Yes there was a lot of jumping to the assumption that it was MtF trans women getting breast implants even though the NHS does zero of those procedures. The report was actually very clear on that and it was mentioned in the article too that it was FtM mastectomy procedures.
I've just read through the article in the OP again, and it doesn't mention at all that this refers to FtM mastectomy procedures. In fact it suggests that these procedures are mainly or exclusively breast augmentation procedures for males:
Breast augmentation for gender reassignment is also not routinely funded by NHS England and an application has to be made.
Draft Clinical Commissioning Policy guidance available online states that it should be given as a secondary service for trans women as “augmentation mammoplasty should not be confused with breast enhancement in natal women. It is a necessary and vital part of gender reassignment” for those who have not responded to hormones.
Where does the Telegraph article mention FtM mastectomies?
The report does say that breast augmentation in males is not routinely funded, but one of the quotes from the report included in the Telegraph article implies that some of this surgery for males is funded:
The report added: “It is striking to note how NHS Specialised Commissioning has facilitated greater access to gender reassignment surgery for gender dysphoria – even though some of the surgical procedures involved are the same as those used to treat e.g. congenital breast developmental issues.”
“We see it as both inconsistent and illogical that a procedure can be deemed of limited clinical value for one group of patients or medical condition, but acceptable for another, where there is no substantial difference in the surgical outcomes.”
Since most of the women affected by this are not seeking mastectomies, we can assume that the surgical procedures referred to as "the same as those used to treat e.g. congenital breast developmental issues” are those requested by males who want to be women.
There should be parity between physical and mental health medical conditions. The FtM transmen needing masectomies may be physically healthy, but they are not mentally healthy due to gender dysphoria- a recognised medical condition.
Why are people with a mental health condition with no physical symptoms being prioritised for surgery over women who suffer physical pain? Is surgery an appropriate treatment for a mental health condition?
As an aside do you realise that it is considered transphobic to refer to gender dysphoria as a mental health condition?