Market insight from year-end 2020 SFCRs: Sample of life insurers based in Luxembourg
Gross written premiums in our sample of Luxembourg-based life insurers decreased 20% in 2020.
Recently, the concept of gender identity and what it means from a health insurance coverage perspective has been receiving increased attention. This paper lays out recent trends, including recent federal and state laws affecting health insurance benefits for transgender individuals. We also examine health insurance clinical coverage policies related to gender reassignment surgery as well as prevalence estimates. Finally, we provide future considerations for healthcare payers, including appropriately capturing data relevant to the healthcare needs of the transgender population.
According to the U.S. Department of Health and Human Services (HHS), the term "gender identity" is defined as:
In most cases, to qualify for gender reassignment surgery, a patient must have a persistent, well-documented diagnosis of gender dysphoria. According to the Diagnostic and Statistical Manual of Mental Disorders (DSM), 5th Edition (DSM-5), gender dysphoria (formerly referred to as gender identity disorder) occurs when there is a noticeable difference between the gender an individual expresses or believes he or she is and the birth gender, and when this disparity is persistent for at least six months.2 This difference, when unresolved, may lead to clinically significant mental distress, which is a defining characteristic of gender dysphoria. It is important to note that only a subset of individuals who are transgender (or gender non-conforming) will be diagnosed as having gender dysphoria because not all individuals who are transgender will experience clinically significant mental distress that can be diagnosed as gender dysphoria.
The need for healthcare services for the transgender population, including reassignment surgery, is not new. One of the first documented cases took place in 1952, when a former U.S. Army private underwent male-to-female (MTF) surgery in Denmark. In more recent years, increased awareness, changing public perceptions, evolving research and medical evidence, changing regulatory environments, and potential changes in demand may create a “tipping point” to expand the availability of healthcare services and health insurance benefits for the transgender population. Medicare, the Federal Employee Health Benefits Program (FEHBP), state Medicaid programs, and commercial insurers are all reexamining coverage policies and changing them in light of evolving standards of care and laws and regulations. Health insurers will need appropriate data and analytics to support changes in coverage policies and understand their impacts.
There are an estimated 1.4 million adults (0.6%) in the United States who self-identify as transgender, according to a recent study based on the Centers for Disease Control and Prevention (CDC) 2014 Behavioral Risk Factor Surveillance System (BRFSS).3 The BRFSS survey asked respondents whether they considered themselves to be transgender, and if yes, whether male-to-female (MTF), female-to-male (FTM), or gender nonconforming. This 2014 estimate is twice that of a prior estimate, which found there were approximately 700,000 individuals (0.3%) who identified as transgender in 2011.4 This increase can be attributed to several factors, including study design changes and individuals being more willing to self-identify in 2014 than in 2011.
To estimate use of particular healthcare services, health insurance claims data are usually a good source of information, especially when there is a substantial population that may use the services and when those services are covered by insurance. In this case, claims-based sources are not currently reliable for estimating the number of individuals who are transgender or who have gender dysphoria and their related healthcare utilization. Milliman conducted a review of proprietary claims data sources containing about 2 million lives over a four-year period (2009 to 2012). We found that 0.004% of members had an insurance claim related to gender dysphoria (previously called gender identity disorder). If extrapolated to the entire U.S. population, this represents only a small fraction of those self-reporting transgenderism in the BRFSS survey.
Health insurance claims are not currently a reliable information source for estimating prevalence of gender dysphoria for a variety of reasons:
Currently, lack of claims-based data is a challenge for health insurers attempting to estimate costs. However, the credibility of claims-based sources to better understand prevalence of gender dysphoria and for related utilization and cost studies will improve over time, especially as health insurers begin to provide coverage for related healthcare services. For now, however, self-reported information provides the most credible view of prevalence.
Not all individuals who have gender dysphoria will want to, need to, or are able to undergo medical treatment or surgical procedures for gender transition. Some individuals will opt for nonmedical options such as change in clothing and gender expression. Others will opt for counseling or mental healthcare services. Some will undergo limited gender affirmation or reassignment surgery-- for example facial reconstruction, tracheal shaving, and breast augmentation. Others may opt for full transition, including removal of gonads and reconstructive surgery, which could include a host of surgical procedures to change an individual’s primary or secondary sex characteristics. (See the table in Figure 1 later in this paper for further details on the bundle of services related to gender reassignment surgery.) One study from 2007 estimates that, of those who identify as transgender, between 0.1% and 0.5% have taken some steps to transition from one gender to another.5 In Europe, 1 per 30,000 adult males and 1 per 100,000 adult females seek gender reassignment surgery.6
Recent federal and state laws and regulations have clarified how nondiscrimination policy applies to health benefits involving an individual’s gender identity or expression. These regulatory changes are driving health insurers to make changes to policies governing covered benefits, utilization management, and medical necessity criteria.
On July 18, 2016, a set of final rules called “Nondiscrimination in Health Programs and Activities” became effective. These new rules implement Section 1557 of the Patient Protection and Affordable Care Act (ACA), which prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs or activities. This includes discrimination based on gender identity. The new rules are applicable to every health program or activity that receives some federal financial assistance, is administered by HHS’s health programs, or is established under Title 1 of the ACA, including all federally facilitated and state-based marketplaces. HHS’s Office of Civil Rights makes clear that it does not require health insurers to cover any particular benefit or services, such as gender reassignment surgery, but it emphasizes that coverage cannot be discriminatory. Specifically, it states that “coverage for medically appropriate health services must be made available on the same terms and conditions under the plan or coverage for all individuals, regardless of sex assigned at birth, gender identity, or recorded gender.” It goes on to state that an “explicit, categorical (or automatic) exclusion or limitation of coverage for all health services related to gender transition is unlawful.” Finally, it clarifies that blanket exclusions on the basis of cosmetic or experimental categorizations are “outdated and not based on current standards of care.”7
In May 2014, the HHS Appeals Board issued a decision that invalidated a National Coverage Determination (NCD) regarding “transsexual surgery.” The Appeals Board stated that the NCD was invalid because the coverage exclusion is “no longer reasonable.” Evidence presented to the Board demonstrated that transsexual surgery is currently considered safe and effective and not experimental.
Therefore, local coverage determinations used to adjudicate Medicare claims can no longer use the old NCD to deny gender reassignment surgery.8
Medicare Advantage plans must adhere to Medicare coverage policies. After May 2014, Medicare Advantage plans revised their coverage policies, stating that they will cover reasonable and medically necessary services for gender reassignment surgery and that coverage determinations need to be made on a case-by-case basis. In addition, the FEHBP followed suit and removed gender reassignment surgery from its list of general exclusions.9
On June 2, 2016, the Centers for Medicare and Medicaid Services (CMS) released a proposed decision memo stating that it does not plan to issue a revised NCD that explicitly states that gender reassignment surgery is covered. Instead, CMS proposes to maintain its current policy and leave coverage determinations on an individual claim basis and at the local level. CMS is currently seeking comments on the proposed decision memo and professional societies and advocacy organizations are currently responding.10
Currently 10 jurisdictions, including the District of Columbia, prohibit health plans from using blanket exclusions for transgender healthcare services. In addition, eight states explicitly require coverage of transgender benefits for their state employee health plans.11 Twelve states explicitly cover gender transition services for their Medicaid populations.12 As stated above, Marketplace plans are subject to the federal nondiscrimination rule that recently went into effect, but they are also subject to state coverage requirements and thus benefits related to gender dysphoria treatment and services vary from state to state.
State laws that prohibit exclusions of services based on gender identity may still allow plans to deny services based on medical necessity. In some cases, coverage may be denied for particular services that are considered experimental or investigational. In addition, particular procedures that are considered purely cosmetic and not medically necessary may also be denied.
In California, the Insurance Gender Nondiscrimination Act (IGNA) prohibits plans from limiting benefits based on gender identity or gender expression.13 In a letter clarifying this law, the California Department of Managed Health Care (DMHC) made clear that plan denials for “individual’s request for services on the basis that the services are not medically necessary or that the services do not meet the health plan’s utilization management criteria... is subject to review through the Department's Independent Medical Review (IMR) process.”14 Since 2013, there have been 21 cases reviewed under the IMR process related to transgender services, 14 of which were overturned (i.e., decided in favor of the patient) in part or in whole, and seven of which were upheld. Cases that were commonly overturned include transgender females’ requests for hormone therapy, breast augmentation, facial laser hair removal, and facial reconstructive surgery. Most of these services were found to be medically necessary based on the case details and the reviewer’s interpretation of the World Professional Association for Transgender Health (WPATH) Standards of Care or other peer-reviewed published sources. Health plan denials that were upheld were done so because specific requested services did not meet the standards of care or were considered unsafe or experimental. In some cases, the standard of care for the requested treatment was not definitive and thus the determination relied on the reviewer’s clinical judgment regarding whether the requested treatment was safe and medically necessary.15
Health insurance clinical policies governing coverage of gender reassignment surgery vary, but there is convergence in terms of the standards of care upon which they are based. (Note that clinical coverage policies are guidelines that give detail on what specific services may be covered and the medical criteria upon which coverage is based.) In addition, there are certain medical necessity criteria and preauthorization requirements for gender reassignment surgery that appear to be standard across policies. We reviewed 48 policies that were publicly available from various carriers, including those covering members in Medicare Advantage, Medicaid, commercial plans, state employee benefits, FEHBP, and ACA marketplace plans. Note that we relied on those policies that had been updated or reviewed in 2014 or later. This ensured that the policies referenced the latest version of the DSM-5, which was updated in 2013 and redefined the term “gender identity disorder” to “gender dysphoria.” Key findings of our review are summarized in this section.
Reliance on WPATH Standards of Care: Virtually all of the clinical policies included in our review heavily relied on the WPATH Standards of Care, 7th version.16 WPATH is an international association whose mission is to “promote evidence-based care, education, research, advocacy, public policy, and respect in transsexual and transgender health.” The organization, composed of over 600 clinicians, social scientists, legal professionals, and other researchers, updated its most recent Standards of Care in 2012. The latest update reflects the then-available research and professional consensus on treatments appropriate for individuals with gender dysphoria. Health plan clinical policies typically relied on the WPATH Standards of Care supplemented by other subsequently completed research.
Bundle of services included in gender reassignment surgery: Clinical policies usually point out that treatment for gender dysphoria with gender reassignment surgery is a multistep process, typically taking years, and involving multiple specialists and a wide range of services. While these services vary from person to person, there is a bundle of services typically considered part of gender reassignment surgery as described in the table in Figure 1. Note that not all services listed below are covered by all policies as coverage can be restricted by the terms and conditions of the member’s plan contract and medical necessity criteria. For example, whether certain services are considered medically necessary or purely cosmetic is up for debate. Several clinical policies stated that services such as rhinoplasty, facial bone reduction, blepharoplasty, breast augmentation, liposuction of the waist (body contouring), reduction thyroid chondroplasty, hair removal, voice modification surgery, chin implants, nose implants, and lip reduction and other aesthetic or plastic surgeries are considered cosmetic. And because cosmetic procedures are a blanket exclusion for all members, they are excluded for gender reassignment surgery.
Figure 1: Services typically included under gender reassignment surgery clinical policies
|Treatment or service||Description and examples|
|Change in gender expression/role||For certain individuals, a recommended course of action involves living in a manner consistent with the individual’s gender identity. Some plans’ clinical policies require change in gender expression/role for a significant period of time (e.g., at least one year) as a criterion for certain surgical interventions.|
|Mental health screening and assessment||Mental health screening and assessment includes obtaining patient history and developing and making the diagnosis of gender dysphoria, if applicable. Assessment of other coexisting mental health conditions, if applicable, is typically included. This would also involve referral for psychotherapy, hormone therapy, and/or surgery as appropriate. Diagnosis of persistent, well-documented gender dysphoria by a qualified mental health professional is a prerequisite criterion for hormone therapy or surgery.|
|Hormone therapy to feminize or masculinize the body||Hormone therapy may be useful for patients who do not wish to, or are unable to, undergo surgery. Hormone therapy is typically a prerequisite criterion for some but not all surgical interventions.
Hormone therapy following gonad removal surgery is typically required for the rest of the individual’s life and requires adjustment for age and other health conditions.
MTF hormone therapy may include estrogen and androgen-reducing medications (anti-androgens).
FTM hormone therapy may include testosterone and progestins for a short duration to effect menstrual cessation.
|Surgery to change primary sex characteristics||FTM surgical procedures may include mastectomy, male chest construction, hysterectomy and oophorectomy (removal of ovaries), urethraplasty, vaginectomy, scrotoplasty, and/or implantation of prostheses.
MTF surgical procedures may include breast augmentation, penectomy, orchiectomy, vaginoplasty, clitoroplasty, and vulvoplasty.
|Surgery to change secondary sex characteristics||FTM surgical procedures may include liposuction/lipofilling, pectoral implants, and other aesthetic or plastic surgery procedures.
MTF surgical procedures may include facial feminization surgery, liposuction/lipofilling, voice surgery, thyroid cartilage reduction, gluteal augmentation, hair reconstruction, and other aesthetic or plastic surgery procedures
|Psychotherapy||May include individual, couple/family, or group therapy. May be helpful at various stages throughout an individual’s life.|
|Speech and voice therapy||Speech and voice therapy can help patients communicate in a manner consistent with their gender identities.|
|Urogenital care||This may include postoperative counseling by surgeons and counseling by primary care clinicians or gynecologists regarding urogenital care.
|Key: MTF=Male to Female; FTM= Female to Male|
Medical necessity criteria for gender reassignment surgery: Clinical policies include details regarding the medical necessity criteria the plan will use to consider a member to be eligible for gender reassignment surgery. Typically, these involve:
In the coming years, we expect to see an increase in claims for services to treat gender dysphoria, especially as antidiscrimination laws reduce barriers to care, as the standards of care become more widely adopted, as coding practices change, and perhaps as public attention on the issue reduces stigma. In light of these trends, there are questions that payers and healthcare providers should consider that affect healthcare operations and delivery:
Figure 2: Data element options
|Data field||Current gender identity||Sex assigned at birth|
|Data element options:|
The authors would like to acknowledge review and input by Tri D. Do, MD, MPH, FACP, Chief Medical Officer of API Wellness Center, and by Gibson R. Sims III, Director, Federal Employee Health Benefits Program Benefits, Products and Administration, Kaiser Permanente.
Susan Philip is a senior healthcare management consultant with Milliman’s San Francisco healthcare management consulting practice. Contact her at: [email protected], +1 415 394 3788.
Andrew Naugle is a principal and healthcare management consultant with Milliman’s technology and operations solutions practice. Contact him at: [email protected], +1 206 504 5707.
Transgender healthcare coverage: Prevalence, recent trends, and considerations for payers
This paper discusses trends, including recent federal and state laws affecting health insurance benefits for transgender individuals and health insurance clinical coverage policies related to gender reassignment surgery.