The Affordable Care Act (ACA) is impacting health care in unprecedented ways, and the newest regulations proposed by the United States Department of Health and Human Services (HHS) promise to continue that trend. On September 8, 2015, HHS issued a proposed rule to implement Section 1557 of the ACA, which is simply titled "Nondiscrimination."1 The text of Section 1557 is plainly broad in scope, applying existing federal anti-discrimination laws to a wide range of health care and health insurance entities that receive federal financial assistance. HHS notes in its commentary that the proposed rule prohibits discriminatory actions that are already impermissible under other federal laws, and also adopts the exceptions and limitations of most of these federal laws. Therefore, in many respects, the proposed rule does not present a significant change from current federal law for many covered entities. However, the major notable exception relates to the prohibition of discrimination on the basis of sex in health programs, a prohibition previously applicable in educational institutions under Title IX of the Education Amendments of 1972. HHS states that these new regulations are necessary to meet the ACA's goal of expanding access to health care to all individuals.
Broad Application and Comprehensive Scope
Under Section 1557:
[A]n individual shall not, on the grounds prohibited under title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, the Age Discrimination Act of 1975, or section 504 of the Rehabilitation Act of 1973, 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 credits, subsidies, or contracts of insurance, or under any program or activity that is administered by an Executive Agency or entity established under [the ACA].
The proposed rule clarifies the extensive breadth suggested by the text of Section 1557. That is, Section 1557 and the proposed rule will apply to (1) any health program or activity that receives federal financial assistance from HHS; (2) any health program or activity administered by HHS, such as federally-facilitated marketplaces; and (3) any health program or activity established by Title I of the ACA, such as state-based market places.2 Federal financial assistance is defined to include any grant, loan, credit, subsidy, contract, or other arrangement for payment or lease or transfer of real property; and any financial assistance provided or administered by HHS, including all tax credits, subsidies, or other funds available to any health insurer on the Exchange.3
Pursuant to HHS commentary, the proposed rule would apply to any entities receiving federal financial assistance through their participation in Medicare or Medicaid—estimated at 133,343 facilities.4 This will include hospitals, skilled nursing facilities, home health agencies, rural health clinics, ambulatory surgical centers, and hospices.5 Section 1557 will also apply to physicians receiving federal financial aid through Medicaid payments, "meaningful use" payments, and other sources—estimated to be about 614,000 physicians; however, it will not apply to physicians receiving only Medicare Part B payments, as HHS does not consider Medicare Part B payments to be federal financial assistance.6 Additionally, the proposed rule will apply to qualified health plan issuers receiving premium tax credits or cost-sharing reductions—including at least 169 health insurance issuers receiving premium tax credits and cost sharing reductions and at least 11 issuers operating in the state-based marketplaces.7 The proposed rule would also apply to health programs and activities conducted by HHS, as well as the state and federal Exchanges.8
The requirements of the proposed rule will also apply to employee health benefit programs provided by covered entities that (a) are principally engaged in providing or administering health services or health insurance 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.9 Therefore, except as provided above, the proposed rule would not apply generally to employment.10 However, 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.11 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.12 Employee health benefit programs include self-insured and fully-insured employee health benefit plans, employer-provided wellness programs and health clinics, and employer-provided long-term care coverage or insurance.13
Section 1557 and the proposed rule prohibit most types of discrimination already prohibited by federal law, although neither the statute nor the proposed rule cover discrimination based on religion.14 Specifically, Section 1557 and the proposed rule prohibit discrimination on the basis of race, color, national origin, sex, age, or disability.15 HHS states that the proposed rule primarily "clarifies and codifies existing nondiscrimination requirements" but notes that the proposed rule "also sets forth new standards to implement Section 1557, particularly with respect to the prohibition of discrimination on the basis of sex in health programs other than those provided by educational institutions."16 Therefore, in its regulatory impact analysis, HHS states that the new regulations would apply "pre-existing requirements in Federal civil rights laws to various entities, nearly all of which have been covered by these requirements for many years."17 Because the proposed rule merely restates existing requirements, HHS does not anticipate that "covered entities will undertake new action or bear any additional costs in response to the issuance of the regulation with respect to the prohibition on race, color, national origin, age, or disability discrimination."18
Remarkably, however, Section 1557 extends to health care the prohibitions against discrimination on the basis of sex that previously only applied to education under Title IX.19 Discrimination on the basis of sex 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, or gender identity."20 HHS acknowledges that "the prohibition of sex discrimination is new for many of the covered entities," and HHS does "anticipate that the enactment of the regulation will result in changes in action and behavior by covered entities to comply with this new prohibition."21
The proposed regulation incorporates both the prohibitions and exclusions in existing federal law regarding discrimination based on race, color, national origin, age, and disability.22 However, the proposed rule does not incorporate the sex-based distinctions permitted by Title IX and the relevant regulations, since many of the distinctions permissible in educational settings would not apply in the health care context.23 HHS has invited commentary regarding what sex-based distinctions, if any, should be permitted in the context of health programs, such as women's health clinics or counseling programs limited to male victims of domestic violence.24
Major Changes Related to Discrimination on the Basis of Sex
In its commentary to the proposed rule, HHS notes that the definition of discrimination on the basis of sex is consistent with previous Supreme Court decisions holding that stereotypical notions of appropriate behavior, appearance, or mannerisms for each gender constitutes sex discrimination.25 HHS also comments that, as a matter of policy, it supports banning discrimination on the basis of sexual orientation; however, HHS notes inconsistencies in recent guidance and case law and invited commentary on this point.26 HHS states that its inclusion of discrimination on the basis of gender identity was consistent with previous guidance issued by HHS and other federal agencies.27
The proposed rule includes several provisions specifically addressing gender identity, which is defined as "an individual's internal sense of gender, which may be different from that individual's sex assigned at birth."28 The rule defines a "transgender individual" as "an individual whose gender identity is different from the sex assigned to that person at birth."29 The new rule requires covered entities to "treat individuals consistent with their gender identity."30 The limited exception to this rule is that a covered entity may not deny health services that are exclusively available to individuals of one gender "based on the fact that the individual's sex assigned at birth, gender identity, or gender otherwise recorded in a medical record…is different from the one to which such health services are…exclusively available."31 For example, a covered entity may not deny treatment for ovarian cancer "based on the individual's identification as a transgender male."32
Similarly, the proposed rule proscribes discriminatory actions specific to transgender individuals in the context of health-related insurance or other health-related coverage.33 When providing or administering health insurance, covered entities may not "[c]ategorically or automatically exclude from coverage, or limit coverage for, all health services related to gender transitions," or "[o]therwise deny or limit coverage, or deny a claim, for specific health services related to gender transition if such denial or limitation results in discrimination against a transgender individual."34 HHS remarked that many health plans, including Medicaid, "have explicit exclusions of coverage for all care for beneficiaries related to gender dysphoria or associated with gender transition."35 HHS explained that, historically, covered entities have justified these exclusions "by categorizing transition-related treatment as cosmetic or experimental."36 In drafting the proposed rule, HHS determined that "such across-the-board categorization is now recognized as outdated and not based on current standards of care."37
In enforcing these provisions, HHS states that the Office for Civil Rights (OCR) will apply basic nondiscrimination principles in evaluating whether a covered entity's denial of a claim for coverage of treatment related to transition-related care is the product of discrimination.38 "OCR will start by inquiring whether and to what extent coverage is available when the same service is not related to gender transition."39 "If, for example, a health plan…denies a claim for coverage of a hysterectomy that a patient's provider says is medically necessary to treat gender dysphoria, OCR will evaluate the extent of the plan's coverage of hysterectomies under other circumstances."40 Nevertheless, HHS states that the proposed rule does not "affirmatively require covered entities to cover any particular procedure or treatment for transition-related care."41
Under the proposed rule, a covered entity must take appropriate initial and continuing steps to notify beneficiaries, enrollees, applicants, and members of the public regarding their rights under Section 1557 and the entity's compliance with Section 1557.42 For example, the covered entity must provide notice that it will provide free and timely auxiliary aids and services, including qualified interpreters, to individuals with disabilities, as well as free and timely language assistance services to individuals with limited proficiency in English.43 These 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.44 OCR will make available a sample notice sufficient to comply with these requirements.45
The proposed rule provides that existing enforcement mechanisms under other federal antidiscrimination laws apply to violations of Section 1557.46 These existing enforcement mechanisms require covered entities to keep records and submit compliance reports to OCR, conduct compliance reviews and complaint investigations, and provide technical assistance and guidance.47 In the event of noncompliance, Section 1557 can be enforced through the suspension of, termination of, or refusal to grant or continue federal financial assistance, among other methods.48 A private right of action and damages are also available for violations of Section 1557.49
Five years after Section 1557 went into effect, HHS has proposed regulations to implement this provision. In many ways, Section 1557 is consistent with, and duplicative of, existing antidiscrimination laws, and the proposed regulations will not impose a significant burden on covered entities in that respect. Based on the proposed rules, the most significant changes for covered entities will relate to the prohibition against discrimination based on sex. HHS estimates that this rule will cost approximately $558 million.50 But, HHS expects that Section 1557, as implemented by the proposed regulations, will achieve one of the central aims of the ACA—expanding access to health care for all individuals.
1 42 U.S.C. § 18116; Nondiscrimination in Health Programs and Activities ("Nondiscrimination in Health Programs"), 80 Fed. Reg. 54172, 54180 (proposed Sep. 8, 2015).
2 Nondiscrimination in Health Programs, 80 Fed. Reg. at 54172-73 (to be codified at 45 C.F.R. § 92.2(a)).
3 Id. at 54216 (to be codified at 45 C.F.R. § 92.4).
4 Id. at 54194.
6 Id. at 54195.
8 Id. at 54195-96.
9 Id. at 54220 (to be codified at 45 C.F.R. § 92.208).
10 Id. at 54180.
11 Id. at 54190.
13 Id. at 54215-16 (to be codified at 45 C.F.R. § 92.4).
14 42 U.S.C. § 18116.
15 Nondiscrimination in Health Programs, 80 Fed. Reg. at 54172.
17 Id. at 54196.
19 42 U.S.C. § 18116.
20 Nondiscrimination in Health Programs, 80 Fed. Reg. at 54216 (to be codified at 45 C.F.R. § 92.4).
21 Id. at 54176.
22 Id. at 54218 (to be codified at 45 C.F.R. § 92.101(b)).
23 Id. at 54181.
25 Id. at 54176 (citing Price Waterhouse v. Hopkins, 490 U.S. 228, 250-51 (1989)).
28 Id. at 54216 (to be codified at 45 C.F.R. § 92.4).
30 Id. at 54219 (to be codified at 45 C.F.R. § 92.206).
32 Id. at 54188. Many commenters responding to HHS's request for information noted that transgender individuals are routinely denied coverage for medically appropriate sex-specific health services due to their gender identity or because they are enrolled in their health plans as one sex, where the health service is generally associated with another sex. Id. at 54189.
33 Id. at 54219 (to be codified at 45 C.F.R. § 92.207).
34 Id. at 54220 (to be codified at 45 C.F.R. § 92207(b)(4)-(5)).
35 Id. at 54189.
37 Id. HHS cited its own Departmental Appeals Board's decision to invalidate Medicare's National Coverage Determination 140.3, which disallowed coverage of "transsexual surgery" because "the record indicated that the blanket denial of coverage was not reasonably based on the state of current medical science." HHS also noted that an increasing number of states have laws and policies providing that exclusions for treatment for gender identity disorder are or are likely to be discriminatory in at least some circumstances. Id. at 54189-90.
38 Id. at 54190.
42 Id. at 54217 (to be codified at 45 C.F.R. § 92.8).
45 Id. at 54202.
46 Id. at 54220 (to be codified at 45 C.F.R. § 92.301).
47 Id. at 54192.
49 Id. at 54220 (to be codified at 45 C.F.R. § 92.302(c)).
50 Id. at 54213.
Article originally published in AHLA Weekly (Sept. 11, 2015). © American Health Lawyers Association