The Prohibition of Medicaid Funding for Conversion Therapy Act amends Title XIX of the Social Security Act to prohibit any payment under a State Medicaid plan or waiver for conversion therapy. The bill inserts a new condition in section 1902 that requires state plans to provide that Medicaid will not pay for conversion therapy, and it adds statutory definitions that describe what counts as conversion therapy and what does not.
Practically, the bill makes two enforcement levers: (1) it creates a new state‑plan requirement that CMS can enforce, and (2) it amends section 1903 to deny federal matching funds for amounts spent on conversion therapy. That combination forces both state Medicaid programs and providers that bill Medicaid to stop seeking reimbursement for the practices the bill defines as conversion therapy, while carving out explicitly defined supportive and gender‑affirming services.
At a Glance
What It Does
The bill amends section 1902 to require state Medicaid plans and waivers to prohibit payments for conversion therapy and adds definitions in a new subsection (uu). It also amends section 1903 to make expenditures for conversion therapy ineligible for federal matching funds.
Who It Affects
State Medicaid agencies (including waiver programs), Medicaid managed‑care contractors, and any provider or entity that bills Medicaid for behavioral‑health services. Medicaid enrollees—particularly LGBTQ individuals—are the population directly protected by the prohibition.
Why It Matters
By pairing a plan‑condition prohibition with a federal non‑match, the bill uses both programmatic and fiscal levers to change provider billing behavior. Compliance, claims processing, and program integrity units will need to implement coding, documentation, and oversight changes to enforce the ban.
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What This Bill Actually Does
The bill inserts a new requirement into section 1902 of the Social Security Act that forces state Medicaid plans and waivers to provide that Medicaid will not pay for conversion therapy. To make that operationally meaningful, the statute also defines conversion therapy and sets out narrow exclusions for interventions that assist an individual in a gender transition, provide acceptance and support, or offer sexual orientation‑neutral interventions aimed at preventing unlawful conduct or unsafe sexual practices.
Because the provision is written as a condition of the state plan, CMS’s approval and oversight of state plans and waivers becomes the primary enforcement channel: states must include the prohibition in their plans and ensure their payment systems, provider agreements, and managed‑care contracts reflect it. The bill strengthens enforcement by also amending section 1903 to deny federal matching funds for any Medicaid expenditures that are conversion therapy after the effective date, creating a financial disincentive beyond programmatic compliance.The statutory definition ties conversion therapy to the intent to change sexual orientation or gender identity and to the provider receiving monetary compensation.
That framing means unpaid peer support or informal non‑compensated activities are outside the statutory definition, while any compensated practice aimed at changing orientation or identity is excluded from Medicaid reimbursement. The explicit exclusions preserve coverage for gender‑affirming medical and mental‑health care and for counseling that is neutral regarding sexual orientation or gender identity and that focuses on safety or unlawful conduct.Operationally, states and providers will need to translate the prohibition into claims edits, billing code guidance, provider training, and managed‑care contract language.
Program integrity units will face questions about proof and intent: how to determine whether a service “seeks to change” identity or orientation, and how to audit claims where the clinical content is subjective. The denial of federal match also creates incentive for CMS to recoup payments or disallow expenditures if states continue reimbursing for prohibited services.
The Five Things You Need to Know
The bill adds a new paragraph 1902(a)(88) requiring state Medicaid plans and waivers to provide that no Medicaid payment may be made for conversion therapy, effective the first day of the first quarter after enactment.
It defines 'conversion therapy' as any compensated practice or treatment that seeks to change an individual’s sexual orientation or gender identity, including efforts to change behaviors, gender expression, or attractions.
The statute explicitly excludes practices that assist an individual undergoing a gender transition, that provide acceptance/support or identity exploration, and sexual orientation‑neutral interventions to prevent unlawful or unsafe conduct.
Section 1903(i) is amended to add paragraph (28), making any amounts expended for conversion therapy ineligible for federal Medicaid matching funds.
The prohibition applies to services billed through state plans and waivers and therefore reaches services paid through fee‑for‑service and Medicaid managed‑care arrangements where the state is the payer.
Section-by-Section Breakdown
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Short title
Gives the Act the short title 'Prohibition of Medicaid Funding for Conversion Therapy Act.' Short titles have no operative effect but signal the statute’s focus and help practitioners and agencies identify the law in rulemaking and guidance.
Adds plan condition prohibiting Medicaid payments for conversion therapy
The bill inserts a new paragraph 1902(a)(88) that requires state Medicaid plans and waivers to include a provision that no payment may be made under the plan for conversion therapy beginning on the statutorily specified effective date. Framed as a condition of the state plan, this amendment gives CMS a statutory hook for plan review and for requiring states to adopt implementing changes to provider agreements, claims processing, and managed‑care contracts.
Definitions: conversion therapy, gender identity, person, sexual orientation
The bill adds subsection (uu) to define key terms. 'Conversion therapy' requires both (i) an intent to change sexual orientation or gender identity and (ii) that the person providing the practice receives monetary compensation. Because the definition is intent‑based, enforcement will hinge on evidence of the service’s purpose or the provider’s stated objectives. The subsection also clarifies that gender‑affirming care and supportive, orientation‑neutral interventions do not qualify as conversion therapy, narrowing the prohibition to services aimed at changing identity or orientation.
Denies federal matching funds for conversion therapy expenditures
The bill amends section 1903(i) to add a new paragraph (28), which makes any amount expended for conversion therapy after the effective date ineligible for federal Medicaid matching. Practically, CMS can disallow federal share reimbursement for such expenditures, which creates a monetary enforcement lever and increases the financial risk to states or providers that continue to bill Medicaid for prohibited services.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Medicaid enrollees, particularly LGBTQ youth and adults — The prohibition removes a funding stream for practices widely regarded as harmful, reducing the likelihood that Medicaid will pay for therapies that seek to change sexual orientation or gender identity.
- LGBTQ advocacy and public‑health communities — The bill aligns federal Medicaid policy with public‑health positions that oppose conversion therapy, strengthening advocacy efforts and public messaging.
- Providers of gender‑affirming and supportive mental‑health services — By carving out explicit exclusions for gender‑affirming care and supportive counseling, the statute helps preserve reimbursement for those services and reduces uncertainty about what care remains payable.
Who Bears the Cost
- Providers who currently bill Medicaid for conversion therapy — They will lose Medicaid reimbursement for those services and may need to alter their practice or seek private payers.
- State Medicaid agencies and program integrity units — States must update plans, claims systems, provider manuals, and managed‑care contracts to implement the ban, incurring administrative and IT costs.
- Medicaid managed‑care organizations — MCOs will need to adjust provider networks, prior‑authorization rules, and medical‑policy language to comply and to avoid paying for services that would be ineligible for federal match.
Key Issues
The Core Tension
The bill balances two legitimate aims—protecting Medicaid enrollees from practices intended to change sexual orientation or gender identity, while preserving access to gender‑affirming, supportive, and safety‑focused care—but it forces agencies to draw lines in ambiguous clinical territory; doing so risks either under‑enforcement (allowing harmful practices to continue) or over‑enforcement (chilling legitimate therapeutic exploration and care).
The bill's enforcement model relies on both a plan‑condition prohibition and denial of federal matching funds, but it leaves practical questions about proof and scope unresolved. The statutory definition requires that a practice 'seek' to change sexual orientation or gender identity and that the provider receive monetary compensation.
That creates two evidentiary thresholds—provider intent and compensation—that program integrity units will need to interpret in audits and claim reviews. Determining intent from clinical notes, billing modifiers, or advertising could be difficult, and providers might adjust documentation practices to avoid disallowance.
The exclusions for gender‑transition assistance, acceptance/support, and sexual orientation‑neutral interventions are necessary to protect legitimate care, but they are also open to differing clinical interpretations. Counseling that helps a client explore identity could, depending on documentation and therapist testimony, be characterized either as supportive or as an effort to change identity.
The statute is silent on specific billing codes, prior‑authorization requirements, or audit standards; absent regulatory guidance from CMS, states will vary in how narrowly or broadly they implement the ban. Finally, the compensation element narrows the prohibition in one way (unpaid activities are outside the statutory definition) but creates a potential circumvention pathway if services are structured as non‑billable or funded by non‑Medicaid sources while still being delivered to Medicaid enrollees.
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