), as well as six advocacy organizations participating in the review as amici curiae, submitted evidence and argument regarding the invalidity of the NCD.  The Centers for Medicare & Medicaid Services (CMS), the agency that issues NCDs, declined to submit any evidence supporting the validity of the coverage exclusion and elected not to challenge any of the evidence introduced by the AP and the amici, including the experts’ testimony.  The DAB found CMS’s decision not to defend the NCD “significant.”

Medical literature published in the 32 years since the compilation of data upon which the NCD was based, as well as uncontested expert testimony, convinced the DAB that the bases set forth in the NCD for denying coverage of gender reassignment surgery are antiquated and unreasonable.  Specifically, the DAB found that: (1) there are medically accepted criteria for diagnosing transsexualism (also referred to as Gender Identity Disorder and Gender Dysphoria); (2) the medical evidence indicates that the surgery is safe and that it can be an effective treatment option for those diagnosed with transsexualism; and (3) the surgery has widespread acceptance in the medical community and is not “experimental.” 

This ruling does not mean that all gender reassignment surgeries will now be covered by Medicare.  Invalidating the NCD simply means that its provisions cannot be relied upon as a basis for denying coverage.  In the absence of this NCD, coverage determinations will be based upon a case-by-case review of medical necessity or, where appropriate, local coverage determinations (LCDs).  That said, LCDs that relied upon the now invalid NCD are similarly invalid.  Although Medicare will not automatically pay for these procedures, eliminating a complete ban on payment is a step in the right direction, according to advocacy organizations.  While the number of Medicare beneficiaries seeking gender reassignment surgery is not immediately available, the DAB decision may well pave the way for increased coverage by other government and private insurance payers. 

Early in 2013, HHS considered accepting public comments on whether to reexamine the long-standing policy prohibiting Medicare coverage for these procedures.  HHS withdrew its proposal, however, in light on of the administrative challenge filed with the DAB.  Participating in the administrative review but opting not to submit any evidence in defense of it was surely a less controversial way for CMS to implement a policy change on an issue that likely would have raised some criticism by the public and Congress.  An HHS spokesperson issued a brief statement in response to the DAB decision, noting that “CMS will carry out this independent board’s ruling through Medicare Administrative Contractors, who manage Medicare claims payment systems.”  CMS has until June 30th to do so.

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