The ACA and Discrimination: What You Need to Know to Comply with Section 1557
On May 18, the U.S. Department of Health and Human Services (HHS) and the Office of Civil Rights (OCR) published a final rule for implementing ACA Section 1557, which prohibits discrimination in health care plans and activities. Section 1557 has been in effect since the ACA was implemented in 2010, but the new regulations provide extensive clarification and guidance for organizations that are impacted by the rule and help to solidify ACA transgender health care.
Patients and health plan enrollees of organizations subject to Section 1557 cannot be discriminated against on numerous grounds — including sex, which encompasses pregnancy, termination of pregnancy, gender identity or sex stereotyping. Health plans and employers subject to Section 1557 cannot refuse coverage or treatment based on gender identity discrimination, and the regulation specifically forbids discrimination against transgender individuals.
Covered Entities Under Section 1557
Section 1557 applies to an organization's patients/enrollees as well as the organization's employee health benefit program.
Organizations whose purpose is providing health care, health insurance or other health services, including hospitals, clinics, hospices, nursing facilities, health insurance carriers and health insurance exchange subsidies, and who receive federal financial assistance via HHS are covered under Section 1557. That includes organizations that receive federal financial assistance to fund their self-insured employee health benefit programs, regardless of the nature of their business.
If an insurer receives federal funding, all of its coverage must be compliant with Section 1557, not just the lines of business that receive federal funding. That includes the insurer's role as a third-party administrator (TPA) for self-insured plans.
Self-insured organizations that use a TPA are not considered covered entities simply because their TPA is a covered entity, however. Furthermore, organizations that receive federal funding for other aspects of their business are not considered covered entities if they don't receive federal funding for their employees' health plan.
Many self-insured employee health plans are thus not subject to Section 1557. But HHS and OCR caution that other anti-discrimination regulations (Age Act, ADA, Civil Rights Act, etc.) would still apply.
Finally, organizations engaged in multiple operations, which include both providing health care, health insurance, etc., as well as other unrelated services are covered by Section 1557. In this case, if the organization receives federal financial assistance from HHS for the health-related aspects of its business, employees in that sector only would be covered under Section 1557.
If your organization is not in the health care or health insurance industry and has a self-insured health plan for which it receives no federal funding, your third-party administrator (TPA) — if you use one — may still be subject to Section 1557. If so, the regulation impacts their administration of the plan (handling of claims, for example), but not the plan design itself, if it's created by your organization rather than the TPA. OCR will review complaints in situations like this on a case-by-case basis.
If your organization is a covered entity, you'll need to ensure that your health plan and/or patient interactions don't discriminate on the basis of sex, gender identity, sex stereotyping, race, color, national origin, age or disability. Most aspects of compliance must be in place by July 18, 2016. But for compliance involving changes to health plan benefit designs, you have until the first day of the plan year beginning on or after January 1, 2017. Section 1557 does not require covered entities to cover any specific medical procedures, including those related to ACA transgender health care; however, the determination of whether coverage/care will be provided must be made in a neutral, non-discriminatory manner.
By October 16, 2016, all covered entities must provide notification of their Section 1557 compliance to their employees, patients, health plan enrollees and the public. HHS has provided a sample notification of nondiscrimination statement. Your notification must be displayed prominently on all significant communications and enrollment materials, as well as within the organization's physical location and on its website. The tagline for the notification must be available in the top 15 languages in the state. HHS has translated versions of the sample notice and tagline available in 64 languages.
If you have 15 or more employees, you should designate an employee who'll be responsible for ensuring compliance with Section 1557, and also establish a grievance procedure that employees or patients can utilize if necessary. HHS has provided a sample grievance procedure.
Section 1557 builds on previous civil rights laws, including the Civil Rights Act, Title IX, Section 504 and the Age Act. But Section 1557 is the first federal regulation that protects against sex-based discrimination in all health plans and health activities that receive federal funding. Organizations have had six years to get used to the requirements of Section 1557, and OCR has been enforcing the non-discrimination provisions throughout that time. This new guidance from OCR and HHS helps employers, health insurers and health care providers understand exactly what's required of them going forward.