Health Insurers Hit With CA's Largest-Ever Penalty Over Gender-Affirming Care Denials

Two major California health insurers were hit with the state’s largest-ever fines for illegally denying coverage for gender-affirming care in a case that will compel them to revise how they treat patients diagnosed with gender dysphoria.

The $850,000 combined penalties against Blue Cross of California Partnership Plan and its Anthem Blue Cross also require the insurers to hire a dedicated case manager for people with gender dysphoria. Over 150 individuals who were denied coverage for such procedures will see their cases reviewed, and most have already seen reversals, according to the decision.

The insurers comply with the decision of the Department of Managed Health Care, a state office that regulates their industry.

“We take these matters seriously and have worked directly with the Department of Managed Health Care to identify and implement specific corrective actions to address and resolve the identified matters,” wrote Mike Bowman, a spokesperson for the insurance providers, in a statement to CalMatters.

From 2017 to 2020, two California plans by Anthem Blue Cross and its state partnership categorized over 20 surgeries, such as facial implants, hair removal, voice therapy and breast augmentation, as “not medically necessary.” But the procedures were covered if they  corrected “abnormal” body structures to create a “normal appearance” for “the target gender.”

The language the company employed “could create confusion for the reviewers regarding the medical necessity of the 22 procedures,” wrote Sonia R. Fernandes, deputy director and chief counsel office of enforcement at the Department of Managed Healthcare in an Aug. 15 ruling against ​​the Blue Cross of California Partnership Plan.

In a parallel ruling against Anthem Blue Cross, she wrote that the company “did not provide alternate criteria” to help clinics and hospitals understand when the procedures would qualify for coverage. The plan in question called the procedures “cosmetic” when used to “improve the gender-specific appearance of an individual who has undergone, or is planning to undergo sex reassignment surgery.”

The contested plans were in place years after the state implemented the Insurance Gender Nondiscrimination Act in 2013, which included many LGBTQ+ Californians into anti-discrimination protections for health coverage. Blue Cross officials acknowledged to regulators that the plans did not comply with state law, but the company and its affiliates have faced growing criticism in the past year over its handling of gender-affirming care.

It’s not the first time California’s insurance regulators have cracked down on such forms of discrimination. The department in 2017 issued a $200,000 fine against the insurer Health Net for gaps in coverage related to gender reassignment surgery and other procedures.

Most recently, in December, the Department of Managed Health Care announced a $200,000 fine against California Physicians’ Service, the doctor reimbursement side of BlueCross, also known as Blue Shield of California.

That decision centered around an individual who was diagnosed with gender dysphoria and received prior-approved services from an out-of-network provider but later saw their health care coverage suspended. The fine has since been paid, and the company has taken corrective action as requested by the state.

In this month’s case, regulators said the insurance companies must also provide written confirmation that they have modified their rules, ensured further denials comply with state law and provided training to the doctors and health care administrators.

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.