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HHS Proposes to Reinstate, Revise, and Expand ACA Section 1557 Nondiscrimination Rules


· 5 minute read


· 5 minute read

Notice of Proposed Rulemaking: Nondiscrimination in Health Programs and Activities, 42 CFR Parts 438, 440, and 460; 45 CFR Parts 80, 84, 86, 91, 92, 147, 155, and 156, 87 Fed. Reg. 47824 (Aug. 4, 2022); Fact Sheet: Nondiscrimination in Health Programs and Activities Proposed Rule Section 1557 of the Affordable Care Act (July 25, 2022)

Proposed Regulations

Fact Sheet

News Release

HHS has proposed regulations reinstating, revising, and expanding prior regulations implementing 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. The prior Section 1557 regulations (which took effect in 2016 under the Obama administration) applied broadly to all health programs and activities funded or administered by HHS, including Exchange insurers—even with respect to plans and services they offered outside an Exchange or, in some instances, as third-party administrators (TPAs) for employer group health plans (see our Checkpoint article). Among other things, the 2016 regulations prohibited those insurers from denying, canceling, limiting, or refusing to issue or renew policies; using discriminatory benefit designs; denying or limiting coverage of a claim; or imposing additional cost-sharing or other coverage limitations on any of the prohibited bases. A court blocked enforcement of a portion of the 2016 regulations prohibiting discrimination based on gender identity and termination of pregnancy (see our Checkpoint article), and eventually vacated those provisions in 2019 (see our Checkpoint article).

In 2020, under the Trump administration, HHS substantially revised and reissued the Section 1557 regulations (see our Checkpoint article). The 2020 regulations repealed significant portions of the 2016 regulations considered duplicative of or inconsistent with other federal nondiscrimination rules and narrowed the regulations’ applicability so that entities not principally engaged in providing health care (such as most health insurers) are regulated only with respect to their health care activities funded by HHS (rather than their entire operations). Courts subsequently blocked enforcement of certain provisions of the 2020 regulations, including those that removed gender identity and sex stereotyping from the nondiscrimination protections, and ruled that the 2016 regulations’ more expansive definitions would remain in effect pending the outcome of the litigation (see our Checkpoint article). HHS, under the Biden administration, has now re-proposed regulations to reinstate rules based on the 2016 regulations—here are highlights:

  • Application to Insurers and TPAs. The HHS proposal would return to a broader definition of programs and activities and would clarify that many health insurers are covered entities. HHS notes that the 2016 regulations included group health plans as entities that were categorically covered; however, the proposals do not explicitly include group health plans as covered entities. HHS explains that this is because many group health plans are not recipients of federal financial assistance. HHS points out that other entities that contract with a group health plan or plan sponsor may be covered entities. For example, insurers principally engaged in providing or administering health insurance coverage would be covered for the insurance they provide to an insured group health plan and for TPA activities they provide to a self-insured health plan.
  • Discrimination on the Basis of Sex. Consistent with its 2021 Notification of Interpretation and Enforcement (see our Checkpoint article), HHS proposes to align the regulations with federal court opinions that make clear that “discrimination on the basis of sex” includes discrimination based on sexual orientation and gender identity. The proposed regulations would also clarify that discrimination on the basis of sex includes discrimination on the basis of sex stereotypes, sex characteristics, and pregnancy or related conditions, including pregnancy termination.
  • Procedures, Training, Notice Required. New rules would require covered entities to implement written civil rights policies and procedures—including grievance procedures—and train staff on their implementation and on providing required language assistance and other services. A designated “Section 1557 Coordinator” would coordinate each covered entity’s compliance efforts. Covered entities would also be required to provide an annual notice of nondiscrimination along with a notice of the availability of language assistance services to participants, beneficiaries, enrollees, and applicants of its health programs and activities.
  • Religious Exemptions. HHS asserts that it is committed to respecting federal conscience and religious freedom laws. The proposed regulations would provide a process for recipients of federal financial assistance to notify HHS of their belief that the application of Section 1557 would violate their rights under such laws. HHS proposes that it would consider those views in responding to complaints or determining whether to proceed with enforcement activity and would determine whether a recipient should receive an exemption or modification from certain provisions of the regulations.

EBIA Comment: Now in their third iteration, these regulations are full of detailed rules and explanations that may again become a lightning rod for litigation. Group health plan sponsors, insurers, TPAs, and advisors may wish to submit comments (due within 60 days of publication of the proposed regulations in the Federal Register) and will want to start studying the proposals as the rules continue to evolve at HHS and in the courts. Meanwhile, HHS emphasizes that Section 1557 and the 2020 regulations remain in effect. For more information, see EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination: Grounds Prohibited Under Federal Laws”) and EBIA’s Group Health Plan Mandates manual at Section XXI.M.1 (“Interaction of Title VII and Section 1557”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.D.5 (“Section 1557 Nondiscrimination: Nondiscrimination in Health Programs and Activities”) and EBIA’s Consumer-Driven Health Care manual at Section XXVI.E.5 (“Section 1557 Requirements”).

Contributing Editors: EBIA Staff.

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