On May 13, the Office of Civil Rights (OCR) of the Department of Health and Human Services (HHS) issued a final rule implementing section 1557 of the Affordable Care Act. The rule finalizes a proposed version issued in September of 2015, analyzed in this blog at that time. The final rule was accompanied by a press release, summary, and series of fact sheets.

Section 1557 of the ACA provides that an individual shall not, on the basis of race, color, national origin, sex, age, or disability, be

  • excluded from participation in,
  • denied the benefits of, or
  • subjected to discrimination under

any health program or activity of which any part receives federal financial assistance, or any program or activity that is administered by an agency of the federal government or any entity established under Title I of the ACA (the private insurance reform and affordability title). The prohibited grounds for discrimination are specified by Title VI of the Civil Rights Act of 1964 (Title VI) (race, color, national origin), Title IX of the Education Amendments of 1972 (Title IX) (sex), the Age Discrimination Act of 1975 (Age Act) (age), and Section 504 of the Rehabilitation Act of 1973 (Section 504) (disability). Section 1557 does not apply to discrimination based on religion.

Section 1557 has been in effect since 2010 when the ACA became effective. There have been several court decisions and enforcement actions based on section 1557. The Office of Civil Rights (OCR), which is charged with enforcing section 1557, issued a request for information to assist in drafting regulations in 2013. But HHS is only now, six years after the ACA was adopted, finally implementing regulations. The requirements of the rule will be effective as of July 18, 2016, except for provisions affecting health insurance plan benefit design, which will not take effect until the first day of the first plan year beginning on or after January 1, 2017.

The Scope Of The Rule

This post offers an overview of some of the most important or controversial provisions of the final rule. The regulation is sweeping in its coverage and scope. It applies to,

  • all health programs and activities that receive federal financial assistance through HHS, including Medicaid, most Medicare, student health plans, Basic Health Program, and CHIP funds; meaningful use payments (which sunset in 2018); the advance premium tax credits; and many other programs;
  • health programs and activities administered by HHS, including the federally facilitated marketplace (FFM); and
  • health programs and activities administered by entities established under Title I of the ACA, such as state based marketplaces or navigator programs.

Although the scope of the rule is broad, however, it is narrower than section 1557 itself, which applies to all health programs or activities receiving federal financial assistance, including programs not funded through HHS. Other federal agencies are encouraged to apply the standards set out in the proposed rule for their own enforcement activities.

Federal financial assistance is defined broadly to include grants, loans, credits, subsidies, and insurance contracts, and to cover not only funds but also services or transfers of real or personal property. Under this definition, health insurers that receive premium tax credits or cost-sharing reduction payments for enrollees receive federal financial assistance, but providers that they pay in turn do not thereby receive assistance (although most of these providers probably receive federal assistance in other forms, such as Medicare or Medicaid).

The rule does not apply to physicians who participate only in Part B, although it does cover all physicians who receive Medicaid or meaningful use information technology (IT) funding (which ends in 2018).

Health programs or activities are also broadly defined to include the provision of health-related services or insurance coverage and the provision of assistance in securing services or coverage. Federally funded medical research is subject to the antidiscrimination prohibition, but the preface recognizes that nondiscriminatory research protocols may exclude certain populations because of the nature of the research.

The regulatory analysis concludes that about 900,000 physicians, most of the practicing physicians in the United States, will be covered. HHS also estimates that the rule will cover 133,343 facilities, such as hospitals, home health agencies and nursing homes, through their participation in Medicare and Medicaid; 445,657 clinical laboratories that receive Medicaid; 1300 community health centers; 40 health professional training programs; Medicaid and public health agencies in each state and the territories; and at least 180 insurers that offer qualified health plans.

Language Requirements For Notices And Publications

The final rule requires covered entities to file an assurance of compliance form. They must also  “take appropriate initial and continuing steps to notify beneficiaries, applicants, and members of the public”:

  • that they do not discriminate on the basis of race, color, national origin, sex, age, or disability in its health programs and activities;
  • that they will provide appropriate aids and services without charge and in a timely manner, including qualified interpreters, for people with disabilities;
  • that they will provide language assistance including translated documents and oral interpretation free of charge and in a timely manner.
  • how to obtain aids and services;
  • how to contact the employee responsible for compliance;
  • about the availability of a grievance procedure; and
  • how to contact OCR to file a discrimination complaint.

This information must be posted in conspicuous physical locations where the entity serves the public, on its website, and in significant publications and communications targeted at enrollees, applicants, and members of the public.

OCR will provide the content of this notice in English and in the top 15 non-English languages of any state, 64 languages in total. Translations of a sample notice and taglines are available at the HHS website.

Notices and significant publications and communications provided by covered entities must have also have taglines in the top 15 non-English languages in the entity’s state. Small-sized significant publications of a covered entity, such as postcards and trifolds, must have an abbreviated nondiscrimination statement and taglines in the top two non-English languages in the state. The rule contains a sample notice in an appendix. Notice requirements will be discussed further in a subsequent post.

The proposed rule required covered entities with 15 or more employees to designate an employee responsible for compliance and to adopt a grievance procedure. The final rule adopted this proposal and declines to require smaller employers to meet these requirements. The rule includes a model grievance procedure.

The General Discrimination Prohibition

The final rule includes a general prohibition against discrimination on a prohibited basis—race, color, national origin, sex, age, and disability—followed by a prohibition against specific forms of discrimination, and finally followed by a list of specific exceptions to the prohibition. The specific prohibitions require that covered entities comply with the particular regulations governing each of the specific forms of discrimination covered by the proposed rule.

The rule does not attempt to harmonize the treatment of the different forms of discrimination covered by the rule, but rather incorporates the law as it has developed under each of the prohibitions incorporated in 1557. The rule clarifies, however, that 1557 also reaches intersectional discrimination involving more than one form. Prohibited discrimination includes various forms of harassment that create a hostile environment. The rule also prohibits discrimination against an individual based on a relationship or association with a member of a protected class.

The final rule’s discrimination prohibition does not apply to discrimination by a covered entity against its employees except insofar as the prohibition addresses employee health benefit programs (see below). Section 1557 is not a general prohibition against discrimination, but rather prohibits discrimination in health programs and activities. It also does not apply to age distinctions permitted or required by federal, state, or local statutes or ordinances, such as the 3:1 age rating permitted by the ACA. It does not prohibit health status discrimination, which is prohibited by other federal and state laws.

Discrimination Against Persons with Limited English Proficiency

In addition to the proposed rule’s general prohibition against discrimination and specific prohibitions based on specific categories of discrimination, it also includes prohibitions against specific areas of discrimination where significant issues have arisen in health programs and activities.

The first of these is discrimination against individuals with LEP. An individual with LEP is an individual whose primary language for communication is not English and who has limited ability to read, speak, write, or understand English (even if he or she has some capacity to do so). Twenty-five million individuals in the United States, 8.5 percent of the population, have LEP. Failing to take reasonable steps to provide meaningful access to language assistance services is a form of national origin discrimination (which is defined in the rule to include not just an individual’s place of origin but also his or her ancestor’s place of origin, as well as manifestation of the physical, cultural, or linguistic characteristics of a national origin group).

HHS has applied and will continue to apply a flexible standard in requiring language access in consideration of the particular facts of a situation. This standard is based on two principles. The first is recognition that safety and quality in health care requires clear communication between patients and providers. Clear provider-patient communication is essential for patient centeredness. The second principle, however, is that the level, type, and manner of language assistance is dependent on the relevant facts, which may include the operations and capacity of the covered entity. Covered entities must take reasonable steps to provide meaningful access for each LEP individual eligible to be served or likely to be encountered in their health programs and activities.

The proposed rule provided a list of relevant factors to consider in determining whether language obligations had been met in a particular case. The final rule deletes these, recognizing that the list might be erroneously considered to lay out the only relevant factors. The final rule focuses rather on the nature and importance of the health program or activity and the particular communication and “other relevant factors.” The only relevant factor listed is whether or not the entity had an effective and appropriate written language access plan, although the rule does not explicitly require a language access plan.

LEP individuals cannot be required to provide their own interpreters. Language assistance services must be provided in a “timely manner,” but the final rule does not include prescriptive timeframes. Covered entities must use qualified translators and interpreters and may not rely on staff to interpret who do not meet the definition of “qualified bilingual/multilingual staff.”

The final rule tightens up definitions of qualified bilingual/multilingual staff to clarify that they must be proficient in English and at least one other spoken language, including the use of specialized vocabulary, and be able to communicate effectively, accurately, and efficiently. The final rule also defines the terms “qualified interpreter for an individual with limited English proficiency,” “qualified interpreter for an individual with a disability,” and “qualified translator” to clarify the qualifications required.

Covered entities may also not usually rely for interpretation on friends or family of individuals, who may well not be competent interpreters and who should often not be privy to sensitive information. The rule makes exceptions for the use as interpreters of adult friends or family in emergency situations or when requested by the individual and otherwise appropriate, and for minor children in emergencies. The final rule provides standards for video remote interpreting services.

Limited English proficient individuals can decline the services of an interpreter, but providers may still use language services to assist their communication with a patient. Covered entities do not need to honor the gender preferences of patients in providing interpreters.

The final rule does not set thresholds for the number of languages for which written translation or oral interpretation must be provided, other than those described earlier for notices and taglines. HHS also declines to adopt recommendations that it harmonize various federal language nondiscrimination rules or deem compliance with the language requirements of other programs as sufficient for compliance with 1557.

Discrimination Against Persons with Disabilities

The final regulation requires effective communications with individuals with disabilities, incorporating longstanding Department of Justice interpretations of the requirements of federal law. The rule incorporates standards under Title II of the Americans with Disabilities Act, which apply to state and local government, rather than the lower standards of Title III, which govern public accommodations.

Covered entities must provide auxiliary aids and services to individuals with impaired sensory, manual, or speaking skills regardless of the number of people the entity employs. The rule requires facilities in which health activities are conducted to conform to ADA 2010 accessible design standards if they are constructed or altered by or on behalf of federal fund recipients or state-based marketplaces and the construction or alteration was commenced on or after the effective date of the rule. If the facility was not covered by the 2010 standards prior to the effective date of the rule, it must comply with the 2010 standards if construction is commenced after January 18, 2018.

Facilities constructed or altered in conformity with the 1991 or 2010 ADA standards or, for facilities not covered by the 1991 or 2010 standards, the Federal Accessibility Standard, are deemed to comply with 1557 if construction or alternation was commenced on or before the effective date of the rule. Once access standards are promulgated for medical diagnostic equipment, those will also apply. These standards only apply to facilities or parts of facilities used by customers or other program beneficiaries.

Covered entities must also ensure that their health programs and activities provided through electronic or information technology are accessible to individuals with disabilities unless doing so would impose undue financial or administrative burdens and would result in a fundamental alteration in the nature of the program or activity. If compliance would cause an undue burden or fundamental alteration, the covered entity must provide information in another format that will to the maximum extent possible ensure that individuals with disabilities have access to services or benefits.

The rule does not adopt specific technology accessibility standards. Section 1557 also prohibits unnecessary segregation of individuals with disabilities.

Sex, Gender, And Sexual Orientation

Section 1557 extended to health care the sex discrimination prohibition of Title IX, which previously applied to education. Articulating what this prohibition means in the health care context is an important focus of the rule. Sex discrimination is defined to include discrimination on the basis of pregnancy, false pregnancy, termination of pregnancy or recovery from it, childbirth, or sex stereotyping (including the stereotype that an individual must identify as either male or female).

The final rule prohibits discrimination based on gender identity, which may be different from the sex assigned to an individual at birth. Gender identity is defined in the final rule to include identity as “male, female, neither, or a combination of male and female.” Covered entities must treat transgender individuals consistently with their own gender identity. An individual has a transgender identity if the individual’s identity is different from the sex assigned to the individual at birth.

The only exception to the gender identity nondiscrimination requirement is this: If a health service is ordinarily and exclusively available to an individual of a particular gender, that service must be provided to an individual with a different gender identity if the service is necessary or appropriate. For example, a covered entity cannot deny treatment for ovarian cancer for a transgender male who would benefit from the treatment.

Resolving Two Issues Left Open In The Proposed Rule: Sexual Orientation Discrimination And Exceptions To The Sex and Gender Discrimination Prohibition

A major issue left open by the proposed rule was whether the final rule would prohibit discrimination based on sexual orientation. The final rule does not resolve whether sexual orientation discrimination is as such a form of sex discrimination prohibited by 1557. It rather states that OCR will evaluate complaints that allege sex discrimination based on sexual orientation to determine whether they involve discriminatory stereotyping of sexual attraction or behavior. The preamble states that HHS supports prohibiting sexual orientation discrimination as a policy matter and will continue to monitor legal developments. It also notes that sexual orientation discrimination by health insurance marketplaces and insurers offering qualified health plans is already prohibited.

The final rule does not prohibit single-sex toilet, locker rooms, or shower facilities as long as comparable facilities are provided regardless of sex. It does note, however, that individuals may not be excluded from facilities for which they are otherwise eligible based on their gender identity. Sex-specific programs are only permitted with an “exceedingly persuasive justification,” such as the scientific need to limit participation in a clinical trial to a particular gender.

The proposed rule also left open the question of whether the rule should recognize exceptions to the discrimination rule, for example based on religious belief. The final rule provides that where application of any requirement of the rule would violate applicable Federal statutes protecting religious freedom and conscience, that application will not be required. These would include, for example, the Religious Freedom Restoration Act, the provisions of the ACA related to abortion services, and the regulations issued under the ACA with respect to preventive services.

Discrimination By Insurers

A specific section of the proposed rule applies to discrimination in the provision of health insurance and related coverage. Under this provision, an insurer that participates in a marketplace by offering a qualified health plan or that otherwise receives federal funding—for example through Medicare parts A, C, or D—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. The rule extends to excepted benefits, such as specific disease or hospital indemnity coverage, offered by covered insurers, even though excepted benefits are not otherwise subject to the ACA

The prohibition applies to denying, cancelling, limiting, or refusing to issue or renew health-related coverage because an enrollee belongs to a protected category, and the use of marketing or benefit designs that discriminate on these bases. It does not, however, prohibit marketing practices designed to reach out to underserved populations. It also does not prevent the use of reasonable medical management practices.

The rule explicitly prohibits discrimination by insurers against transgender individuals or in the provision of gender transition services. Section 1557 also prohibits insurers from discriminating against providers for prohibited reasons. The rule does not specifically address covered benefits or network adequacy requirements. Programs that comply with rules governing qualified health plans or employee wellness programs will not necessarily be deemed to comply with section 1557 requirement.

A covered insurer that provides third party administrator services for a self-insured employer plan is subject to the 1557 rule. If the entity is legally separate from an insurer that receives federal assistance, OCR will engage in a case-by-case analysis to determine whether the third party administrator is subject to the rule. This determination would depend on whether the entity was truly legally separate or whether the purpose of the separation was a subterfuge for discrimination.

Covered third-party administrators are only liable for their own discriminatory actions, not those of the health plan that they administer. A third-party administrator would thus be liable for discriminatory denial of claims, but not for the plan’s discriminatory benefit design. This is consistent with the May 11 holding in Tovar v. Essentia Health and Health Partners. The health plan would only be liable under 1557 if it was otherwise subject to the rule, as described below.

Discrimination In Employee Health Benefit Programs

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. The nondiscrimination provision also applies to employers that receive federal financial assistance to fund their employee health benefit programs and health service or coverage operations of employers that are not primarily engaged in health care. (Thus, under the final rule employee benefit programs of state Medicaid programs are subject to Section 1557’s requirements, but benefit programs covering other state workers are not.)

An employer that otherwise 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. A small employer that receives a small employer tax credit through a SHOP marketplace is not subject to the rule because the tax credit does not come through HHS.

Employee health benefit programs include insured and self-insured plans, employer- provided or employer-sponsored wellness programs, employer-provided health clinics, and long-term care coverage provided or administered by an employer, group health plan, third party administrator, or health insurer. Wellness programs are covered as an employee health benefit program whether or not they are part of the employer’s health benefit plan.

Enforcement

OCR will enforce  section 1557 using the procedures applicable to Title VI of the Civil Rights Act, except that the procedures of the Age Act will be used with respect to age discrimination and the procedures used to enforce section 504 will be used in enforcement actions against HHS itself. If an entity fails to provide OCR with requested information in a timely manner, OCR can find noncompliance and use appropriate enforcement procedures, including suspension or termination of funding.

Retaliation by the Department against individuals who assert their rights under 1557 is prohibited. Good faith is not a defense to a compliance action although OCR has discretion to efforts entities have taken to maintain and achieve compliance.

Individuals may sue directly under section 1557 in federal court. HHS has concluded, consistent with the decision of Rumble v. Fairview Health Services, that section 1557 provides a new, health-specific, anti-discrimination cause of action subject to a single standard, regardless of the plaintiff’s protected class status. The preamble concludes, therefore, that an individual can bring a private action based on disparate impact discrimination even though a disparate impact claim would not be available for the specific form of discrimination under the underlying statutory prohibition.

The final rule also clarifies that compensatory damages are available in 1557 actions. Attorneys’ fee and class action rules that apply under the underlying statutes also apply to 1557 claims.

Other Developments

While the 1557 regulation was the focus of attention on May 13, the Centers for Medicare and Medicaid Services was also busy. CMS announced that it is again sending out periodic data matching notices to consumers enrolled in both 1) marketplace premium tax credits or cost-sharing reduction payments and 2) Medicaid or CHIP to tell them to come back to the marketplace and end their coverage. A second failure to reconcile warning notice is being sent to consumers who attested on their 2016 applications that they filed a 2014 return and reconciled their 2014 APTC but who in fact did not do so; the notice warns them that their 2016 APTC will be terminated if they do not file and reconcile for 2014.

CMS also released a sample employer notice that will be used to inform certain employers if an employee has enrolled in Marketplace coverage with financial assistance claiming lack of affordable and adequate employer coverage.

Finally, on May 13, 2016, the D.C. Circuit federal court of appeals rejected a challenge to the administration’s transitional policy allowing the continuation of non-ACA compliant plans. The court held that the plaintiffs in American Freedom Law Center v. Obama had not been injured by the policy and thus did not have standing to challenge it.