State regulators in California have penalized Health Net $200,000 for violating antidiscrimination laws by denying coverage for transgender people seeking gender reassignment surgery.

It is the first time the California Department of Managed Health Care, which regulates HMO plans in the state, has issued an enforcement action against an insurer for violating the Insurance Gender Nondiscrimination Act, a department spokesman said. The state law, which took effect in 2012, prohibits health plans from discriminating against people based on gender identity or expression.

The agency in late July found that Health Net and its medical groups denied attempts by seven people who sought medical services related to gender reassignment surgery between 2013 and 2015, according to a letter of agreement signed by a Health Net executive and the agency’s office of enforcement. Those services included testosterone injections, gender reassignment surgery, bilateral mastectomy and facial feminization surgery.

Health Net has agreed to take corrective actions by Sept. 30, including submitting written confirmation that its health plans comply with state antidiscrimination laws. It will also evaluate whether to reimburse the out-of-pocket expenses that the seven affected patients incurred as a result of the procedures not being covered by insurance. The Department of Managed Health Care declined to identify the seven individuals, citing patient confidentiality.

The American Medical Association does not take a position on specific treatment options for gender dysphoria, such as hormone therapy or surgery, but has indicated that insurers should cover treatment as long as the patient and his or her physician have determined it is the most appropriate option.

On Wednesday the New York state insurance regulator notified health insurance companies that they may not deny claims for coverage because a medical service does not conform with a patient's gender identitiy. Examples: a person who identifies as male who has had a Pap smear to check for cervical cancer; a person who identifies as a female having prostate treatment.

Systems are set up so that if someone who identifies as female goes in for a prostate exam, it might get kicked out. But we believe that anything like that would get corrected through the appeals process.

--Leslie Moran, New York Health Plan Association

Fixing that problem, she said, might involve establishing a separate label for transgender people — not an M, or an F, but a T, say. And that could be worrisome to patients who prefer to list themselves as male or female.

At Upper Hudson Planned Parenthood, about 10 percent of some 115 transgender patients have had claims denied for such reasons, said Chelly Hegan, the nonprofit's president. Typically, it works just like Moran said — insurance companies eventually pay the claims after learning why a service didn't match up with a patient's gender.
But Hegan saw it as a bigger deal. Appealing repeated claims denials can be a hassle that discourages some transgender people from taking care of their health, Hegan said.

What the governor's doing should be applauded, because it recognizes that gender is not binary. To have to have them jump through hoops is not encouraging people to take care of themselves. It pushes people out of wanting to receive basic preventative care.

--Hegan