HHS Releases Health Care Nondiscrimination Final Rule

Section 1557 Background & Prior Regulations

Section 1557 of the ACA provides protections against discrimination in health care programs and activities based on:

• race,
• color,
• national origin (including limited English proficiency and primary language),
• sex (including pregnancy status and related conditions, sexual orientation, gender identity, sex stereotypes, and sex characteristics, including intersex traits),
• age, and
• disability.

Section 1557 generally applies to health care providers, including doctors’ practices and hospitals that receive Federal financial assistance, as well as health insurers receiving Federal financial assistance and the health insurance Marketplaces. It also applies to both in-person and telehealth care.

OCR’s Section 1557 prior rules and guidance have been subject to various lawsuits, dating back to 2016 when the initial Section 1557 regulations were first promulgated. These lawsuits have generally concentrated on two primary issues outlined below:

1. Which health programs and activities are subject to Section 1557’s nondiscrimination requirements; and
2. Whether sex discrimination includes discrimination based on gender identity, sexual orientation, and termination of pregnancy.

Notably, the Section 1557 final regulations from 2020 did not include gender identity and pregnancy termination in the definition of sex discrimination. Moreover, health insurers were generally not subject to Section 1557 requirements under these 2020 regulations.

2024 Final Section 1557 Rule Highlights

The final rule expands the scope of the 2020 final regulations clarifying the following:

• Health Insurers. The final rule confirms that Section 1557 applies to health insurers receiving Federal financial assistance and all HHS-administered health programs and activities.
  • Federal financial assistance includes receipt of Medicare Parts C and D payments, as well as state Medicaid agencies.
  • This provision recognizes the significant role health insurance plays in the provision of health care, and the final rule provides clear nondiscrimination standards for the industry in general.
• Sex discrimination. Section 1557 protections against sex discrimination include discrimination on the basis of sexual orientation and gender identity, as well as sex stereotypes, sex characteristics, and pregnancy or related conditions.
  • This provision provides clear and explicit protections for lesbian, gay, bisexual, transgender, queer, or intersex (LGTBQI+) patients, in accordance with the U.S. Supreme Court’s holding in Bostock v. Clayton County.
  • This provision also includes two notable clarifications on high-profile medical care topics detailed below:
    • Abortion: The preamble to the final rule provides that “a covered provider, including a pharmacy, does not engage in discrimination prohibited by Section 1557 if it declines to provide abortions based on religious or conscience objections to performing the procedure, based on a professional or business judgment about the scope of the services it wishes to offer, or for any other nondiscriminatory reason.”
    • Gender-affirming care: The final rule does not mandate coverage of gender-affirming care. Rather, it prohibits health insurers, state Medicaid agencies, and other covered entities from excluding categories of services in a discriminatory way. Coverage must be provided in a neutral and nondiscriminatory manner.
      
      The preamble to the final rule states that “Section 1557 requires that health care providers who receive Federal financial assistance must provide nondiscriminatory care. However, providers do not have an affirmative obligation to offer any health care, including gender-affirming care, that they do not think is clinically appropriate or if religious freedom and conscience protections apply.”
      
      This provision appears to require that medical providers who provide care that could be appropriate for persons seeking gender-affirming care (e.g., breast reconstruction surgery) extend those services to such persons unless they have a sincerely held religious objection or unless they believe it is not clinically appropriate.
• Language assistance & auxiliary aids. Covered entities under the final rule, including providers, health insurers, and HHS-administered programs, must inform patients that language assistance services and auxiliary aids are available at no cost if needed.
  • The notice must be provided in the top 15 languages spoken by individuals with limited English proficiency (LEP) in the relevant state(s) where the entity operates. Click here for the OCR-prepared sample notices in English and 47 other languages.
  • The notice must be communicated to individuals with disabilities as effectively as they are to individuals without disabilities.
  • The notice must be displayed in prominent locations both physically and on the covered entities’ websites, and must be made available upon request.
• Telehealth services. Section 1557 nondiscrimination requirements apply to health programs and activities provided through telehealth services. Telehealth services must be accessible to individuals with disabilities and provide meaningful program access to people with limited English proficiency (LEP).
• Patient care decision support tools. Covered entities under the final rule, including providers, health insurers, and HHS-administered programs, are required to take steps to identify and mitigate discrimination when they use patient care decision support tools.
  • Patient care decision support tools that use input variables or factors that measure race, color, national origin, sex, age, or disability must be carefully identified, and covered entities must make reasonable efforts to mitigate the risk of discrimination from the use of these tools. This is especially important given the proliferation of the use of artificial intelligence (AI) clinical algorithms and predictive analytics in health programs and activities. This provision of the final rule serves as HHS’ response to President Biden’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.
• Policies and training. Covered entities under the final rule, including providers, health insurers, and HHS-administered programs, are required to implement policies and training to improve compliance.
  • These requisite policies must provide language assistance services for people with LEP and include effective communication and reasonable modifications for people with disabilities.
• Religious freedom and conscience. The final rule reaffirms that a covered entity may rely on applicable Federal protections for religious freedom and conscience, and any provisions under this final rule are not required when such protections apply.
  • The final rule also includes an administrative process for covered entities to seek an assurance of exemption in writing from OCR.
• Employee health benefits. The final rule does not apply to employers’ employment practices, including the provision of employee health benefits. The preamble to the final rule states that “single employers that are plan sponsors of single employer group health plans and joint boards of trustees or similar bodies, associations, and other groups that are plan sponsors of multiemployer Taft-Hartley plans or multiple employer welfare arrangements (MEWAs) do not become covered entities under the rule due to their employment practices, including the provision of employee health benefits.” The rule can apply directly to certain types of employer-sponsored plans, however, if employers receive Federal financial assistance for offering those plans. Those include:
  • Retiree Drug Subsidy (RDS): The preamble to the final rule confirms that while employers and other plan sponsors who receive Retiree Drug Subsidy (RDS) payments from the Centers for Medicare & Medicaid Services, which is considered Federal financial assistance, are not subject to this final rule, the underlying benefit offering/health plan would be.
  • Employer Group Waiver Plans (EGWPs): Similarly, EGWPs are plans offered by employers to Medicare-eligible retirees through Medicare Advantage. While employers offering such plans would not directly be subject to Section 1557, the EGWP would be.

Effective Date

This Section 1557 final rule will be effective on July 5, 2024. However, effective dates vary for certain provisions of the rule.

Employer Impact

Other than with respect to the narrow instances detailed above, this Section 1557 final rule does not directly impact most employers outside of the health care industry who sponsor group health plans for their employees as it is considered an employment practice not subject to Section 1557, as detailed above. Rather, health plan insurers and third-party administrators (TPAs) that receive Federal financial assistance will be subject to the final rule and will be required to comply with the provisions highlighted above.

As such, employers will likely experience the downstream effects of this final rule by virtue of their carriers and TPAs being subject to the rule and responsible for compliance.

While employers are encouraged to become familiar with the provisions highlighted above, they can generally defer to their plan carriers and TPAs for full compliance with the final rule.

It’s worth mentioning that the preamble to the final rule includes extensive commentary with respect to self-insured plan TPAs being held liable for discriminatory plan design features. The preamble to the final rule states that if a plan’s discriminatory terms originated with a covered TPA, rather than with the plan sponsor, the TPA could be liable for the discriminatory design feature under Section 1557.

However, the preamble also provides that “where the alleged discrimination relates to the benefit design of self-insured group health plan coverage that did not originate with the covered [TPA], but rather with the plan sponsor or the group health plan, and where the [TPA] played no role in the development of the plan’s benefit design, OCR will refer the complaint to the EEOC or DOJ for potential investigation.”

Employers sponsoring self-insured group health plans are advised to discuss this particular concern with their specific TPA and benefits counsel.

It is also important to reiterate that while Section 1557 rules may not commonly apply to employer group health plan sponsors, Title VII of the Civil Rights Act of 1964 does. Title VII imposes similar requirements to the protections afforded under Section 1557.

Reach out to your Risk Strategies team members with any questions or contact us directly at benefits@risk-strategies.com.