On May 18, 2016, the United States Department of Health and Human Services (HHS) Office for Civil Rights (OCR) issued the final rule to implement Section 1557 of the Affordable Care Act (ACA), which is simply titled "Nondiscrimination."1 Section 1557 of the ACA applies existing federal anti-discrimination laws to a wide range of health care and health insurance entities that receive federal financial assistance.2 The statute and the rule prohibit discriminatory actions that are already impermissible under other federal laws; therefore, in many respects, the proposed rule does not present a significant change from current federal law for many covered entities. The major notable exceptions relate to prohibitions on the basis of sex in health programs and new requirements to improve accessibility for individuals with disabilities or limited proficiency in English.
The effective date of the rule is July 18, 2016, which is 60 days following the publication of the final rule.3 Changes to health insurance or group health plan benefit designs will not be required until January 1, 2017.4 Additionally, the rule specifies different effective dates for posting notices, meeting accessibility standards, and implementing changes to health coverage.
Section 1557 prohibits discrimination against individuals on the basis of race, color, national origin, sex, age, or disability, and states that no individual shall "be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any health program or activity, any part of which is receiving Federal financial assistance, including…any program or activity that is administered by an Executive Agency...."5 The final rule applies to (1) every health program or activity that receives federal financial assistance from HHS; (2) every health program or activity administered by HHS; and (3) every health program or activity administered by a Title I entity, such as state-based and federally-facilitated marketplaces.6 Although the rule does not contain a religious exemption, the rule will not be applied if that application violates federal statutory protections for religious freedom and conscience.7
Federal financial assistance is defined to include any grant, loan, credit, subsidy, contract, or other arrangement by which the federal government provides funds, and federal financial assistance provided or administered by HHS, including all tax credits, subsidies, or other funds available to any health insurer on an Exchange.8 Under these broad definitions, most insurers, health care providers, health care plans and policies will be required to comply with the final rule.
Section 1557 applies to qualified health plan issuers receiving premium tax credits or cost sharing reductions through their participation in an Exchange.9 Although self-funded employee benefit plans are not covered by the rule, many employee benefit plans are administered by third party administrators (TPAs) that are covered by the rule as qualified health plan issuers.10 Those TPAs will be prohibited from administering self-funded plans in a manner that would violate the rule.11 In investigating complaints of discrimination under employee benefit plans, OCR will determine whether the responsibility for the discriminatory action rests with the employer, which is not directly responsible for complying with Section 1557, or with the TPA.12
Some commenters requested that HHS revise the final rule to narrow the application of the rule to the specific health program for which the entity receives federal financial assistance.13 Specifically, commenters recommended that health plan issuers be required to comply with Section 1557 when administering plans sold on an Exchange, but not when administering plans sold outside of the Exchange for which the issuer receives no federal financial assistance, such as employee benefit plans.14 HHS rejected these comments, noting that the broad application serves the central goal of the ACA to enhance access to health care services and coverage.15
HHS clarified that compliance with Section 1557 will be evaluated at the level of the entity receiving the federal financial assistance.16 For example, a doctor who is employed by a hospital is not individually accountable under Section 1557.17 Instead, the hospital's program is the relevant health program responsible for complying with the rule.18 HHS also noted that a health care provider contracting with the issuer does not become a recipient of federal financial assistance by virtue of the contract.19
In its commentary to the proposed rule, HHS noted that the nondiscrimination provision applies to entities receiving federal financial assistance through their participation in Medicare or Medicaid, including hospitals, skilled nursing facilities, home health agencies, rural health clinics, ambulatory surgical centers, and hospices.20 HHS also noted that Section 1557 will apply to physicians receiving federal financial aid through Medicaid payments, "meaningful use" payments, and other sources.21 However, consistent with the proposed rule, HHS states in the final rule that the definition of federal financial assistance does not include payments under Medicare Part B.22
Although not applicable to employee benefit plans generally, the final rule applies to employee health benefit programs provided by covered entities that (a) are principally engaged in providing or administering health services, health insurance coverage, or other health coverage; (b) receive federal financial assistance to fund the entity's employee health benefit program; or (c) operate a health program or activity, other than an employee health benefit program, that receives federal financial assistance.23 Thus, where an employer is principally engaged in providing or administering health services or health coverage, the employer will be subject to Section 1557 in its provision or administration of its employee health benefit programs.24 Therefore, a hospital providing health benefits to its employees will be covered by Section 1557, not only for the services it offers to its patients, but also for the health benefit programs it provides to its employees. However, the rule does not generally apply to discrimination by a covered entity against its own employees.25 Employees who are subject to discrimination may bring complaints under employment discrimination laws.26
Scope of the Final Rule
The final rule provides that "an individual shall not, on the basis of race, color, national origin, sex, age, or disability, be excluded from participation in, be denied the benefits of, or otherwise be subjected to discrimination under any health program or activity to which this part applies."27 The rule incorporates the specific discriminatory actions prohibited by each of the civil rights statute which Section 1557 references.28 HHS anticipates that most of these requirements are already being met by covered entities, since they are "pre-existing requirements in Federal civil rights laws to various entities, nearly all of which have been covered by these requirements for many years."29 However, the prohibition of sex discrimination is new for many covered entities, and it will require changes in action and behavior by the covered entities.30
Additionally, the rule prohibits discrimination by covered entities providing or administering health-related insurance or other health-related coverage.31 Health plans may not deny, cancel, limit, or refuse to issue or renew health insurance on the basis of race, color, national origin, sex, age or disability.32 Health plans and policies may not be structured to deny benefits or impose additional cost-sharing in a discriminatory manner.33
Requirements Related to Nondiscrimination on the Basis of Sex
The final rule prohibits discrimination "on the basis of sex," which is defined to include discrimination on the basis of pregnancy, false pregnancy, termination of pregnancy, or recovery therefrom, childbirth or related medical conditions, sex stereotyping, and gender identity.34 Sexual orientation is not specifically included in the definition, although it would be included to the extent the discrimination is based on gender stereotyping.35 Although the definition includes discrimination on the basis of termination of pregnancy, the definition does not displace existing protections afforded by other federal laws, such as provider conscience laws, or the ACA's provisions stating that health plans are not required to provide coverage of abortion as an essential health benefit.36
HHS modified the definition of "gender identity" to incorporate requests by commenters that the definition reference non-binary gender identities.37 Therefore, gender identity is defined as "an individual's internal sense of gender, which may be male, female, neither, or a combination of male and female, and which may be different from an individual's sex assigned at birth."38 The prohibition against discrimination based on gender identity also prohibits discrimination on the basis of gender expression and transgender status.39
Covered entities must provide individuals with equal access to health programs and activities without discrimination on the basis of sex.40 This requires covered entities to "treat individuals consistent with their gender identity."41 A covered entity may not select a site or location of its facilities if the selection results in the exclusion or discrimination of an individual on the basis of sex.42 The rule does not prohibit separate toilet, locker room, and shower facilities where comparable facilities are provided to individuals, regardless of sex.43 However, even where it is permissible to make sex-based distinctions, individuals may not be excluded from health programs or activities for which they are otherwise eligible based on their gender identity.44
A covered entity may operate sex-specific health programs or activities only if it can demonstrate an "exceedingly persuasive justification" for the program, which HHS acknowledges is a demanding standard.45 In an investigation of a complaint regarding sex-specific health programs, OCR will expect a covered entity to supply objective evidence, and empirical data if available, to justify the need to restrict participation in the program to only one sex.46
Health plans and policies may not limit or restrict coverage for sex-specific health care services to a transgender individual based on the fact that the individual's sex assigned at birth, gender identity, or gender otherwise recorded are different from the one to which such health services are ordinarily or exclusively available.47 Neither can health plans or policies impose categorical exclusions for health services related to gender transition, or impose additional cost-sharing or restrictions on services related to gender transition.48 The rule does not affirmatively require coverage of any particular treatment for gender transition-related care; however, coverage denials may not be based on a the individual's gender identity or the fact that the treatment would be for gender transition.49
Covered entities are required to take reasonable steps to provide meaningful access to individuals with disabilities and limited English proficiency.50 These reasonable steps include providing language assistance services free of charge in a manner that is accurate, timely, and protects the privacy and independence of the individual.51 The covered entity may not rely on an adult accompanying the individual to interpret or facilitate communication, except in an emergency or upon request by the individual with limited English proficiency.52 Interpreting services may be offered by remote video connection.53 This requires real-time, full-motion video and audio over a high-speed wireless connection that delivers high-quality video images that do not produce lags, grainy image, or irregular pauses in communication.54 Covered entities must provide appropriate hearing aids and services to persons with impaired sensory, manual, or speaking skills.55
Covered entities are required to ensure that newly constructed or altered facilities are accessible to individuals with disabilities.56 They must ensure that all of their health programs or activities provided through electronic and information technology are accessible to individuals with disabilities, except in limited circumstances.57 Covered entities are also responsible for making reasonable modifications when necessary to avoid prohibited discrimination.58
Enforcement, Notice, and Compliance
OCR is authorized to investigate complaints and determine whether a covered entity has violated Section 1557.59 OCR may take, or require entities that have violated Section 1557 to take, remedial action to overcome the effects of the discrimination.60 Covered entities are also authorized to take voluntary action to overcome the effects of discrimination.61
Covered entities employing 15 or more persons must designate at least one employee to oversee the entity's efforts implement the requirements of Section 1557.62 The designated employee will be responsible for investigating any grievance communicated to the entity alleging noncompliance with Section 1557.63 Covered entities must also adopt grievance procedures that incorporate due process standards and that provide for the "prompt and equitable" resolution of grievances alleging violations of Section 1557.64 HHS does not specify any minimum standards for grievance procedures, such as imposing timeframes, requirements for written determinations regarding the grievance, appeals procedures, and notice regarding retaliation protections.65 HHS attached a sample grievance procedure as Appendix C to the final rule.66
The final rule sets forth certain notice requirements, which have been modeled after the notice requirements in Title VI, Title IX, Section 502 and the Age Act.67 Covered entities must provide notice to beneficiaries, enrollees, applicants, and members of the public of the entity's compliance with Section 1557.68 This notice must include information regarding the availability of hearing aids, qualified interpreters, and translated documents.69 Sample notices are available at Appendices A and B to the final rule.
Notices must be posted in a conspicuous physical location in English, and each covered entity must make these notices available, electronically or in another appropriate manner, in the top 15 languages spoken by individuals with limited English proficiency.70 Notices must also be included in significant publications and significant communications, although HHS has modified the notice requirements for small-sized publications such as tri-fold brochures and pamphlets.71 Significant publications and communications include documents intended for the public, such as outreach, education, and marketing materials, as well as written notices requiring a response from an individual or written notices to an individual pertaining to rights and benefits.72
The required notices may be combined with the content of other notices, as long as the combined notice clearly informs individuals of their rights under Section 1557.73 The touchstone for whether a covered entity has met the notice requirements is whether the content is sufficiently conspicuous and visible that individuals participating in health programs could reasonably be expected to see and read the information.74
Six years after Section 1557 went into effect, HHS has issued the final rule to implement the ACA's nondiscrimination provision. Although, in many ways, Section 1557 is consistent with, and duplicative of, existing antidiscrimination laws, the final rule does impose new requirements related to accessibility and discrimination on the basis of sex. Covered entities, including employers, providers, and health plan issuers, must act promptly to ensure compliance by July 18, 2016. HHS expects that Section 1557 and the final rule will achieve one of the central aims of the ACA—expanding access to health care for all individuals.
Article originally published in AHLA Weekly (June 3, 2016). © American Health Lawyers Association
1 42 U.S.C. § 18116(a); Nondiscrimination in Health Programs and Activities ("Final Rule"), 81 Fed. Reg. 31376 (May 18, 2016) (to be codified at 45 C.F.R. pt. 92).
2 42 U.S.C. § 18116(a)
3 Final Rule, 81 Fed. Reg. at 31466 (to be codified at 45 C.F.R. § 92.1).
6 Final Rule, 81 Fed. Reg. at 31466 (to be codified at 42 C.F.R. § 92.2(a)). For relevant definitions, see id. at 31466-31468 (to be codified at 42 C.F.R. § 92.4).
7 Id. at 31379-80, 31466 (to be codified at 42 C.F.R. § 92.2(b)(2)).
8 Id. at 31467 (to be codified at 42 C.F.R. § 92.4).
9 Id. at 31431.
13 Id. at 31385.
14 Id. at 31386.
16 Id. at 31384.
19 Id. at 31383.
20 Nondiscrimination in Health Programs and Activities ("Proposed Rule"), 80 Fed. Reg. 54172, 54194 (proposed Sep. 8, 2015).
22 Final Rule, 81 Fed. Reg. at 31383.
23 Id. at 31472 (to be codified at 42 C.F.R. § 92.208).
25 Id. at 31404.
26 Id.at 31405.
27 Id. at 31469 (to be codified at 42 C.F.R. § 92.101).
29 Proposed Rule, 80 Fed. Reg. at 54196.
30 Id. at 54176.
31 Id. at 31471 (to be codified at 42 C.F.R. § 92.207).
32 Id. at 31471 (to be codified at 42 C.F.R. § 92.207).
34 Final Rule, 81 Fed. Reg. at 31467 (to be codified at 42 C.F.R. § 92.4).
36 Id. at 31388.
37 Id. at 31384.
38 Id. at 31467 (to be codified at 42 C.F.R. § 92.4).
40 Id. at 31471 (to be codified at 42 C.F.R. § 92.206).
42 Final Rule, 81 Fed. Reg. at 31470.
43 Id. at 31409.
44 Id. HHS notes that courts have rejected claims that any legal right to privacy is violated and that one person suffers any cognizable harm simply by permitting another person access to a sex-specific program or facility which corresponds to their gender identity
45 Id. at 31409, 31470.
46 Id. at 31409.
47 Id. at 31472 (to be codified at 42 C.F.R. § 92.207).
49 Id. at 31429, 31433.
50 Id. at 31470 (to be codified at 42 C.F.R. § 92.201).
55 Id. at 31471 (to be codified at 42 C.F.R. § 92.202).
56 Id. (to be codified at 42 C.F.R. § 92.203).
57 Id. (to be codified at 42 C.F.R. § 92.204).
58 Id. (to be codified at 42 C.F.R. § 92.205).
59 Id. at 31468 (to be codified at 42 C.F.R. § 92.6(a).
62 Id. at 31469 (to be codified at 42 C.F.R. § 92.7).
65 Id. at 31394.
67 Id. at 31395.
68 Id. at 31469 (to be codified at 42 C.F.R. § 92.8).
71 Id. at 31398.
72 Id. at 31402.
73 Id. at 31397.