Businesses weigh sex reassignment surgery coverage in changing legal landscape

President Donald Trump sparked debate Wednesday by tweeting that the U.S. military could not accept transgender troops in part because of the “tremendous medical costs” associated with sex reassignment hormone treatments and surgeries.

Businesses in Kansas City and nationwide have also been weighing those costs. In the last few years, more have been coming down on the side of covering reassignment treatments and surgeries in their health plans, either to promote acceptance of transgender employees or to avoid legal hassles.

A study performed by Mercer Health & Benefits found that by 2015, almost 30 percent of companies with more than 20,000 employees covered reassignment surgeries. Among companies with 500 or fewer workers, the figure was only 10 percent, but that was double the rate of two years earlier.

The Human Rights Campaign, an LGBT advocacy group, tracks which companies offer plans that cover sex reassignment treatments in its annual Corporate Equality Index. This year’s list includes some Kansas City-area companies, including Sprint Corp. and AMC Entertainment Inc. Neither company responded to a request for an interview.

Mike Breitenbach, the owner of OFM Benefits Consulting in Overland Park, said there’s not as much demand for sex reassignment surgery in the Midwest as on the coasts, and it’s not something his corporate clients ask him about covering.

“Most companies I know are going to fight it until they have to (cover it) because it is a high-cost item,” Breitenbach said.

Bill Ferguson, a regional compliance attorney at another benefits consulting company called Arthur J. Gallagher and Co., said he’s heard that sex reassignment surgery can cost about $30,000.

But he said covering it is not a major cost driver in health plans because so few employees seek it.

“I know it would have a very minimal effect, if it was an insured product, on the ultimate premium,” Ferguson said.

He added that none of his clients that provide the coverage has reported paying out a claim for it.

Ferguson said a nondiscrimination provision in the Affordable Care Act that went into effect Jan. 1 is pushing more insurance companies to at least remove language from their plans that specifically excludes sex transition procedures.

“You don’t necessarily need to cover gender reassignment surgery, but in a roundabout way it certainly is a mandate, and you certainly need to get rid of any explicit exclusion that just says, ‘We will not cover gender reassignment surgery,’ ” Ferguson said.

Coverage is then determined on a case-by-case basis, based on medical necessity.

David Barbe, a Missouri doctor who is president of the American Medical Association, said the association “supports public and private health insurance coverage for treatment of gender dysphoria as recommended by the patient’s physician.”

Ferguson said the Affordable Care Act regulation is now on hold because it’s subject to a legal challenge, but this year’s health care plans were written before the court injunction.

Self-insured companies are largely exempt from the regulation, and Ferguson said those clients are “a mixed bag” when it comes to covering reassignment treatments. Some have embraced it anyway, especially companies with a large presence in western Europe.

Others have added the coverage after Ferguson warned them that even if they’re exempt from the Affordable Care Act regulation, they might still be subject to a discrimination lawsuit from the Equal Opportunity Employment Commission. He said that’s been a compelling argument in some blue-collar industries like trucking and manufacturing.

“They realize their population maybe won’t utilize the (sex reassignment) benefit very much,” Ferguson said. “So it’s better just to play ball and not risk any sort of litigation whatsoever.”

This story was originally published July 26, 2017 at 5:40 PM with the headline "Businesses weigh sex reassignment surgery coverage in changing legal landscape."