(Story updated at 4:24 p.m. ET)
HHS has finalized a rule that bans discrimination against transgender people throughout the healthcare system, carrying out anti-bias provisions in the Affordable Care Act.
HHS could find itself facing pushback from religious hospitals seeking exemption from some of the rule's provisions, including transition-related surgeries. Others might find it difficult to comply because of costs and complications.
The rule is expected to be more costly than anticipated, requiring an estimated $960 million in training and administrative costs for state and federal agencies over its first few years of implementation, the agency said. That's up from the $558 million outlined in the proposed rule.
The final rule would apply to any provider or program that accepts federal dollars. HHS received more than 2,000 letters on the proposal before the comment period closed on Nov. 9.
Most doctors would be covered, as would Medicaid and Medicare. Insurers that offer plans through HealthCare.gov would have to comply with the requirements in their exchange plans as well.
The rule does not explicitly require insurers to cover gender-transition treatments such as surgery. But insurers could face questions if they deny medically necessary services related to gender transition for a man who identifies as a woman, or a woman who identifies as a man.
The rule largely supports existing polices and law but clarifies that the protections will block discrimination based on sex, which HHS says includes gender identity.
For example, transgender people can now enter bathrooms or hospital wards consistent with their gender identity.
Previously, laws enforced by HHS' Office for Civil Rights barred discrimination based only on race, color, national origin, disability or age.
The ACA empowers HHS to alert an offender and suspend, terminate or refuse to continue federal funding to any organization that does not address noncompliance. HHS may also contact the Justice Department with a recommendation to enforce the law if the discrimination is found to be a criminal offense.
The rule does not address whether the ACA offers added protections to patients who feel their sexual orientation has resulted in provider discrimination. However, the rule makes clear that the OCR will investigate any complaints.
Religious hospitals are likely to take issue with the final rule. Their arguments would be similar to those made in several lawsuits brought by religious organizations that say compliance with rules and laws related to providing birth control or paying for abortion through health plans go against their religious freedom.
“Health services related to gender transition present a potential conflict with the equally important principle of the free exercise of religion,” the Catholic Health Association said in comments on the proposed rule.
“Ascension believes strongly that the final rule should include explicit language protecting its ministries both as health care providers and employers from having to perform, provide health insurance coverage of, pay for, or facilitate in any way procedures that would be contrary to Catholic doctrine,” the health chain says.
In the final rule, HHS refused to offer a blanket religious exemption for transgender care issues.
Such an exemption “could result in a denial or delay in the provision of health care to individuals and in discouraging individuals from seeking necessary care, with serious and, in some cases, life-threatening results,” the agency said, adding that it would consider exemptions on a case-by-case basis.
The CHA also asked for clarification on how to handle room assignments for transgendered individuals.
“While hospitals … should be compassionate in how they treat transgender patients, they must also be sensitive to the privacy concerns of other patients. Facilities which are not able to resolve the situation to everyone's satisfaction despite a good faith effort should not be held liable for unlawful discrimination,” the association said.
The CHA recommended that facilities making a good faith effort should not face penalties.
Finalizing the rule during a period of debate over the rights of transgender people in the U.S. might not be a coincidence.
The Obama administration Friday issued a directive that public schools must permit transgender students to use bathrooms and locker rooms consistent with their chosen gender identity, not the gender listed on their birth certificates.
"There is no room in our schools for discrimination of any kind, including discrimination against transgender students on the basis of their sex," Attorney General Loretta Lynch said in a statement accompanying the directive, which is being sent to school districts Friday.
The Justice Department on Monday sued North Carolina over a bathroom access law that it said violates the rights of transgender people, a measure that Lynch likened to racial segregation policies and efforts to deny gay couples the right to marry.