Note: This newly issued rule is not related to the pending ACA rules regarding nondiscrimination in eligibility and benefits for insured group health plans. Those rules have not yet been issued.

As explained below, this nondiscrimination rule affects health care services and will apply to virtually all major health insurance carriers and the policies they underwrite, as well as most health care providers. Therefore, while most employers do not need to take any action to be compliant, employers should be aware of the rule’s effect on health care services employees may receive.

In May 2016, the Department of Health and Human Services (HHS), Office for Civil Rights (OCR) issued the Nondiscrimination in Health Programs and Activities final rule (final rule) implementing Section 1557 of the ACA. Section 1557 prohibits federally-funded health care services from discriminating against individuals on the basis of race, color, national origin, sex, age, and disability. The law has been in effect and enforced since the ACA was enacted in March 2010. The final rule interprets and codifies the existing law and establishes some new provisions, primarily regarding discrimination “on the basis of sex”. The effective date of the final rule is July 18, 2016. However, if compliance requires a health plan to make benefit design changes, the final rule will be applicable to those plans on the first day of the plan year on or after January 1, 2017.

Section 1557 applies only to health programs and activities funded in any part through federal financial assistance, or administered by HHS or an entity created by Title I of the ACA. The term “health program or activity” includes any health-related service, insurance or other coverage, and assistance provided to individuals to get health services or insurance coverage. For example, the following health programs or activities must comply with Section 1557:

  • Health services provided by hospitals, doctors’ offices, and clinics, etc. that accept Medicare or Medicaid payments;
  • State-based or federally-facilitated Marketplace services, including Navigator assistance;
  • Insurance coverage through insurance carriers that sell Marketplace coverage;
  • Children’s Health Insurance Program (CHIP) and other similar programs that receive federal financial aid;
  • Employee health benefit programs of any of the above employers; and
  • Any employee health benefit program that receives federal financial assistance, but not including benefits from the Credit for Small Employer Health Insurance Premiums.

Section 1557 will therefore apply to virtually all major health insurance carriers, and all health policies that they underwrite, since the carriers currently sell Marketplace coverage in at least one state, and plan to continue to do so into 2017.

Self-insured plans would not be subject to the law unless the employer receives federal financial assistance either to fund their employee benefits plan or as part of the employer’s principal business of providing or administering health services, health insurance coverage, or other health coverage. A third-party administrator (TPA) of self-insured plans might be subject to the law if the TPA either receives federal financial assistance or is under common ownership and control of an insurance carrier that does. However, the law’s coverage of a TPA does not extend that coverage to the self-insured plans it administers. The TPA must operate in a non-discriminatory manner, but would still administer plan benefits consistent with each plan’s benefit design, even if the design might be discriminatory according to the final rule.

The final rule explains individual rights for protection, as well as the responsibilities and restrictions on providers and insurers in order to ensure those rights. These rights include providing individuals with protection from discrimination based on:

National origin, through accessibility provisions to assist individuals with limited English proficiency (LEP).

  • Entities must take “reasonable steps” to ensure they can provide “meaningful access” to individuals with LEP that are “eligible to be served or likely to be encountered”.
  • Language assistance, if necessary for meaningful access, must be accurate, timely, and at no cost. Also, it must be provided through qualified multilingual staff or qualified language assistance services and in a manner that protects the individual’s privacy and independence.

Disability, through accessibility provisions to assist individuals with disabilities.

  • Entities must take “appropriate steps” to ensure that they can provide communications that allow for “meaningful access” to all disabled individuals. This may include providing auxiliary aids or services appropriate for individuals with impaired sensory, manual, or speaking skills.
  • Entities must make reasonable changes to correct any disability discrimination in existing policies, practices, and procedures.

Sex, which includes gender and gender-identity, through coverage provisions to ensure treatment accessibility by transgender individuals. (Note that insurance policies purchased in D.C. became subject to similar regulations in 2013.)

  • Individuals must be treated consistent with their gender identity; however, it is not permissible to deny, impose additional costs on, or restrict access to health services on the basis of an individual’s gender identity or assigned sex at birth.
  • It is not permissible to categorically exclude all gender transition health services from health insurance or other health coverage.
  • Health insurance or other health coverage may not deny, limit, or restrict coverage of a specific health service if doing so results in discrimination against a transgender individual.

Additionally, there are initial and continuing notice requirements to ensure that beneficiaries, enrollees, applicants, and general members of the public are aware that an entity’s program or activity is subject to the law. Each entity providing or administering a program or activity that is subject to Section 1557 is required to post a notice and taglines in significant publications and communications by October 16, 2016. A sample notice and tagline was included in the final rule.

Please feel free to contact your Keller account team or your legal advisor if you have questions or concerns about how this affects your organization.