.. while public awareness of the gay, lesbian, and bisexual civil rights movement is growing, the average person knows very little about the psychological condition of gender identity disorder and the process of sex reassignment." T R A N S - A C T I O N FEES Public Insurance, Medical Necessity, and Sex Reassignment Surgery C A I T L I N P E T E R S O N D U E T O A G E N E R A L L A C K O F U N D E R S T A N D I N G R E G A R D I N G T R A N S G E N D E R P E R S O N S , T H I S G R O U P O F I N D I V I D U A L S I S P U T A T P A R T I C U L A R R I S K O F D I S C R I M I N A T I O N I N T H E A R E A O F L A W A N D M E D I C I N E . T H E Q U E S T I O N O F P U B L I C I N S U R A N C E C O V E R A G E F O R M E D I C A L T R E A T M E N T O F G E N D E R I D E N T I T Y D I S O R D E R IS O N E O F T H E M O S T P R E S S I N G I S S U E S I N T H I S F I E L D . T H I S P A P E R W I L L P R O V I D E A N O V E R V I E W O F T R A N S G E N D E R I S M A N D T R E A T M E N T S O F G E N D E R I D E N T I T Y D I S O R D E R I N O R D E R T O A S S E S S T H E M E D I C A L N E C E S S I T Y O F S E X R E A S S I G N M E N T S U R G E R Y A N D O T H E R P R O C E D U R E S P R O V I D E D T O T R A N S G E N D E R P E R S O N S . W H I L E M E D I C A I D G U I D E L I N E S D O A L L O W F O R T H E D E N I A L O F M E D I C A L L Y N E C E S S A R Y S E R V I C E S , T H E S E D E N I E D S E R V I C E S M U S T F I T C E R T A I N C R I T E R I A . S P E C I F I C C A S E S IN W H I C H S T A T E I N S U R A N C E C O V E R A G E W A S P E R M I T T E D O R D E N I E D T O T R A N S G E N D E R M E D I C A I D P A T I E N T S W I L L B E E X A M I N E D I N O R D E R T O A S S E S S T H E O V E R A L L E T H I C A L I T Y O F M E D I C A I D P O L I C Y T O W A R D S T R A N S G E N D E R P E R S O N S . D I S C R I M I N A T I O N A N D T H E T R A N S G E N D E R C O M M U N I T Y Transgender persons are part of a fast-emerging but histor- ically understudied group. Lack of understanding regard- ing the transgender community is reflected in local, state, and federal laws, under which transgender persons have limited rights. Many anti-discrimination laws that have already been extended to include sexual orientation continue to ignore gender identity and expression.1 Similarly, while public awareness of the gay, lesbian, and bi- sexual civil rights movement is growing, the average person knows very little about the psychological condition of gender identity disorder and the process of sex reassign- ment. The combination of neglect and ignorance sur- rounding transgender issues, when viewed from the per- spectives of medicine and law, presents the possibility of abuse and discrimination of transgender patients' rights to receive insurance coverage for medical treatment surrounding their condition. The medical procedures involved in changing one's gen- der, especially sex reassignment surgery, are particularly unfamiliar because the topic is often regarded as taboo. Private insurance companies do not provide coverage for such procedures because they consider them to be elective.11 This paper wi l l not address the issue of private in- surance companies' policies because these procedures are nearly always categorically excluded in private contracts. 1 1 1 However, examining the funding policies of government- run programs such as Medicare and Medicaid can provide a unique perspective on the ethicality of current regulations regarding insurance coverage. The objective of this study is to shed light on the process of transitioning frequently undergone by transgender per- sons in order to determine the appropriateness of current state-run insurance policies toward procedures associated with changing one's gender and sexual identity. This paper wi l l first give an overview of the medical aspects of being transgender and the surgical procedures that often accom- pany gender transitions i n an attempt to assess the medical necessity of sex reassignment surgery (SRS) and other medical treatments associated with gender identity disorder. It wi l l subsequently analyze the status of Medicaid policy as it pertains to SRS and related services as well as the denial of medically necessary services to patients under Medicaid. The cases i n which state insurance cover- age has been permitted or denied wi l l then be reexamined in light of these findings, and the overall ethicality of these cases and their related policies wi l l be assessed. T H E A M B I G U I T I E S OF G E N D E R I D E N T I T Y D I S O R D E R ! A N O V E R V I E W Fluid and socially-charged terms such as those surround- ing sex and gender are particularly difficult to define. Some of the confusion surrounding transgender identity and the proper treatment of transgender persons can be attributed to the ambiguity regarding gender identity terminology. This section wi l l attempt to illuminate some of the prob- lems and definitions of sex and gender as they relate to transsexuality. G E N D E R I D E N T I T Y D I S O R D E R A N D T R A N S - S E X U A L I T Y Transgender and transsexual are terms used to describe some people with the psychological condition known as Gender Identity Disorder (GID). The psychological diag- nosis of GID is often accompanied by physical ramifica- tions, but not all persons with GID feel the need to surgi- cally alter their bodies to physically match the bodies of their target sex.lv As such, this paper wi l l use the term "transgender" as an umbrella term encompassing all those persons who were assigned a gender at birth that differs from their internal gender identity (target gender). The term "transsexual" wi l l only be used i n reference to those persons undergoing SRS. The Diagnostic and Statistical Manual of Mental Disorders (DSM-IV), generally regarded as the bible of psychological diagnosis, describes individuals with GID as those who have "a strong and persistent identification with the oppo- site gender. There is a sense of discomfort in their own E L E M E N T S F A L L 08 gender and may feel they were 'born the wrong sex."'v I n addition, GID is a particularly sensitive diagnosis because it is often, though not always, diagnosed in conjunction with depression and suicidal thoughts.V ) The lingering ef- fects of these other afflictions could distort assessments of the efficacy of SRS, an issue that needs to be taken into account when the medical necessity of SRS is assessed. P R E V A L E N C E O F T R A N S C E N D E R P E R S O N S Estimates regarding the prevalence of transgender persons range from i in 11,900 to 1 i n 37,000 for assigned males and 1 i n 30,400 to 1 in 107,000 for assigned females. v i i It must be noted, however, that many self-identified transgen- der individuals are not professionally diagnosed, do not undergo surgery, or deal with their transgender identity in alternative ways (such as cross-dressing), which makes accurate statistics assessing the pervasiveness of trans- gender persons difficult to acquired" T R A N S S E X U A L I T Y I N T H E C O U R T S The term transsexual, as defined by the DSM-IV diagnosis of GID, can describe individuals at any stage i n the transi- tion process (before, during, or after hormones and surgi- cal procedures). I n spite of this, where the law is concerned the exact operative state of a transgender individual is often a necessary detail. Some court cases have allowed the use of the "he" pronoun to describe a pre-operative or mid-op- erative female-to-male transsexual, or the "she" pronoun for a transitioning male-to-female transsexual.1* When the sex of the individual is an integral part of the issue at hand in the trial, however, courts generally do not recognize the gender transition as having taken place unti l the genitals of the person have been altered, or, i n other words, unti l the individual has undergone SRS.X Persons who do not desire SRS cannot, despite their gender identity and outward gen- der expression, be considered a member of that gender. Massachusetts General Law, for example, holds that birth certificates can be amended to reflect new gender identity, but only providing the person has completed sex reassign- ment surgery.Xi Even if, in all other respects, the person ap- pears to be the opposite gender, most courts follow "The ... DSM-IV... describes individuals with GID as those who have ... . 'a sense of discomfort in their own gender and may feel they were "born the wrong sex.'"" Massachusetts and still regard the individual as officially his or her originally assigned sex unti l SRS is complete. x i i This can create problems for individuals who, for instance, wish to claim discrimination based on sex but have not completed male-to-female SRS, and thus cannot qualify as female in the courts. This problem creates a legal necessity for SRS x m that wi l l be returned to further on in the assess- ment of Medicaid funding for SRS. A N O V E R V I E W OF SRS P R O C E D U R E S The Harry Benjamin International Gender Dysphoria Association's Standards Of Care For Gender Identity Disorders (hereafter known as Standards of Care or SOC) provides an in-depth outline, for both patients and thera- pists, of the suggested approach for treating patients with GID. A brief overview of the methods and procedures wi l l be outlined here in order to demonstrate the extensive process involved in undergoing a sex change. By showing the vast array of criteria one must fulfill before obtaining SRS, this section wi l l challenge the claim that SRS and re- lated medical procedures are often performed whimsi- cally. x l v The process is broken into three distinct phases, al- though SOC acknowledges that fulfillment of all three stages is not appropriate for all patients, and some wi l l be satisfied with completion of one or two phases, rendering complete SRS unnecessary.xv T R A N S - A C T I O N F E E S T H E F I R S T P H A S E ! P S Y C H O T H E R A P Y While SOC acknowledges that psychotherapy is not neces- sary in all cases, it is certainly highly recommended for pa- tients who wish to undergo SRS in order to provide options and assess eligibility and readiness for the life adjustments involved in sex change. Psychotherapy also addresses the effects of GID on the patients' work, education, and family life.3™ There is no required number of sessions of psy- chotherapy because patients vary greatly in emotional state and psychological history, and SOC wishes to avoid patients seeing psychotherapy as simply a hurdle on their way towards their ultimate goal of SRS.x v i i A WOMAN IN A PSYCHOTH ERAPHY SESS ION, OFTEN T H E FIRST STEP TOWARD SRS. During psychotherapy the therapist encourages the patient to experiment with brief forays into the world of the oppo- site sex through cross-dressing as well as basic cosmetic alterations such as the removal of facial hair for men or breast-binding for women." ' 1 1 In order to proceed to the second stage of hormone treatment, a patient must meet several criteria. "Without first meeting these recommended eligibility requirements," SOC explains, "the patient and the therapist should not request hormones or surgery." x i x These criteria should be indicated in a docu- mentation letter written by the mental health professional. They include evidence that the patient is fully aware and has been counseled on the effects of hormones, and that he or she is over eighteen years of age and has either lived for three months as the opposite gender or has undergone a sufficient amount of psychotherapy (also usually three months). x x In addition, the patient must demonstrate that he or she is ready to continue the process in a responsible manner by showing he or she has made progress overcoming other identified problems such as alcoholism or suicidal tendencies.™ T H E S E C O N D P H A S E : H O R M O N E T R E A T M E N T Once the patient's eligibility and readiness is assessed, he or she qualifies for hormone treatment. Biological males are treated with estrogen in order to allow breast growth, in- crease body fat and curviness, decrease body hair, and shrink the testicles. Biological females treated with testos- terone experience a decrease in breast mass, increased body weight and upper body strength, increase in facial and body hair, and enlarging of the clitoris. x x " In essence, the patient undergoes a "psychologically unbalancing" or "sec- ond puberty." x x l" For biological females, a mastectomy can be performed during this stage along with the hormone treatments.™7 It is usually necessary for hormone treat- ment to continue for two years before its full effects are re- alized, and patients generally must continue treatment throughout their lives to maintain the desired effects. x x v At least one year of this two-year period is also required for the individual, i f he or she desires, to pass to the subse- quent and final stage of gender reassignment. More assess- ment and psychotherapy is necessary, Sultan explains, be- cause the treating physician must be certain that the gender dysphasia is real and that "[t]he disorder is not a symptom of another mental disorder"; that is, that the person gen- uinely has deep-seated, irreversible issues with his gender and that the feelings of dysphasia are not manifestations of paranoia, schizophrenia, or other afflictions. x x v i E L E M E N T S F A L L 0 8 T H E T H I R D P H A S E ! S E X R E A S S I G N M E N T S U R G E R Y Requirements for passage into this most drastic phase of sex reassignment are stringent. The SOC requires that the patient live as a member of their target gender and undergo hormone therapy for at least twelve continuous months prior to undergoing SRS. In addition, he or she must be completely aware of the financial burdens, hospitaliza- tions, and possible risks and side effects associated with SRS and must obtain a competent sex reassignment sur- geon . -™ 'When all of these requirements are demonstra- ble, a mental health professional must perform a compre- hensive evaluation of h i m or her and then write a letter describing the patient's condition and mental status as ready for surgery. This letter is required before a surgeon can proceed with SRS, meaning that SRS is not simply an elective procedure.™ 1 1 1 Patients also must be completely aware of all the particulars regarding the surgical process itself. In female-to-male pa- tients, SRS involves a phalloplasty in which a phallus is cre- ated from the patient's forearm tissues x x i x Testes are cre- ated and attached, and the woman becoming a man generally has a hysterectomy and salpingo-oophorectomy to remove reproductive organs.' v Other procedures in- clude a vaginectomy, metoidioplasty (creating a micro penis from the enlarged clitoris by severing connecting tis- sue 5 0™), scrotoplasty, and urethroplasty in order to create a urethra and scrotum. In male-to-female patients, SRS involves an orchiectomy (removal of the testicles), penectomy, vaginoplasty, clitoro- plasty, and labiaplasty.v x " In essence, "this surgery in- volves removal of most of the penis and the entire testes, with the remaining penis turned 'inside-out' and then grafted to the newly constructed vaginal opening. " x x x i u Labia and a clitoris are then created with excess tissue. For both transformations, several procedures are often neces- sary in order to obtain full sexual function and coital ability, and occasionally full function is not achieved. x x x i v After SRS, follow-up therapy is often necessary and always ONE OF T H E SEVERAL SURGICAL PROCEDURES SRS PATIENTS MUST UNDERGO . recommended to assess possible long-term medical condi- tions resulting from SRS and hormone treatment. x x x v As demonstrated by this section, the claim that SRS is per- formed whimsically and treated as an elective or cosmetic surgery is not supported by evidence, which shows the highly complicated and time-consuming process that transsexual individuals must go through in order to alter their biological sex. The subsequent section wil l present a brief history and outline of the rules of government-funded medical insurance programs, in an attempt to explain why coverage is so frequently, and often categorically, denied to transgender patients. T H E R U L E S O F G O V E R N M E N T - F U N D E D H E A L T H C O V E R A G E Medicare and Medicaid were both part of programs con- ceived in the 1960s and passed in 1965 as part of the Social Security Act . " x x s ! Medicare provides health insurance cov- erage for retired persons, therefore its role in this paper is minimal. As it is highly unlikely for a person over 65 to begin SRS, conflicts with funding and Medicare are ex- tremely rare . x x x v i i Medicaid, on the other hand, provides coverage for the indigent. Before one can adequately ad- dress the true issue of funding for SRS under public insur- ance programs, the history and rules regarding the pro- grams themselves must be understood. T R A N S - A C T I O N F E E S M E D I C A I D A N D T H E L O O P H O L E O F J O I N T F E D ­ E R A L A N D S T A T E C O N T R O L Medicaid, besides having a target user group in a lower age bracket, is a cooperative federal and state program. Both the state and the federal government help to fund Medicaid. The federal government provides the basic reg- ulations and goals of the program, but leaves it to the states to decide exactly which procedures are covered. x x x v m Medicaid was created by Title XIX of the Social Security Act of 1965.v : v Because it allows the states to create their own programs based off of loose federal regulations, any law- suits brought against the states must be based on these fed- eral regulations.'' The preamble of Title XIX designates the intended recipients of Medicaid to be those who cannot afford "medically necessary" services, the first of a plethora of vague terms used to describe the functions of Medicaid, including requirement that standards be "reasonable," "consistent with the objectives" of Title XIX and the services covered must "reasonably achieve the purpose" of the services/ States must create a program that is in the best interest of Medicaid recipients, and one that has a method of reviewing claims to ensure that appropriate claims are funded. One slightly less ambiguous aspect of the statute is the prohibition of discrimination or preclu- sion of funding based solely on the type of illness/'" Overall, however, the statutes surrounding Medicaid are sufficiently vague to provide a vast array of interpretations of the requirements and role of the states in determining funding for procedures. I N C R E A S E D R E S T R I C T I O N S O N S E R V I C E S At the advent of private insurance, Medicare, and Medicaid, insurers relied almost entirely on doctors to determine the necessity of services. Eventually, however, private insurers, and in turn Medicare and Medicaid, realized that they were being charged for procedures that were entirely cosmetic or unnecessary. Private insurers inserted phrases restricting procedures to those considered "medically necessary," but when they continued to lose cases well into the 1970s, they began wording their contracts more strictly. Medicaid also inserted statutes forbidding "experimental" and "cosmetic" treatment at this t i m e . x l i n Hall explains that the "experimental treatment" in health insurance policies today responds to a growing concern "that most current medical procedures were adopted with- out ever having been tested rigorously and that at least some of the procedures commonly used today have limited or no medical value." x l l v Likewise, the "cosmetic" exclusion came about as people began to look to medicine for weight loss and plastic surgery."1'' These are two of three chief ex- planations, medical necessity being the third, that have been used in courts to explain Medicaid's (as well as private insurers') reasons for not funding SRS. D E N I A L O F M E D I C A L L Y N E C E S S A R Y P R O C E ­ D U R E S A N D T H E C O S T F A C T O R It is important to consider one other aspect of Title XIX be- fore attempting to apply it to SRS. As Finley points out, Congress never defines the term "necessary medical serv- ices." x l v i He argues for further investigation into the true meaning of the Medicaid statutes and how they are applica- ble in an ever-changing, ever more expensive medical world. Title XIX, Finley argues, is very interested in cost-control and management of resources, and many of the statutes reference this goal . x l v n Unfortunately, state investment in keeping costs down comes directly into conflict with pro- viding all "necessary medical services" as indicated in Section 1396. " I f a state is required to fund all medically necessary services", Finley writes, "other viable objec- tives—especially those of cost control and state discretion to meet fiscal concerns—will be undercut. Therefore, it is unlikely that Congress intended that a requirement be in- ferred from section 1396, since such a construction would be detrimental to other statutory concerns." x l v i n In other words, Finley shows that Title XIX does not mandate fund- ing of all medically necessary services, but rather it requires that any limitations on medically necessary services be rea- sonable. ! This means that while medical necessity E L E M E N T S F A L L 0 8 should be the goal of funding, the federal government rec- ognizes that there are other factors in determining the "rea- sonableness" of claims, such as cost. This l imiting objec- tive is indicated in the evolution of Medicaid and the additions Congress made to Title XIX after its inception. It shows that, despite Congress' ambitious intentions regard- ing the program, the last few decades have brought about expensive advancements in the realm of healthcare, and new Medicaid restrictions must reflect the changing times. WHETHER OR NOT SRS IS CONS IDERED A 'NECESSARY MEDICAL PROCEDURE ' IS AN O N G O I N G Q U E S T I O N . S R S ! D O T H E R E S T R I C T I O N S A P P L Y ? While male-to-female transitions are significantly less ex- pensive than female-to-male transitions, (with the former costing between $18,000 and $35,000 and the latter cost- ing over $50,000) the financial burden associated with SRS is astronomical regardless of the original biological sex of the individual. It is here, in light of the limits agreed upon in the previous section, that the question of insurance coverage for such procedures wil l be analyzed. While the subject of private insurance coverage for SRS and related procedures is outside the scope of this paper, determina- tions regarding coverage of such treatments are relevant to both public and private insurance policies. This section wil l apply relevant data regarding SRS and related proce- dures to first assess why sex change treatments are neither cosmetic nor experimental, and why they should be consid- ered medically necessary. Once the medical necessity of SRS is assessed, the appropriateness of their coverage under Medicaid policy wil l be determined. D E B U N K I N G " C O S M E T I C " A N D " E X P E R I M E N ­ T A L " C L A I M S Characterizing SRS and related procedures as either cosmetic or experimental was one of the easiest ways for states to get out of paying for SRS. Dasti explains, "While states cannot effect bans on necessary treatments on the basis of diagnosis discrimination, any non-necessary pro- cedure can be barred from coverage by states as they choose."1' In other words, by designating a procedure either cosmetic or experimental, they can completely ex- clude it from their policy without breaking Section 1392, which forbids states from discriminating against a particu- lar illness or affliction by categorically denying funding for all treatments associated with that condition. Medicaid claims that SRS was cosmetic were deflated by G.B. v. Lackner, a Medicaid lawsuit in California in which the judge concluded: " I t is clearly impossible to conclude that transsexual surgery is cosmetic surgery."1 1 Despite the fact that transsexual and transgender surgery results in an altered outward appearance of the individual, it is being used to correct a psychological disorder and should there- fore not be considered cosmetic, but a surgery that is cor- recting an inner default. Kirkland writes that physicians in Lackner responded to the "cosmetic" argument with the "illness" argument: "Unless this person gets sex reassign- ment surgery such that her genitalia and hormones match her sexual identity, she occupies the legal category of an un- treated i l l person who is entitled to Medi-Cal benefits." 1 The judge in this case also ruled that the surgery was "necessary and reasonable," a fact that is applicable to the subsequent section on medical necessity. The use of the word "experimental" was also common Medicaid terminology, and one that seems slightly more valid. In the early 1970s SRS was relatively new and thus had high risks associated with i t . l l v As time passed, however, the procedure was improved upon and as early as 1976 judges began to rule that this procedure was not ex- perimental. 1" Thirty years have passed since that ruling, and doctors have made even more progress regarding SRS. It is absurd, therefore, to continue to characterize such a procedure as experimental especially considering the large number of functioning transsexual persons living in soci- ety today. "The extreme social sacrifices and financial burdens that transgender patients undertake further evidences their faith in the fact that they will benefit from them." M E D I C A L N E C E S S I T Y O F S E X R E A S S I G N M E N T P R O C E D U R E S After determining the reasons that SRS is not to be consid- ered cosmetic or experimental, this paper will now look at its medical necessity. Standards of Care characterizes both hormone treatments and SRS as medically necessary pro- cedures. Regarding hormone treatment, SOC concludes that: Cross-sex hormonal treatments play an important role in the anatomical and psychological gender transition process for properly selected adults with gender identity disorders. Hormones are often medically necessary for successful living in the new gender. They improve the quality of life and limit psychiatric co-morbidity, which often accompanies lack of treatment)™ In regards to SRS, SOC once again comes down strongly in favor of categorizing the procedure as medically necessary. It reads: In persons diagnosed with transsexualism or profound GID, sex reassignment surgery, along with hormone therapy and real-life experience, is a treatment that has proven to be effective. Such a therapeutic regimen, when prescribed or recommended by qualified practitioners, is medically indicated and medically necessary. Sex reassign- ment is not "experimental", "investigational", "elective", "cosmetic", or optional in any meaningful sense. It constitutes very effective and appropriate treatment for transsexualism or profound GJD. l v u As was previously mentioned, patients with GID often suf- fer from other psychological conditions such as depression, anxiety, and suicidal thoughts. 1 , 1 When the origins of these conditions lay in the patient's incorrect gender iden- tity, they should be assuaged by hormone therapy and SRS. Such conditions could also conceivably be exacerbated, however, by societal rejection and discrimination against transsexual persons. Therefore, assessing the psychologi- cal state of post-operative transsexual individuals and using this as a marker to determine the success of the SRS could be a faulty assessment method due to the additional societal pressures assumed when one becomes a member of the opposite sex. A different, although similarly flawed, method to deter- mine medical necessity is to assess patient satisfaction with their new physical gender. This should only be asked of pa- tients who followed the standards of care recommended by The Harry Benjamin International Gender Dysphoria Association, so as to assure that only properly cared for patients are assessed. The extreme social sacrifices and financial burdens that transgender patients undertake further evidences their faith in the fact that they wil l benefit from them. Transsexual individuals who undergo surgery are often forced to give up their careers or are ostracized from their families. They also can become unable to bear children, and risk medical problems in the future. It seems such sac- rifices would only be made i f he or she were completely convinced of the procedure's effectiveness. A n additional vital point that needs to be taken into consid- eration pertains not necessarily to the phrase "medical ne- cessity" but certainly to the phrase "necessary medical serv- ices" as it is used in section 1392 of the Title XIX statutes. Early on in this investigation, the difficulties transgender individuals experience in the courts were discussed, in particular, the inability for the courts to determine gender/sex identity for mid-operative or pre-operative per- sons. As Dasti points out, there is a need for facilitating transsexual surgical procedures in the legal sense because without it laws that follow in society's strict binary-gen- dered definitions are difficult to apply and enforce. I , x "One certainly can hope for a future in which a transgender person can identify as neither fully male nor fully female, yet still be welcome as a full participant in society," Dasti writes. "Unt i l that day, however, the nearly fetishistic focus that the law places on genital structures undergirds a strong argument that access to sex-reassignment surgery is necessary in order to avoid shutting an entire class of citizens outside of the law." l x Dasti presents an additional compelling reason for surgical procedures to be regarded as necessary: without it there would be many more gender- ambiguous persons, which would make the court's job even more difficult. Most doctors specializing in treating transgender patients agree that, for some patients with GID, SRS presents the only option for alleviating or curing the psychological con- dition. Therefore, this paper wil l proceed from the premise that sex-change operations are medically necessary surger- ies. This premise is clearly not a flawless one, and evidence as to the effectiveness of these surgeries is incomplete and certainly warrants further study, but it is generally accepted and has been upheld in several court decisions. 1"' S R S : M E D I C A L L Y N E C E S S A R Y , B U T F U N D A B L E ? The last question that must be addressed in this section is whether SRS falls in the group of medically necessary ex- ceptions—procedures that are deemed vital, but can be re- fused on the grounds that they are too expensive and would place too great of a burden on the state. Despite the fact that SRS procedures and associated hormone treatments can be very expensive on an individual scale, there are very few sex reassignment surgeries each year. l x , i The financial burden that such procedures would place on the state is minimal, therefore denial of such services would not fulfill the statute of a "reasonable" restriction to place on medical care. CASE H I S T O R Y A N D T H E C U R R E N T STATE OF COVERAGE In order to continue with the assessment of government funding for treatment procedures, it is helpful to first delin- eate the options available to government programs regard- ing the extent of treatment funded by the programs and the levels of funding that are accepted by Medicaid in different states. P O S S I B L E D E C R E E S O F F U N D I N G There are several paths that government funding of sex change procedures and treatments could take. They wil l be outlined here in order to provide a basis from which to assess the current state of Medicaid coverage. i . Fund nothing associated with gender identity disorder; i i . Provide compensation for only psychotherapy associated with GID; i i i . Compensate psychotherapy and hormone treat- ment, but not SRS or other surgical procedures; iv. Compensate for psychotherapy, hormone treat- ment, and surgical procedures such as mastectomy but not genital surgery; v. Compensate for all medical care related to GID, including SRS surgeries, but on a case-by-case basis. vi. Compensate for all medical care related to GID, including all SRS surgeries The first option of providing absolutely no funding is not a realistic public policy, because GID is a diagnosable psychological disorder that is recognized as such by the DSM-IV. Funding is certainly provided for psychotherapy associated with other psychological disorders. As Todd Savage explains in an article on the high costs of gender reassignment, even private insurers typically pick up the cost of psychotherapy.Ix 1 1 ] It is at the third option that many private insurers draw the line. "Doctors are usually able to get reimbursed for hormone treatments," Savage explained, "but only because they are deliberately vague in reporting their purpose." l x i v It can be concluded that doctors, i f they want the insurance company to fund hormone treatment, do not explicitly inform insurers that it is being used as part of treatment for GID. In the world of private insurance, denial of care can also extend to contra-care, or any care that is used in conjunction with SRS, such as prostate exams for male-to-female patients or gynecological care for female-to-male. Ixv S T A T E C O V E R A G E T R E N D S Due to the state control of Medicaid, the extent of coverage varies greatly from state to state. There are several states, including California, Minnesota, Washington, and Iowa, that have ruled against categorical denial of all procedures relating to sex change. The court ruled that the denial of Medicaid benefits was arbitrary and "inconsistent with the objectives of the federal Medicaid statute." This does not mean that these states permit funding as per option six, but that they choose option five and wil l fund some procedures as presented on a case-by-case basis. 1 ' v i In the case of Iowa and Washington, however, this seems to mean that they wil l fund hormone treatment and smaller surgical proce- dure such as mastectomies, but not SRS itself. In addition, Iowa's groundbreaking 1980 ruling in Pinneke v. Priesser, in which the judge ruled that SRS was the only method known that would help the plaintiff's transsexuality, x l v n was essentially overturned by Smith v. Ramussen in 2002. Smith v. Ramussen ruled that Pinneke v. Priesser was super- seded by Iowa Human Services Department regulations. x l v i i i Most other states, including Alaska, Illinois, and Pennsylvania, still have statutes on their Medicaid policies that categorically exclude procedures relating to transsexu- ality. Oregon, for example, denied state coverage of sex- change procedures ruling that "there was no good evidence showing that sex-reassignment surgery improves patients' mental and emotional well-being or socioeconomic status or that it reduces the incidence of suicide attempts among transsexuals." I x i x In New York, two cases in the 1970s held that the plaintiffs who desired coverage of SRS under Medicaid had failed to prove the medical necessity of the treatment, 1 A and now New York continues to proscribe cov- erage for anything related to gender reassignment, includ- ing hormone therapy. l x x i Slowly, cases have arisen that challenge the acceptability of categorical denial of procedures relating to GID. In Minnesota, Doe v. State Department of Public Welfare held that the standards the state was using were so high as to be burdensome for patients, and that the state had to consider funding future applications for transsexual surgery. l x x i i I n Massachusetts, which currently bans all SRS-related proce- dures, the state was ordered to pay for breast reconstruction for a trans-woman who had had SRS 25 years ago and whose silicone implants were l e a k i n g . W h i l e this does not reverse the ban, it does provide some hope for trans- gender persons that progress is being made to raise awareness regarding this issue. P R O S C R I P T I O N O F S R S I D I S C R I M I N A T I O N I N P U B L I C P O L I C Y ? This paper has argued that the process of completing gen- der transition is very involved and closely regulated by med- ical professionals. Therefore, the decision to undergo SRS cannot be considered a whimsical decision made by a dis- turbed individual and instead must be regarded as a life- changing choice that is made with the assistance of experts E L E M E N T S : : F A L L 0 8 in order to treat a psychological condition. It cannot be con- sidered cosmetic or experimental, and is medically neces- sary. Categorical denial of funding for treatment of trans- gender individuals is inappropriate and unethical, because it constitutes discrimination based on a specific type of i l l - ness. This is forbidden by the Medicaid statutes, as it is prejudiced against a group of people. Denial of services because of cost is a specious argument because there is a very low percentage of transgender persons, so no signifi- cant monetary loss would occur from allowing coverage for SRS. In addition, providing funding for treatment could decrease costs associated with long-term effects of un- treated GID, such as depression, anxiety, and dangerous consequences of illegal hormone use. Finally, since there is no formula presented by the federal government for making evaluations of claims, they should be made on a case-by-case basis, as Finley suggests, taking into account the goals of Medicaid, the best interest of the patients, and the fiscal needs of the state. l x x i v The fact that cases are still ruled in favor of state proscrip- tions is, in most cases, a reflection of misunderstanding and discrimination in our society. When claims made by transgender persons are treated with the same reasonable- ness that is extended to other claims, a part of this institu- tionalized prejudice wil l cease to exist. Unfortunately, the prejudice extends to the very top; transgender individuals who attempt to take recourse cannot apply to the Americans with Disabilities Act (ADA). In 1990, Congress specifically excluded transgender persons from protection under the act, putting them in a category of other excluded groups such as pedophiles, voyeurs, and pyromaniacs, l x x v despite the fact that transgender individuals are also said to have a non-criminal psychological condition as defined by DSM-IV. This discrepancy reflects a fear and willful igno- rance of transsexuality and transgender issues that is clearly unethical and harmful to the very citizens the gov- ernment is ostensibly trying to protect. This is particularly detrimental to transgender persons who have private health insurance, because when they are denied by their providers they have few options for recourse i f they cannot claim discrimination based on ADA. E P I L O G U E : N E W A M A R E G U L A T I O N S A N D T H E F U T U R E O F I N S U R A N C E F U N D I N G In June 2007, The American Medical Association voted to amend its nondiscrimination policies to include transgen- der people. This new policy specifically states the A M A s opposition to "the denial of health insurance on the basis of sexual orientation or gender identity." l x V l 1 The influence of the AMA's increasingly high-profile stance on gay, lesbian, and transgender issues is causing many healthcare insur- ers and municipalities across the United States to reexam- ine their policies to ensure that transgender patients are not denied access to medically necessary services. In 2001, San A WOMAN ATTENDING THE SAN FRANCISCO CITY HALL VOTE ON WHETHER SEX-CHANCE OPERATIONS S H O U L D BE COVERED BY HEALTH PLANS. T R A N S - A C T I O N F E E S Francisco became the first city to pay for SRS for its work- ers, and Berkeley wil l most likely follow soon. l x x v " The AMA's amendment of its nondiscrimination policies wi l l perhaps provide an example for private insurance compa- nies and federal and state governments in order that the categorical exclusion of members of society can cease to be a reality. E N D N O T E S i . Sultan (2003) i i . Savage i i i . "Inpatient Care Exclusions, Aetna H M O Summary Plan Description 2007" (2007) iv. The Harry Benjamin International Gender Dysphoria Association's Standards of Care For Gender Identity Disorders '(2001) v. Diagnostic and Statistical Manual of Mental Disorders (2007) vi. Sultan (2003) vi i . Standards of Care (2001) v i i i . Sultan (2003) ix. Ladrach (1987) x. K v. Health Division, Dept. of Human Resources (1976) xi. Massachusetts General Laws (2001) xi i . Harris (1997) x i i i . Dasti (2002) xiv. Innes Bowen (2000) xv. Standards of Care (2001) xvi. SOC (2001) xvii. SOC (2001) xviii . Ibid. xix. SOC (2001) xx. SOC (2001) xxi. SOC (2001) xxii. SOC (2001) xxiii . Sultan (2003) xxiv. SOC (2001) xxv. SOC (2001) xxvi. Sultan (2003) xxvii. SOC (2001) xxviii. SOC (2001) xxix. Savage xxx. Sultan (2003) xxxi. "Female to Male Transsexuals" (2007) xxxii. SOC (2001) xxxiii. Sultan (2003) xxxiv. SOC (2001) xxxv. .SOC (2001) xxxvi. "Medicare History" (2000) xxxvii. For groups fighting for Medicare rights for transsexuals, see www.gendercare.org xxxviii. Finley (1978) xxxix. Ibid. xl . Ibid. x l i . Ibid. x l i i . Ibid. x l i i i . Hall (1992) xliv. Hall (1992) xlv. Hall (1992) xlvi. Finley (1978) xlvii . Ibid. xlvi i i . Ibid. xlix. Ibid. 1. Savage l i . Dasti (2007) l i i . G. B. v. Lackner (1978) l i i i . Kirkland (2003) pi7 liv. Rush v. Parham (1980). SRS was invented in 1965. By 1980, the doctor i n the case claims, several thousand patient had un- dergone the procedure, lv. Kv. Health Division (1976) lvi . SOC (2001) lv i i . SOC (2001) lv i i i . Sultan (2003) lix. Dasti (2007) ix. Dasti (2007) lxi . Doe v. Minnesota Department of Public Welfare and Hennepin County Welfare Board (1977) lx i i . Finley (1978) Ixi i i . Savage lxi v. Savage lxv. "AMA expands non-discrimination policy" (2007) lxvi. Sultan (2003) lxvii. Pinnekev. Preisser (1980) lxvii i . Smith v. Ramussen (2001) lxix. Savage lxx. Dasti (2007) lxxi. Sultan (2003) lxxii . Doe v. State, Dept. of Public Welfare (1977) lxxii i . Beger v. Acting Comm'r, Div. of Med. Assistance (2000); Sultan (2003) lxxiv. Finley (1978) lxxv. Kirkland (2003) lxxvi. "AMA expands non-discrimination policy." (2007) lxxvii. "San Francisco First City to Pay for City Workers' Sex Changes" (2001) REFERENCES "AMA expands non-discrimination policy." 3 July 2007. Gaywired.com. 10 Nov, 2007, . "AMA expands non-discrimination policy." Gay Business World. 3 July 2007. Beger v. Acting Comm'r, Div. of Med. Assistance, 11 Mass. L. Rptr. No. 31, 745, 747 (Mass. Super. Ct. May 1, 2000); Sultan, 1206. E L E M E N T S F A L L 0 8 http://www.gendercare.org http://Gaywired.com http://www.gaybusinessworld.com Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (DSM-IV). As provided by AllPsych Online, . 15 May 2007, Accessed 4 December 2007. Doe v. Minnesota Department of Public Welfare and Hennepin County Welfare Board, 257 N.W.2d 816, 819 (Minn.1977) "Exclusions and Limitations, Blue Cross Blue Shield of Arizona." . Accessed 4 December 2007. "Female to Male Transsexuals," from California's gender health site, Updated 15 Aug. 2007. . Accessed 5 December 2007. Finley, Lucinda M . November 1978. "State Restrictions on Medicaid Coverage of Medically Necessary Services." Columbia Law Review, Vol. 78, No. 7, pp. 1491-1516. G. B. v. Lackner, 145 Cal.Rptr. 555, 80 Cal.App.3d 64 (Cal.App. 1 Dist., 1978). Hall , Mark A. and Gerald F. Anderson. May 1992. "Health Insurers' Assessment of Medical Necessity." University of Pennsylvania Law Review, Vol. 140, No. 5. P1645-1646. Harris, In re, 707 A.2d 225 (Pa. Super., i997)Dasti, Jerry L. "Sex Reassignment Under Medicaid." New York University Law Review. 24 December 2002. P1773. 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