California’s IMR Process Drives Insurance Coverage for Transgender Procedures

A little-known bureaucratic process in California has played a significant role in expanding insurance coverage for transgender medical procedures, according to interviews with former state regulators and insurance industry insiders. The process, known as the Independent Medical Review (IMR) system, allows patients to appeal insurance denials for treatments and surgeries. When a patient files an appeal, an independent medical expert—sometimes a psychiatrist, rather than a surgeon—reviews the case. If the reviewer determines the procedure is medically necessary, the insurer is required to provide coverage, even in cases involving complex mental health histories or controversial procedures.

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The central debate revolves around whether California’s IMR process, and the standards used by regulators, have shifted the landscape of medical insurance. Specifically, critics and supporters disagree on whether the process has moved transgender procedures from being considered cosmetic to being recognized as medically necessary health care.

California’s Department of Managed Health Care (DMHC) oversees the IMR process. The department’s decisions are binding on insurers, meaning that once an independent reviewer rules in favor of the patient, the insurer must comply. For example, in a 2025 case, a biological male taking anti-psychotic medication received insurance coverage for a surgically created vagina after a psychiatrist overturned the insurer’s initial refusal to cover the procedure.

How IMR Decisions Are Made

The DMHC maintains a public database of IMR outcomes, which documents the types of procedures that have been approved for transgender patients. These include facial feminization surgery, hair transplants, and other gender-affirming treatments. The database shows that when procedures are deemed medically necessary, they are often approved—even if the initial insurance claim was denied.

In several cases, psychiatrists have played a key role in making the final determination on surgical requests. For instance, a psychiatrist approved a request for a surgically created vagina, while another case involved both a psychiatrist and a plastic surgeon reviewing a request for facial surgery and hair transplantation. This approach reflects a broader trend in which mental health professionals are increasingly involved in decisions about surgical care for transgender patients.

Renee Chiea, a former DMHC employee who later worked for a private insurer, told The Federalist that, in the past, insurers typically denied most transgender-related procedures as cosmetic. She said state officials used the IMR process to push for broader insurance coverage, describing regulators as “absolutely pushing the trans agenda 100 percent.” According to Chiea, psychiatrists became more involved in IMR decisions for transgender patients over time, which made it easier for patients to win appeals.

“Everybody has to do what WPATH says, because we sent you a letter that says we want you to.”

— Renee Chiea, former DMHC employee

Regulatory Standards and Disputes

California regulators have issued a series of "All-Plan Letters" to health plans, directing them to use nationally recognized standards when deciding which procedures to cover. One such letter, APL 16-013, specifically lists behavioral health services, psychotherapy, hormone therapy, and a range of surgeries as core treatments for gender dysphoria. The standards referenced in these letters often come from the World Professional Association for Transgender Health (WPATH), which is widely recognized in the field of transgender medicine.

Chiea described this approach as "sub-regulatory pressure," arguing that state regulators imposed these standards without going through formal rulemaking processes. She contends that this allowed the DMHC to expand coverage for transgender procedures without legislative oversight. However, DMHC spokesperson Kevin Durawa disputed this characterization. Durawa said the IMR process fulfills a federal requirement for independent review of insurance denials and that the department’s actions are consistent with both state and federal law.

Durawa also provided statistics indicating that a majority of insurer denials for transgender procedures have been overturned through the IMR process. However, Chiea noted that the data spans a ten-year period, making it difficult to assess whether there has been a consistent trend toward broader coverage or if the results fluctuate over time.

Pushback from Reviewers and Officials

Some medical reviewers and officials have pushed back against claims that the IMR process is biased or that it unfairly favors transgender patients. Dr. Dan Karasic, a psychiatrist who has conducted numerous IMRs for transgender patients, said he has increasingly upheld insurance denials as insurers have become more careful in applying state standards. Karasic rejected the idea that the process is one-sided, telling The Federalist, “Just because I believe that appropriate transgender care can be beneficial, does not mean that I am unable to use my expertise to determine whether criteria of medical necessity have been met.” He also emphasized that his reviews are overseen by an independent company and a medical director, adding another layer of oversight.

The IMR process in California remains a focal point in the ongoing debate over how medical necessity is determined for transgender procedures. Critics argue that regulatory standards and the involvement of mental health professionals have made it easier for patients to obtain coverage for procedures that were once considered cosmetic. Supporters, meanwhile, say the process ensures that patients receive necessary care and that independent review protects against arbitrary denials by insurers.