Insurance Fraud Is Widespread in Transgender Medicine

A key strategy in the Trump administration’s crackdown on gender medicine is identifying and prosecuting insurance fraud. A common form of potential billing fraud involves use of the diagnosis “Endocrine Disorder Not Otherwise Specified” (E34.9 in the International Classification of Diseases handbook), instead of “Gender Identity Disorders” (F64), for patients who do not have or are not being treated for endocrine disorders.

Critics of gender medicine might argue that fraud exists even with appropriate diagnostic coding. The “gender dysphoria” diagnosis, the reasoning goes, was created in 2013 for the purpose of ensuring insurance coverage for medical interventions.

The argument is not without merit. In the 2010s, advocates of gender medicine in the United States recognized the dilemma for their field. Delisting gender identity disorder from the Diagnostic and Statistical Manual of Mental Disorders (DSM) would “destigmatize” gender incongruence, but at the expense of losing insurance coverage, which requires a diagnostic code. Because people who wished to undergo medical transition had no physical pathology, it was not possible to adopt a physiological diagnosis.

Heino Meyer-Bahlburg, a prominent figure in transgender medicine, concluded at the time that “the decision on the categorization of GIV [gender identity variants] cannot be achieved on a purely scientific basis” and called for “a pragmatic compromise.”

The compromise arrived in 2013, when the American Psychiatric Association replaced gender identity disorder with “gender dysphoria” in the DSM-5. Unlike gender identity disorder, the concept of gender dysphoria was not thought to imply that the mismatch between a person’s sex and self-conception of being a man or woman was itself a disorder.

The conceptual problem, however, was not resolved but merely swept under the rug in the interest of working within the constraints of the U.S. health-care system. “The major reason for wanting to keep the diagnosis in the DSM,” wrote Jack Drescher, Peggy Cohen-Kettenis, and Sam Winter, three leaders in the field, “was healthcare reimbursement.”

The World Professional Association for Transgender Health, in its latest “Standards of Care,” recommends the use of “gender incongruence,” a new diagnosis included in the ICD-11 in the category of “Conditions Related to Sexual Health,” as an alternative to the gender identity disorder (F64) codes. The World Health Organization, which publishes the ICD, explained that its inclusion of “gender incongruence” in ICD-11 was intended to “help increase access” to gender transition interventions and “destigmatize the condition.”

Setting aside these criticisms, I will assume for the sake of argument that there is a non-fraudulent diagnostic code for transgender medical procedures (“gender identity disorders,” F64). The problem: plenty of evidence suggests that providers are not using it. Thus, a plausible case can be made that systematic insurance fraud exists.

It’s worth stating up front that transgender identity is not an endocrine disorder, and sex-trait modification (“gender-affirming care”) is not intended to treat any physical pathology.

However, transgender-identified people may develop endocrine disorders as a result of the hormonal or surgical interventions. Consider three examples.

A castrated male will be unable to produce sex hormones, which play a critical role in the maintenance of most body systems. Iatrogenic primary hypogonadism—or doctor-induced underproduction of hormones—results in infertility and can lead to osteoporosis, a serious medical problem.

In its clinical practice guideline on gender medicine, the Endocrine Society recommends that females be given six to 100 times the normal reference range of the virilizing hormones. “Gender-affirming care,” in this case, means iatrogenic hyperandrogenism—an endocrine disorder desired for its secondary cosmetic effects.

A 12-year-old put on gonadotropin-releasing hormone analogues (GnRHa, or “puberty blockers”) will be in a state of iatrogenic hypogonadotropic hypogonadism—an endocrine disorder. Several studies have reported deficiencies of bone mineralization as an expected outcome, increasing in turn the risk for debilitating fractures of the spine and hip. Even when adolescents who are put on GnRHa receive cross-sex hormones, bone mineralization may not catch up to normal levels. (See Section 7.3.2 in the Department of Health and Human Services report on treatment for pediatric gender dysphoria.)

“Gender-affirming care,” in other words, may also be called iatrogenic endocrine disorders, or doctor-induced disorders of sex development (when minors are concerned). If a patient with a normal endocrine system receives “gender-affirming care” and then seeks treatment for the side effects of that “care,” any responsible doctor should treat the patient for that endocrine condition, and billing treatment for an “endocrine disorder” need not constitute fraud, provided the specific, appropriate code is used (see below). A gender clinician who uses the “unspecific” endocrine disorder code, in contrast, raises legitimate suspicion of doing so for a patient who does not currently have an endocrine disorder.

The decision by gender medicine leaders to use endocrine disorder not otherwise specified (E34.9) rather than gender identity disorder (F64) codes, despite the absence of endocrine disorders in people initially seeking gender transition, was a response to Obama-era regulations that required the collection of data on sexual orientation and gender identity in electronic health records; to pressures from transgender-identified patients and their advocates to reduce the stigma associated with “gender identity disorder” diagnoses; and to an insurance landscape in which reimbursement claims for hormones or surgeries were not always fulfilled.

Gender clinicians have also justified the use of E34.9 codes on the grounds that not all people seeking sex trait modification would meet criteria for F64 codes. In 2021, one group of gender clinicians and researchers summarized the matter this way: “The utility of GID [gender identity disorder] codes to identify transgender people is limited by the fact that not all transgender people experience GID and GID codes may be underused by clinicians to avoid labeling the patient as transgender, or to avoid non-payment of insurance claims.”

A WPATH training module from 2021 by Stephen Rosenthal, a pediatric endocrinologist and one of the biggest names in the world of U.S. gender medicine, recommends that clinicians use “Endocrine Disorder” as an alternative to the “Gender Dysphoria” diagnosis when coding for insurance billing.

A 2022 article in KFF Health News titled “Medical Coding Creates Barriers to Care for Transgender Patients” opened with an example of a woman denied insurance coverage for hair removal as part of a phalloplasty procedure (where skin flaps are harvested from the thigh or forearm to create a pseudo-penis). “One reason [for denial of insurance claims] is transphobia within the U.S. health care system,” KFF proclaimed, “but another involves how medical diagnoses and procedures are coded for insurance companies.” Insurance typically does not cover procedures that are considered cosmetic.

Nick Gorton, a gender doctor interviewed for the KFF Health News piece, admitted to using the ICD-10 code for pelvic pain instead of gender-related issues for patients undergoing hysterectomy. Eric Meininger, a pediatrician, acknowledged using the ICD code for “medication management” for “trans kid[s] seeking hormone therapy.” Meininger added, “It’s not hard usually to come up with five or seven or eight diagnoses for someone because there’s lots of vague ones out there.”

In 2023, a JAMIA Open study of health records at the University of Iowa Hospitals and Clinics revealed that 87.5 percent of patients who were put on “gender-affirming therapy” had an endocrine disorder (E34.9) diagnosis in their medical records. The study did not report how many of these patients had that code used for their initial hormone treatment (that is, prior to developing iatrogenic endocrine disorders).

Another 2023 JAMIA Open study, this one of electronic health records at Fenway Health, a community health center in Boston that specializes in transgender medicine, contained an even more dramatic finding. Acknowledging that “Endocrine Disorder Not Otherwise Specified” codes “are frequently utilized to avoid labeling a person as transgender when providing gender-affirming services,” the authors found that, at Fenway Health, “few TGD [transgender/gender-diverse] persons had an ICD code specific to gender identity disorder/dysphoria (ranging from 20.9% to 21.6%). Instead, many TGD individuals had a diagnosis code for an endocrine disorder not otherwise specified (ranging from 60.2% among nonbinary adults assigned female at birth to 82.8% among transgender men).”

In short, the decision by leaders in the field of gender medicine to use “endocrine disorder” codes for patients who lack such disorders was deliberate and is well documented. Indeed, the openness, even pride, with which they discuss this practice shows their confidence that neither the medical establishment nor the insurance industry would dare challenge the field on this critical matter.

It’s hard to know to what extent the experiences of clinics like Fenway are representative of other health-care centers, but some indications suggest that the problem is widespread.

Last year, a Manhattan Institute analysis of an all-payer, all-claims insurance database found an almost 30 percent increase in unspecified endocrine disorder diagnoses among minors between 2020 and 2022. It’s possible that this increase was due to better diagnosis of actual endocrine disorders like central precocious puberty (CPP). But a more likely explanation, given the timeframe, the rarity of CPP, and especially the fact that a specific code for CPP exists (E22.8), is that the increase reflects greater willingness of gender clinicians to use endocrine disorder (E34.9) codes instead of gender identity disorder (F64) codes.

Earlier this month, the Philadelphia Inquirer reported that the U.S. Department of Justice had launched a probe into the Children’s Hospital of Philadelphia and the Children’s Hospital of Pittsburgh after finding potential evidence of billing fraud. Contractors hired by the Trump administration to examine billing practices found evidence that, between 2017 and 2024, hospital officials made 250 diagnoses of CPP in children ages ten and up, “including numerous teenagers aged 14 to 18.” Two days later, the Daily Caller reported on a similar probe into Boston Children’s Hospital after government officials noted that the hospital went from “diagnosing almost no 11-year-olds with CPP for the years 2017–2019 to diagnosing 50 11-year-old patients with CPP in 2022.”

CPP is an endocrine disorder in which puberty appears at an abnormally early age and is treated with puberty blockers. At least some of the patients at CHOP and BCH appear to be well outside the age range for CPP, raising legitimate suspicion of fraudulent billing practices.

The Department of Justice probes into CHOP and BCH are part of a broader federal investigation into health-care institutions that offer sex-trait modification procedures to minors. A Massachusetts court is currently blocking that investigation.

The legal repercussions of billing fraud are potentially dire. Where public insurance (Medicaid) is concerned, it can include criminal charges. Violators may face imprisonment for up to ten years and fines of up to $250,000, as well as other penalties. Civil penalties under the federal False Claims Act include exclusion from federal health-care benefit programs, loss of license, and hefty fines per false claim.

Last week, news broke that May Lau, a gender physician from Texas who had been under investigation by state authorities for violating the state prohibition on pediatric gender transition and disguising her violations with fraudulent billing, agreed to surrender her Texas medical license. Lau has reportedly relocated to Oregon, where she can continue to practice “gender-affirming care” on minors.

It thus remains to be seen whether providers who offer gender transition and use inappropriate diagnostic codes will be held liable for their actions.

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