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HHS issues new proposed regulations expanding ACA non-discrimination testing

Benefits Administration and Outsourcing Solutions|Health and Benefits|Inclusion and Diversity|Total Rewards
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By Maureen Gammon , Anu Gogna and Kathleen Rosenow | August 5, 2022

The new proposed regulations affirm the Biden administration’s executive order protections against discrimination on the basis of sex — including sexual orientation and gender identity.

The Department of Health and Human Services (HHS), Office of Civil Rights (OCR) has issued long-awaited new proposed regulations revising the existing Affordable Care Act (ACA) Section 1557 regulations to address gaps in protections against discrimination. Section 1557 prohibits discrimination by covered entities on the basis of race, color, national origin, sex, age or disability in certain health programs and activities. The proposed regulations are intended to help expand access to healthcare and coverage, eliminate barriers and reduce health disparities.

Generally, “covered entities” are health programs and activities that at least in part receive federal financial assistance (FFA), as well as insurers participating in a state exchange or federally facilitated exchange and any health program funded by HHS. Section 1557 does not apply directly to employers that sponsor self-insured group health plans but do not receive FFA.

Background

When the first Section 1557 final regulations were issued in 2016, certain ambiguities lead to broad interpretations of the scope and effect. A second set of final regulations were issued in 2020, with the Trump administration proposing to rescind large portions of the 2016 regulations, including the broad definition of “on the basis of sex,” as well as the required notice of nondiscrimination and notice of the availability of language assistance services (“taglines”) in a range of communications.

A few days after the second set of final regulations were issued, the U.S. Supreme Court ruled in Bostock v. Clayton County that the definition of “on the basis of sex” includes sexual orientation and gender identity.1

New proposed regulations

The new proposed regulations affirm the Biden administration’s executive order protections against discrimination on the basis of sex — including sexual orientation and gender identity consistent with the U.S. Supreme Court’s holding in the Bostock case — and reiterate protections from discrimination for seeking reproductive healthcare services.

Among other things, the new proposed regulations:

  • Reinstate application of Section 1557 to all HHS administered health programs and activities. The 2020 regulations limited the applicability of Section 1557 to only those programs and activities conducted by HHS under the ACA. HHS believes the best reading of Section 1557 is that it covers all the health programs and activities administered by HHS, an interpretation that provides protection from discrimination to people in more programs.
  • Align sex discrimination regulatory requirements with federal court decisions. The new proposed regulations clarify that protections against discrimination on the basis of sex include protections against discrimination on the basis of sexual orientation and gender identity. This is consistent with the U.S. Supreme Court’s holding in Bostock and with HHS’ subsequent Federal Register Notice. In addition, the new proposed regulations clarify that sex discrimination includes discrimination on the basis of sex stereotypes; sex characteristics, including intersex traits; and pregnancy or related conditions, including pregnancy termination.
  • Require covered entities to have Section 1557 policies and staff training. Recipients of FFA, HHS’ health programs and activities, and state exchanges would be required to give staff clear guidance on providing language assistance services for limited English proficient (LEP) individuals, and effective communication and reasonable modifications to policies and procedures for people with disabilities. Covered entities would also be required to train relevant staff on these policies and procedures.
  • Require covered entities to provide notice of the availability of language assistance services and auxiliary aids and services. Covered entities would be required to notify annually, upon request, that language assistance services and auxiliary aids and services are available, in English and at least the 15 most common languages spoken by LEP persons of the relevant state(s). Covered entities would need to provide these notices in alternate formats for individuals with disabilities who require auxiliary aids and services. The notices would need to be placed in prominent physical locations and in a conspicuous location on their websites. The proposed regulations allow individuals to opt out of receiving an individualized notice annually.
  • Provide a clear process for covered entities to raise conscience and religious freedom objections to the application of Section 1557. OCR clarifies that when it receives a conscience or religious freedom notification from a covered entity, it will promptly consider those views in responding to any complaints or when determining whether to proceed with an investigation or enforcement. Any ongoing investigation or enforcement action would be put on hold until OCR determines whether a recipient is exempt from complying with the regulations as they stand, without modifications.
  • Clarify that nondiscrimination requirements apply to health programs and activities provided through telehealth services. Covered entities must not discriminate in the provision of health programs and activities through telehealth services. They must ensure such services are accessible to individuals with disabilities and provide meaningful program access to LEP individuals. Such services would include communications about the availability of telehealth services, the process for scheduling telehealth appointments (including the process for accessing on-demand unscheduled telehealth calls) and telehealth appointments themselves.
  • Interpret Medicare Part B as FFA. The new proposed regulations announce HHS’ position that Medicare Part B is FFA for the purpose of coverage under the federal civil rights statutes HHS enforces.
  • Reinstate protections on the basis of gender identity and sexual orientation in Centers for Medicare & Medicaid Services (CMS) regulations. The 2020 regulations amended 10 provisions in the Centers for Medicare and Medicaid Services (CMS) regulations, deleting language that prohibited discrimination on the basis of sexual orientation and gender identity. In addition, CMS proposes to amend its own regulations applying these protections in CHIP to also apply to Medicaid fee-for-service programs and managed care programs.

Section 1557 and the current regulations remain in effect, subject to any court-imposed injunction, until the proposed regulations are finalized. Public comments on the proposed rules are due 60 days after publication of the proposed regulations in the Federal Register.

Footnote

1 For more information on the Bostock case, see “Supreme Court ruling on sex discrimination issued days after final ACA 1557 regulations,” Insider, June 2020.

Authors

Senior Regulatory Advisor, Health and Benefits

Senior Regulatory Advisor, Health and Benefits

Senior Regulatory Advisor, Health and Benefits

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