Back and Forth to the Future: HHS Issues Proposed Rules on Nondiscrimination

The Department of Health and Human Services (HHS) has issued proposed regulations under the nondiscrimination provisions of Section 1557 of the Affordable Care Act (ACA). The propose rules revisit familiar ground, restoring and augmenting a number of the nondiscrimination requirements in regulations that were published in 2016, but later stripped away in rules published in 2020.

Section 1557 generally prohibits certain entities from discriminating on the basis of race, color, national origin (which raises the subject of discrimination based on English language proficiency), sex, age, and disability. It applies to health programs and activities that receive federal financial assistance and to health programs administered by an “Executive Agency” (all versions of the regulations limit their scope to HHS) or an entity established under certain provisions of the Affordable Care Act. The rules are grounded in other civil rights laws. However, where the 2020 regulations generally view Section 1557 as limited to those laws, the new proposed rules see Section 1557 as providing an independent prohibition against discrimination.  

The changes in the proposed rule include:

• Expansion of rules on sex discrimination. The change that has received the most attention is the expansion of the rule prohibiting discrimination on the basis of sex. The 2016 regulations defined sex discrimination to include discrimination on the basis of sex stereotyping and gender identity. The 2020 regulations removed the definition of “on the basis of sex” and narrowed application of the provisions, but at least two courts found that change to be contrary to the Supreme Court’s Bostock decision , which found discrimination on the basis of sexual orientation and gender identity to violate federal civil rights rules under Title VII. The new proposed regulations restore, broaden, and sharpen the 2016 provisions, extending the prohibition against sex discrimination to apply to sexual orientation, gender identity, sex stereotypes, and sex characteristics (including intersex traits), and pregnancy. The new regulations also restore specific rules–similar to those in the 2016 regulations – that address how these rules on sex discrimination apply to health insurers, health plans, and health care providers.
• Expansion in the entities covered by Section 1557. The proposed rules broaden the entities that will be subject to the Section 1557 nondiscrimination requirements. First, where the 2020 regulations merged health programs administered by HHS into those administered under certain ACA provisions (which essentially meant ACA health insurance exchanges), the proposed rules also apply to other health programs and activities administered by HHS. Second, under the proposed rule, health insurers will once again be subject to the requirements if they receive financial assistance from HHS. Third, under a new interpretation, Medicare Part B funds will be regarded as federal financial assistance, and providers receiving Medicare Part B funds will be subject to the rules.   
• Revision of notice requirements. The notice requirements under the 2016 regulations presented one of the more tangible compliance obligations for entities subject to Section 1557. The 2016 regulations required all significant publications to include notices with taglines about the availability of language assistance in the most common foreign languages (typically 15 of them) in a particular state. The 2020 regulations eliminated this notice requirement. The proposed rules aim at a compromise. They include two notice requirements. A notice of nondiscrimination meeting certain content requirements must be provided once per year and on request. It must also be posted conspicuously in an appropriate physical location and on the applicable website, if any. A notice of the availability of language assistance services and auxiliary aids for those with disabilities needs to meet similar requirements, but must also be provided with specifically identified publications, including the notice of nondiscrimination (above), the HIPAA notice of privacy practices, explanations of benefits (EOBs), handbooks, and communications that require a response from an individual. This second notice must be provided in English and in the 15 most common foreign languages in the relevant state or states. It also must be available in an alternative format, as needed to accommodate disabilities.
• Changes in internal operations. Entities covered by Section 1557 must establish written policies and procedures and conduct training in those policies and procedures. The policies and procedures must state that the entity will not discriminate; address certain language access, communication, and reasonable modification procedures; and–if the entity has at least 15 employees–set forth a grievance procedure. HHS is expected to publish sample policy and procedure documents. Entities must also conduct training for those responsible for the policies and procedures and those who implement them in their interactions with patients and plan participants. If an entity has 15 or more employees, it must also designate a Section 1557 coordinator with broad responsibilities that include (at least oversight of) the implementation of certain compliance measures and the handling of grievances.
• New areas. The regulations introduce certain new requirements that require facilities and telehealth services to be accessible and that prohibit discrimination in the use of clinical algorithms in making decisions.
• Religious accommodations. The proposed rules establish a procedure for certain entities to obtain a determination from HHS that they are exempt from certain requirements in the regulations or entitled to a modification of those rules based on a federal conscience or religious freedom laws.

The issuance of these regulations is not a particular surprise. The Biden Administration has long signaled that it would be revising the Section 1557 regulations, and they are likely to remain largely intact when they are finalized. Health care providers, insurers, and plan sponsors should determine whether they are subject to the new rules and consider the changes that they will need to make to comply, particularly to the extent that they made changes based on the 2020 regulations. Most of the rules will likely take effect within a few months of being finalized, although health plans and insurers that are subject to the new rules will have at least an additional year to make revisions affecting plan design.

Ballard Spahr attorneys in the Employee Benefits and Executive Compensation and Health Care Practice Groups advise plan sponsors and plan administrators on how to navigate these ever-changing health care laws. Please contact us if you have questions.

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