HHS Finalizes Sweeping Changes to Section 1557 Nondiscrimination Regulations

HHS has finalized regulations narrowing the agency’s previous interpretation of Affordable Care Act (ACA) Section 1557, which prohibits discrimination in certain health programs and activities on the basis of race, color, national origin, sex, age, or disability. Regulations implementing Section 1557 originally took effect in July 2016 (see our Checkpoint article) and apply to health programs and activities funded or administered by HHS, including Exchange insurers—even with respect to the plans and services they offer outside an Exchange or, in some instances, as third-party administrators for employer group health plans—and some retiree medical plans. In December 2016, a federal trial court issued a nationwide preliminary injunction blocking enforcement of the portion of the regulations prohibiting discrimination based on gender identity and termination of pregnancy (see our Checkpoint article), eventually vacating those provisions in October 2019 (see our Checkpoint article). HHS issued new proposed regulations in May 2019 (see our Checkpoint article), and the proposals have now been finalized with “minor and primarily technical corrections.” Here are highlights:

• Narrowed Applicability. The regulations’ applicability is narrowed so that entities not principally engaged in providing health care (such as most health insurers) are regulated only to the extent their health care activities are funded by HHS (rather than their entire operations, as under the prior regulations). The regulations also do not apply to employer-sponsored group health plans that do not receive funding from HHS, and are not principally engaged in the business of providing health care.
• Scope of Civil Rights Laws. HHS has repealed significant portions of the regulations that it considers duplicative of, or inconsistent with, regulations implementing Titles VI and IX of the Civil Rights Act of 1964 and other federal nondiscrimination rules. Notably, the regulations repeal portions of the prior regulations that defined discrimination “on the basis of sex,” to include discrimination based on gender identity or termination of a pregnancy. The regulations also add a provision stating that Section 1557 will be enforced consistent with federal health care conscience protections (e.g., the ACA’s protections concerning abortion and assisted suicide) and religious freedom protections.
• Repeal of Notices and Taglines. The regulations eliminate the requirement that all “significant communications” include nondiscrimination notices and “tagline” translation notices in at least 15 languages, instead requiring “reasonable steps” to ensure meaningful access for individuals with limited English proficiency.

EBIA Comment: Advocacy groups that immediately announced plans to challenge the Section 1557 regulations in court will likely be encouraged by the U.S. Supreme Court’s landmark decision that Title VII’s prohibition of employment discrimination “because of sex” applies to discrimination based on sexual orientation or gender identity (see our Checkpoint article). While the Court’s decision is limited to employment actions under Title VII, its rationale would seem to apply to other nondiscrimination statutes (such as Titles VI and IX) that prohibit discrimination “because of” or “on the basis of” sex. It remains to be seen if HHS will take any action in response to the Court’s decision, or if the regulations will be the subject of ongoing litigation. For more information, see EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination Provisions: Grounds Prohibited Under Federal Laws”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.D.5 (“Section 1557 Nondiscrimination: Nondiscrimination in Health Programs and Activities”), EBIA’s Consumer-Driven Health Care manual at Section XXV.G.5.e (“Section 1557 Requirements”), and EBIA’s Group Health Plan Mandates manual at Section XXI.A (“What Is Title VII, as Amended by the PDA, and Who Must Comply?”).

Contributing Editors: EBIA Staff.