Early puberty at 14? Feds say billing fraud rampant for youth trans procedures, cash cow for docs

The business model and medical coding practices of the so-called gender-affirming care industry for minors, long obscured by the jargon and secrecy of the profession, are facing the harsh glare of federal scrutiny, as the evidence base for puberty blockers, cross-sex hormones and surgeries for gender-confused youth gets picked apart globally.

The best-case scenario for hundreds of "wolves in white coats" – potential scofflaws identified in a new Department of Health and Human Services report on gender medicine billing fraud – may be simply losing federal money. HHS on Wednesday cut off federal Medicaid and Children’s Health Insurance Program funding for "sex-rejecting procedures on children."

The worst case is incarceration, with Vice President JD Vance referring flagged providers to Attorney General Todd Blanche for potential prosecution Thursday. HHS Secretary Robert F. Kennedy also asked his inspector general to probe "potentially anomalous billing patterns" by the providers across four suspicious cohorts of reimbursement claims.

"The expansion of pediatric sex-rejecting procedures resulted from an interaction among financial incentives, potentially illegal billing practices, ideological and professional influences, federal policy, and inadequate oversight," leaving vulnerable children "irreversibly harmed and abandoned," an executive summary of the report concludes.

It lays out the evidence for providers intentionally miscoding claims to secure insurance coverage for procedures that would otherwise not qualify, including nearly $50 million billed from 2015-2025 for puberty blockers in recipients 9-to-17 years old for "endocrine disorder" diagnoses without early-onset "precocious puberty," for which blockers are typically indicated.

In the same period, $11 million was billed for blockers to recipients 13-17 who were diagnosed with precocious puberty, who by definition cannot be "precocious" in that age range.

The report identifies nearly $120 million in billings for pediatric gender procedures since 2019, including more than 5,500 surgeries ranging from $12,000 to $130,000 and 8,500 courses of blockers or hormones ranging from $600-$16,000 a year.

"Unlike most traditional pediatric services, which involve episodic or short‑term care," children receiving this treatment become "captive patients," requiring ongoing "endocrinology visits, laboratory monitoring, prescriptions, mental‑health services, surgical procedures, and follow‑up care extending into adulthood," the report says.

From runaway to LGBTQ shelter, then abandoned after detransition

The report differs from the systematic review of youth gender medicine commissioned by HHS, published 15 months ago, in one significant respect: its authors' backgrounds.

First named six months after their initial report, when they finished peer review and answered critics, the youth gender medicine authors are largely academics and liberals. Several are associated with the Society for Evidence-Based Gender Medicine.

The billing fraud report's contributors are mostly conservative activists, half of them from the Independent Women's Forum and its affiliated Independent Women's Law Center, including former Trump White House senior adviser May Mailman. 

They include three doctors: surgeon Eithan Haim, prosecuted by the Biden administration for exposing youth gender procedures at Texas Children's Hospital that apparently violated state law; psychiatrist and bioethicist Aaron Kheriaty, who sued the Biden administration for outsourced censorship; and pediatric endocrinologist Quentin Van Meter, former president of the American College of Pediatricians.

Kheriaty discusses the report in a 12-minute HHS "shortform documentary," hosted by Assistant Secretary of Health Brian Christine, that also interviews detransitioners and gender-clinic litigants Clementine Breen, Layla Jane (legally Kayla Lovdahl) and Soren Aldaco. Christine appears with Vance and Kennedy in a separate video introducing the report.

"The stories it describes are real – young people led deeper into their problems instead of out of them, parents caught between the reality they know and what providers claim is true," said Aldaco, an "ambassador" for IWF, in the group's statement on the report.

Another detransitioner, Rose Marie, does not appear in the video but speaks and, like the others, retains an identifiably masculine voice from testosterone supplements, which Marie first took on her 18th birthday. A runaway foster child who became transgender in an LGBTQ youth shelter, she "spent the last year homeless again," the report says.

'Predictable, high-margin stream' for low-margin pediatrics profession

The report weaves together the financial incentives for pediatric gender-affirming care, and how easy it is to bill it as something else to obtain insurance coverage, with the Biden administration's role in "expansion and normalization" of the procedures through regulation, litigation and personnel policies, and the cheerleading of professional associations.

The World Professional Association for Transgender Health, Endocrine Society, American Psychological Association and the American Academy of Pediatrics "created an institutional environment" that encouraged the procedures "while undercutting their own evidence base," giving short shrift to "uncertainties," irreversible risks and "clinical perspectives."

Starting in the late 2010s, the rapid increase in pediatric sex-rejecting procedures – a term apparently coined by HHS last year when it told hospitals to ditch them or lose eligibility for Medicaid and Medicare – could not have happened without the "blessing of large institutional actors like hospitals," not just fly-by-night gender clinics.

The "lifelong medical interventions" required to present as the opposite sex solved an endemic problem to pediatrics – its historically low margins compared to adult medical specialties – and spread the wealth to endocrinology and surgical specialties, turning "physiologically healthy young people" into indefinite medical dependents, the report says.

Insurance reimbursements "create a predictable, high-margin stream for pediatric endocrinology, adolescent medicine, plastic surgery, urology, and gynecology departments," in contrast to the typically simple or "one-time" treatments for kids, whose healthcare averages $3,000 a year but $25,000-75,000 over a lifetime just for blockers and hormones.

For genital surgeries, "health-plan-paid" costs average nearly $54,000 for vaginoplasties and more than double for phalloplasties, which "may require revisions for complications (urethral strictures, fistulas, loss of sensation, or cosmetic adjustments), each generating additional operating-room time, hospital stays, and follow-up care," the report says.

Fewer than 5% of those diagnosed 'had an actual endocrine condition'

Firsthand accounts from detransitioners and their parents illustrate that gender-confused children are "likely to encounter an ideologue at gender clinics predisposed to embrace the child’s story," while the financial incentive gives hospitals and clinics a reason to "excuse or overlook inaccurate diagnoses," according to the report.

It says two medical codes stand out for their novel use in gender-affirming care, "Endocrine disorder, unspecified" (E34.9) and "Central Precocious Puberty" (E301). 

The "unspecified" tag is supposed to be limited to "the early stages of a diagnostic workup when the underlying pathology is still unknown," yet providers clearly misuse it as a proxy for gender dysphoria, creating the very "hormonal abnormalities" they claim to be treating when doctors give patients hormones, the report says.

WPATH's 2021 presentation on "insurance coding and coding considerations" explicitly recommends using the "unspecified" endocrine code for "Transgender/Gender Diverse Adolescents," while a 2023 lecture on insurance coverage warned that linking gender-related ICD codes with gender-intervention CPT codes "can be problematic." 

Research literature acknowledges the widespread misuse of this code, if not for insurance purposes then to "combat the perceived stigma of a GID diagnosis," as a 2016 government study of the "transgender population in Medicare" explained, the report says. 

A 2023 University of Iowa study of coding for "gender-expansive" patients found fewer than 5% diagnosed with unspecified endocrine disorder "had an actual endocrine condition."

The report cites a Justice Department investigation of Children's Hospital of Philadelphia that found it misuses both codes to prescribe hormones and blockers, respectively, including 250 minors ages 10 and up diagnosed as precocious, with "numerous" 14-18-year-olds, "well beyond the age" they are typically diagnosed.

The hard age cutoff for precocious puberty makes miscoding easier to spot, as when CPP diagnoses in 11-year-olds at Boston Children's jumped from zero in 2017-2019 to 50 in 2022 alone, in another DOJ probe, the report says. 

It points to Pennsylvania Department of Human Services data given to investigative journalist Megan Brock that show precocious-puberty E301 reimbursements jumped 2,100% from 2013 to 2017, and Pennsylvania Medical Assistance data from 2020-2024 that show 1,900 blocker claims for kids 10-13 and 1,000 for 14-18-year-olds, long past the end of treatment for the actual condition.