Trump Admin Takes Step on Rule Barring Federal Funds from Hospitals That Transition Kids

When the Trump administration’s rule prohibiting federally funded hospitals from performing child transgender procedures was found missing from the regulatory agenda, conservatives worried the president was backtracking on a key promise.

The Unified Agenda of Regulatory and Deregulatory Actions for 2026 was initially posted without the rule included, but it was added to the agenda on Wednesday afternoon, the Daily Signal has learned. The inclusion of the rule signals that the administration stands by its efforts to prohibit taxpayer funding of child sex changes. 

In December, the Centers for Medicare & Medicaid Services issued two draft notices of proposed rulemaking that work together to prevent taxpayers from funding transgender procedures at Medicare- and Medicaid-certified hospitals.

Several hospitals, including the Children’s Hospital of Los Angeles, have closed their child sex change units as a result of the Trump administration’s pressure. More than 40 pediatric gender clinics in blue states stopped or paused offering transgender procedures and services between January 2025 and 2026, according to STAT.

“The threat of these rules has induced behavior by clinics and hospitals even before they go into effect,” said Rachel Morrison, director of the Ethics and Public Policy Center’s Administrative State Accountability Project. “And so they’ve given cover for hospitals to cut their gender clinics if they wanted to, but there was still political pressure to keep them.”

The Centers for Medicare & Medicaid Services’ “conditions of participation” rule for hospitals is now on the agenda, with an anticipated publishing date of December 2026 for the final rule. It would prohibit all hospitals participating in Medicare and Medicaid from performing gender-transitioning procedures.

CMS’ other rule, which blocked federal Medicaid dollars and Children’s Health Insurance Program funds from directly covering transgender procedures for children, was already on the agenda. However, while the latter rule is significant, the former rule might be even more so.

“The condition of participation is more far-reaching because it doesn’t just prohibit the funding for the procedures; it prohibits providing the procedures if you want to receive any federal funding under Medicaid,” Morrison said. 

Morrison said it’s likely both rules will be challenged in court after they are finalized.

On Tuesday, NPR reported that the Department of Health and Human Services “likely will not be finalizing” its rule blocking Medicaid funding of hospitals performing child transgender procedures. 

HHS quickly released a statement saying the report was “completely inaccurate and unfounded.”

“HHS and CMS continue to follow statutory requirements by reviewing comments, and we intend to issue a final rule,” the X post said. “HHS remains committed to protecting children from potentially lifelong, irreversible, and harmful sex‑rejecting interventions.”

Morrison said the rule is currently in a waiting period as CMS reviews comments. 

“They’re reviewing comments and working on finalizing the rule, and then they would publish it in the Federal Register,” she said. “Before it gets published in the Federal Register, it would show up at the Office of Information and Regulatory Affairs as being under review by the Office of Management and Budget, and so that would be the next step of knowing that the rule is moving forward and would be finalized in the near future.”