Reform Alerts - News from the Blues' Office of Health Reform

Office for Civil Rights issues proposed rule implementing Section 1557 of the Affordable Care Act on nondiscrimination in health programs and activities

December 9, 2015

On Sept. 8, 2015, the Office for Civil Rights published a proposed rule implementing Section 1557 of the ACA which prohibits discrimination in health programs and activities on the basis of race, color, national origin, sex (including gender identity), age, or disability.

Note: Section 1557 is the first law to prohibit sex discrimination in health care programs.

What is the scope of the proposed rule?
As written, the proposed rule’s language and requirements applies to all health plans offered by issuers who participate in the Marketplace, including individual, small group, large group, Medicare, Medicaid, and TPA plans.
What does the proposed 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 proposed 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 proposed rule? 
  • Section 1557 applies currently existing federal law to the delivery and operation of health care activities and programs.
  • Section 1557 does not create new anti-discrimination regulations.
  • In many instances, most businesses and plans will likely already be in compliance with the terms of the proposed language.

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 Department of Health and Human Services.
  • For issuers participating in the Marketplaces or receiving federal financial assistance, the proposed rule applies the nondiscrimination provisions to most, if not all, of the issuer’s operations, including operations as third party administrator, or TPA.

What are the key issues addressed by this rule?

  • The proposed 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 proposed 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 proposed 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 requirements of the rule will be effective 60 days after a final rule is issued, except for the notice provisions, which are effective 90 days after the rule is issued.

What is the notice requirement?

90 days after the effective date of the final rule, issuers would be 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 will be provided by the Office for Civil Rights in English and will also include taglines for the top 15 languages spoken nationally.

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.

Where can I find more information?

More information from the OCR can be found here.

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.