Reform Alert - News from the Blues' Office of National Health Reform

The U.S. Department of Health and Human Services Office for Civil Rights issues final rule implementing Section 1557 of the Affordable Care Act on nondiscrimination in health programs and activities

July 18, 2016

On May 13, 2016, the U.S. Department of Health and Human Services Office for Civil Rights issued a final rule implementing Section 1557 of the ACA, which prohibits discrimination in health programs and activities that receive federal financial assistance on the basis of race, color, national origin, sex, age, or disability.

Note:Section 1557 is the first federal civil rights law to prohibit discrimination on the basis of sex, including gender identity, in federally funded health care programs.

Section 1557: Nondiscrimination in health programs and activities breakdown

What is the scope of the rule?

The rule’s language and requirements:

  • Apply to all health plans offered by issuers who participate in the Marketplace, and includes the issuer’s individual, small group, large group, Medicare, Medicaid, and TPA plans, which are referred to as covered entities.
  • Extend Section 1557 to traditionally excepted benefits, such as specific disease or hospital indemnity coverage.
  • Cover student health programs. These plans are also covered by Title IX, as well as other civil rights laws cited in Section 1557, as long as the institution receives federal financial assistance, such as federally subsidized student loans.

Note:The rule does not apply to expatriate health plans, expatriate health plan issuers, or employer plan sponsors of expatriate health plans as defined in the Expatriate Health Coverage Clarification Act.

What does the rule require?

Under Section 1557, anti-discrimination protections in the delivery of health care will be advanced in the following ways:

  • Discrimination is prohibited in health programs and activities on the basis of race, color, national origin, sex (including gender identity), age, or disability.
  • Protections are provided for those seeking transgendered services.
  • Communication requirements are extended to those with disabilities and those with limited English proficiency.
  • A private right to action is granted to the individual.

Are an employer’s current actions discriminatory under the terms of the rule?

  • An employer will be liable for Section 1557 discrimination in its employee health benefits when that employer receives federal financial assistance and its principle business is providing health care or health services.
  • Employers should consult with legal counsel to determine their obligations under Section 1557.

Who in health care is affected by this rule?

The prohibition against discrimination extends to health insurance issuers, health care providers including pharmacies and health clinics, and some group health plans.

  • The scope of Section 1557 includes any plan or program that receives any federal funds from the federal U.S. Department of Health and Human Services.
  • For issuers participating in the Marketplaces or receiving federal financial assistance, the rule applies the nondiscrimination provisions to most, if not all, of the issuer’s operations, including operations as third party administrator, or TPA.

The Office for Civil Rights notes that TPAs are generally not responsible for the benefit design of self-insured plans and in issues of discrimination would act accordingly.

What are the key issues addressed by this rule?

  • The rule prohibits discrimination on the basis of sex in health programs, and includes requirements related to transgender individuals.

The rule does not require plans to cover certain benefits, but does require that plans do not operate in a discriminatory manner.

  • An issuer that participates in a marketplace by offering a qualified health plan cannot discriminate in its marketplace business, in its individual market business outside the marketplace, in the group market, or even when it serves as a third-party administrator for a self-insured group plan. Although the rule does not say so, the same rule should apply to issuers that offer Medicare Advantage, Medicaid managed care, or Children’s Health Insurance Program plans.
  • The rule includes requirements for language assistance for individuals with limited English proficiency and accessibility and effective communication for individuals with disabilities.
  • The rule provides for a private right of action and damages for violations of Section 1557.

Individuals have the ability to file a lawsuit under Section 1557 without exhausting the issuer's existing grievance processes.

  • Under the rule, covered entities that are principally or primarily engaged in providing or administering health services or health insurance coverage may not discriminate in the operation of their employee health benefit programs.
  • An employer that receives federal financial assistance does not become subject to the rule simply because it offers employee health benefits if it is not otherwise involved in providing health services or insurance.

The rule does not require employers that are not involved in health services to address or amend their own discrimination policies as the rule suggests that any discrimination is such instances can be handled by existing legislation.

What is the timeframe to implement the rule?

The effective date to meet the requirements is generally July 18, 2016, with exceptions:

  • Where changes are required to health insurance or group health plan benefit design, the effective date is the first day of the plan year beginning on or after January 1, 2017.
  • The notice provisions are effective October 16, 2016.
  • Requirements for facilities access are effective January 18, 2018.

What is the grievance requirement?

Covered entities with 15 or more employees must

  • Designate a responsible employee to coordinate the entity’s compliance with Section 1557.
  • Adopt a grievance procedure for complaints related to Section 1557.

Note:Many covered entities are already required to designate a compliance coordinator and have a written process in place for handling grievances with respect to disability determination. If already designated, covered entities may use this individual to coordinate Section 1557 compliance.

The final rule specifies that enforcement mechanisms under the following laws apply for violations of Section 1557:

  • Title VI of the Civil Rights Act of 1964
  • Title IX, Education Amendments of 1972
  • Age Discrimination Act of 1975
  • Section 504 of the Rehabilitation Act of 1973

What is the notice requirement?

  • Issuers are required to post a notice regarding nondiscrimination, the availability of free language assistance services and auxiliary aids and services, as well as how to file grievance procedures regarding these accommodations.
  • The content of these notices was provided by the Office for Civil Rights in English and also includes taglines for the top 15 languages spoken in the state (based on where the plan is located).
  • The notice and associated taglines are required to be posted in significant publications, in prominent public areas and also in a prominent location on the entity’s website.
    • For significant publications and communications that are small in size, covered entities are required to post a shorter nondiscrimination statement in these documents along with a limited number of taglines.
  • The content of the notice can be combined with the content of other notices, such as those required under other civil rights laws, as long as the content clearly conveys the required notice information and separately meets any other applicable notice requirements.

What is the language requirement?

  • In addition to the required taglines in the top 15 languages in the state, a qualified translator must be available, via remote or on-site, for an individual whose primary language is not English.
  • The translator must be free of charge, accurate and timely, and protect the privacy and independence of the individual.
  • Covered entities must use a qualified translator when translating written content in paper or electronic form.

Electronic content and web-based portals subject to Section 1557

  • The final rule requires that covered entities make all health programs and activities provided through electronic and information technology accessible to individuals with disabilities, unless doing so would result in an undue financial or administrative burden, or doing so would fundamentally alter the nature of the health program or activity. This includes activities such as an online appointment system, electronic billing, and comparisons of health plans offered by a Marketplace.
  • If a covered entity determines that updating the electronic content would qualify as a fundamental alteration, the entity would then be required to supply an alternate format to the disabled individual to ensure that individual is able to receive the full benefit provided through electronic means to individuals with disabilities.
  • The rule applies to electronic information and web site content for lines of business excepted by the ACA such as dental and vision coverage.
  • Non-health related excepted benefits are covered under Section 1557 if offered by a covered entity that is principally engaged in providing health coverage.
  • Accessibility requirements are limited to health programs and activities offered through electronic and information technology that is used by consumers or other program beneficiaries.
  • Marketing materials are within the scope of Section 1557 requirements. For electronic marketing materials, if the material provides information for making informed health care of health coverage decisions, the material will be required to be accessible to individuals with disabilities.

Note:A specific technology accessibility standard has not been adopted.

Transgender services

  • The final rule prohibits discrimination based on gender identity, which may be different from the sex that was assigned at birth. Gender identity includes male, female, neither, or a combination of male and female. It also prohibits the denial of health care or health coverage based on an individual’s sex, including discrimination based on pregnancy, gender identity and sex stereotyping.
  • Covered entities must treat transgender individuals in a manner that is consistent with the individuals’ gender identity.
  • Issuers must provide health benefits to a person’s self-determined gender, which may differ from their gender at birth.
  • Issuers are still permitted to allow for neutral determinations of medical necessity in determining which procedures are medically appropriate.
  • A health service that is ordinarily and exclusively available to an individual of a particular gender must be provided to an individual with a different gender identity if the service is necessary or appropriate.
  • Gender transition services are required to be covered, however, specific procedures have not been specified.
  • The automatic or initial denial of a transgender enrollee’s claim should be considered discriminatory, even if the enrollee is able to correct the denial through the internal appeals process.

Note:Sexual orientation is not considered a protected class under Section 1557.

Sex-based discrimination

  • Women are protected from discrimination not only in the health coverage they obtain but in the health services they seek from providers.
  • Sex-specific health programs or activities are allowable only where the covered entity can demonstrate an exceedingly persuasive justification, such as, the sex-specific program is substantially related to the achievement of an important health-related or scientific objective.
  • Discrimination on the basis of sex includes but is not limited to discrimination on the basis of pregnancy, false pregnancy, termination of pregnancy, or recovery there from, childbirth or related medical conditions, sex stereotyping, and gender identity.

Nondiscrimination in health-related insurance coverage

Issuers are now prohibited from discriminating in their health coverage on the basis of sex, which now includes gender identity. This includes:

  • Denying, cancelling, limiting or refusing to issue or renew a health-related insurance plan or policy or other health-related coverage.
  • Denying or limiting coverage of a claim, or imposing additional cost sharing or other limitations or restrictions, on the basis of an enrollee’s or prospective enrollee’s sex, including gender identity.
  • Using marketing practices or benefit designs that discriminate on these bases described above.

Disability services

Issuers are now required to provide auxiliary aids and services to individuals who request such additional access. Issuers are permitted to provide any number of auxiliary aids and/or services, with deference being given to the auxiliary aid or service requested by the individual.

Accessibility standards for buildings and facilities

  • Each facility or part of a facility in which health programs or activities are conducted that is constructed or altered by a covered entity must comply with the 2010 Americans with Disabilities Act Standards for Accessible design by July 18, 2016, if the entity was covered by the 2010 ADA standards before July 18, 2016.
  • Each facility or part of a facility in which health programs or activities are conducted that is constructed or altered by a covered entity conforming with the 1991 ADA Standards or the 2010 ADA standards will be in compliance with the requirements of Section 1557 if the construction or alteration began before July 18, 2016.

No religious exemptions under nondiscrimination requirements

The final rule does not include a religious exemption. However, the nondiscrimination requirements would not apply if they violate other applicable federal statutory protections for religious freedoms.

Penalties under Section 1557

  • The existing enforcement mechanisms of the underlying legislation apply to violations of Section 1557. These include requiring covered entities to keep records and submit compliance reports to the Office for Civil Rights, conducting compliance reviews and complaint investigations, and providing technical assistance and guidance.
  • Where noncompliance cannot be corrected by informal means, enforcement mechanisms include the suspension of, termination of, or refusal to grant or continue federal financial assistance; referral to the U.S. Department of Justice with a recommendation to bring proceedings to enforce any rights of the United States; and any other means authorized by law.

Where can I find more information?

More information on the final rule can be foundhere.

The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice.As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.