On April 26, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) released a final rule interpreting section 1557 of the Affordable Care Act (ACA), which prohibits discrimination on the basis of race, color, national origin, sex, age, or disability. The rule—which drew more than 85,000 comments—reinstates many Obama-era nondiscrimination regulations that were modified or eliminated by the Trump administration in 2020 and continue to be litigated. Implications of the rule for state policymakers are explained below.
Who Must Comply With Section 1557
The section 1557 protections apply in every health program or activity which receives any federal financial assistance from HHS; to entities established under Title I of the ACA, including the Marketplaces and the Basic Health Program (BHP); and to health programs and activities administered by HHS itself, including Medicaid, the Children's Health Insurance Program (CHIP), and Medicare. The rule provides a comprehensive but non-exhaustive list of "covered entities," which extends compliance obligations to a wide variety of actors in the healthcare system. This includes direct and indirect recipients of federal financial assistance and their subcontractors, whose actions covered entities are responsible for under the rule. The rule makes clear that a covered entity "may not absolve itself of its obligations" under nondiscrimination rules by contracting federally financed functions and services to another entity. Given the new rule's expansive reach, OCR estimates that roughly 267,000 covered entities must comply with it. Some examples of healthcare program-related entities that must follow section 1557 rules include:
- State Medicaid programs, CHIPs, and BHPs: Medicaid programs, CHIPs, and BHPs—and the providers who accept reimbursement from those programs—must comply with the new regulations.
- Marketplaces: The federal Marketplace and its Navigator grantees are subject to the rule. The rule also specifically includes State-Based Marketplaces (SBMs) as covered entities and expands the current nondiscrimination rules for SBMs to include "discrimination on the basis of sex characteristics, including intersex traits; pregnancy or related conditions; sexual orientation; gender identity; and sex stereotypes."
- Health insurers: Excluded from the 2020 rule, health insurers are explicitly included as covered entities if they receive federal financial assistance in any part of their business, including accepting advance premium tax credits (APTCs) and cost-sharing reductions on behalf of Marketplace enrollees or Medicare, Medicaid, or CHIP reimbursement. For example, a health insurer that accepts APTC in its line of Marketplace business is also subject to nondiscrimination rules in its off-Marketplace insurance offerings.1 Further, the regulations cover not only health insurance but also "health-related coverage." This includes short-term, limited-duration plans, excepted benefits, and similar coverage that does not meet the regulatory definition of health insurance.
- Agents, brokers, and web brokers: The rule covers agents, brokers, and web brokers who contract with a Marketplace because they participate in a health program administered under Title I. An agent or broker working for a health insurance issuer that receives federal funds is also covered if the agent or broker is a subrecipient of those funds.
- Third-party administrators (TPAs): A TPA must comply with section 1557 if it receives federal financial assistance directly or is a subrecipient of those funds through a covered entity. A covered entity, such as a health insurance issuer, that subcontracts with a TPA is liable for any discriminatory behavior by the TPA.
- Pharmacy benefit managers (PBMs): Though PBMs are not explicitly designated as operating a "health program or activity," the rule's inclusive definition wraps them in as covered entities if they receive federal financial assistance, potentially making all of their activities subject to section 1557, similar to that of a TPA.
Scope of Section 1557 Protections
Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age, or disability. Relying on the Supreme Court's decision in Bostock v. Clayton County (2020) and other court decisions and guidance, the definition of discrimination on the basis of sex is articulated more specifically to codify protections against discrimination based on sex characteristics (including intersex traits), pregnancy or related conditions, sexual orientation, gender identity, and sex stereotypes. Discriminatory actions include: denying or limiting health services based on an individual's sex assigned at birth, gender identity, or recorded gender; treating an individual differently on the basis of sex that subjects an individual to more than de minimis harm; or denying or limiting health services sought for the purpose of gender transition or other gender-affirming care.
However, the rule notes that "legitimate, nondiscriminatory" denials or limits on services are permissible, as long as the restriction is broadly applied or the service is deemed not to be clinically appropriate and not based on "unlawful animus or bias, or constitute a pretext for discrimination."
A recipient of federal funding can also act on "good faith reliance" of their protections under existing religious freedom and conscience laws, and OCR will not seek "backward-looking relief" against them. This means that a provider does not have to provide certain services they object to, such as abortion or gender-affirming care. However, the rule creates an exemption process for recipients of federal funds to receive "assurance" from OCR that the conscience objection is valid.
While reasonable medical management techniques are not prohibited, the rule lists myriad circumstances where a covered entity that provides or administers health insurance may not discriminate. Potential discrimination on the basis of race, color, national origin, sex, age, and disability by health insurers (and prohibited by the rule) includes:
- Refusals to issue or renew coverage, limiting coverage of a claim, or imposing additional cost-sharing.
- Discrimination in marketing or benefit design.
- Charging additional cost-sharing for services based on the person's sex assigned at birth, gender identity, or gender otherwise recorded.
- Categorical coverage exclusions or higher cost-sharing for gender affirming care.
- Having or implementing a benefit design that does not cover care in the most integrated setting (e.g., only covering nursing home care for a particular condition and not home care options).
The rule also expands the scope of prohibitions on discrimination in patient decision support tools, which broadly includes all tools that assist with clinical decision-making, ranging from flowcharts to artificial intelligence. Covered entities—including states, SBMs, the health plans they contract with, and the providers that participate—will be responsible for identifying the risks of discrimination within decision support tools and mitigating risks by making reasonable efforts to prevent discriminatory outcomes. While the rule does not lay out a specific plan for enforcement, ways to implement might include establishing written policies and procedures governing how patient care decision tools will be used in decision-making, monitoring any potential impacts, and developing ways to address complaints.
Language and Accessibility Requirements
Covered entities must take "reasonable steps" to provide "meaningful access" to each individual with limited English proficiency (and their companions) "eligible to be served or likely to be directly affected by" its health programs and activities. Interpretation and translation are required, and language assistance services must be provided free of charge. Covered entities cannot rely on an adult who is not a qualified interpreter to facilitate communication, unless it is a temporary measure in an emergency situation or when an individual with limited English proficiency requests in private that an accompanying adult facilitate communication. Video and audio remote interpretation are permissible if they meet certain requirements. Machine translation must be reviewed by a qualified human translator.
Reasonable accommodations, including appropriate auxiliary aids and services, must also be provided for people with disabilities and their companions. Access to facilities is protected, with facilities where health programs or activities occur being required to meet certain building code standards. Information and communication technology (which includes services and equipment, such as system technology for data transfers, information kiosks, or telehealth interfaces) must be accessible to the maximum extent possible, but covered entities are offered leeway if doing so would result in "undue financial or administrative burden or a fundamental alteration in the nature of the health programs or activities."
Notice Requirements
The final rule contains two major notice requirements.
- Nondiscrimination Notice. The rule enumerates required elements of the nondiscrimination notice that must be provided by a covered entity, including a statement of nondiscrimination on the basis of race, color, national origin, sex, age, or disability; the availability of accommodations for people with disabilities and language access services; how to obtain reasonable modifications, appropriate auxiliary aids and services, and language services; the name and contact information of the entity's section 1557 coordinator (a newly-required position to serve as a hub of compliance in organizations with 15 employees or more); and information on the filing of grievances and OCR complaints. The deadline for compliance with this provision is November 2, 2024 (120 days after the effective date of the rule).
- Notice of the Availability of Language Assistance Services and Auxiliary Aids and Services. This notice must be provided in English and at least the 15 languages most commonly spoken by individuals with limited English proficiency in the state, as well as in alternative formats to accommodate people with disabilities. In addition to the display locations required for the nondiscrimination notice, covered entities must provide notice on application and intake forms and on notices of denial or termination of eligibility, benefits, or services, among several other electronic or written communications. On an annual basis, an individual can opt out of receiving the notice; the opt-out provision must be in the individual's primary language or with appropriate auxiliary aids and meet certain requirements to assure affirmative consent to opt-out. The deadline for compliance with this provision is July 5, 2025 (one year after the effective date of the rule).
Covered entities must provide these notices to participants, consumers, enrollees, and applicants of its health programs and activities. The notices must be provided: annually or upon request; at a conspicuous location on the covered entity's website; in clear and prominent physical locations; in no smaller than a 20-point sans serif font; and where individuals can see or hear the notices. To facilitate compliance, sample notices are posted on the OCR website in English and 47 languages.
Effective Date
Many of the rules' provisions will be effective on July 5 (60 days after the May 6 publication in the Federal Register), though OCR extended the effective dates of several provisions.
Conclusion
On the date of its publication, a lawsuit was filed by the state of Florida and other parties arguing that that the rule would force providers to administer, and insurers to cover, gender-affirming care or face penalties, going beyond the section 1557 authority and in contravention of Florida's state laws. The state is asking for an injunction of the rule or delayed implementation. It is difficult to predict whether the courts will delay effectuation of or stay all or parts of the rule, but it is a near certainty that this litigation, and likely subsequent challenges, will linger. Litigation from the 2016 rule from the Obama administration is still active, as are suits challenging the 2020 Trump administration rule. Overall, the rule represents a significant cementing of rules in areas in which policies of states and other covered entities vary, particularly in protections on the basis of sex. To the extent that states have not implemented or formalized these nondiscrimination protections, changes will be necessary in Medicaid, CHIP, and SBMs to assure compliance and appropriate oversight of contracted entities.
Footnote
1. However, "health insurer" does not include self-funded group plans, except in the rare case when that group health plan receives federal financial assistance.
Originally published by State Health & Value Strategies.
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