Final Rule: Nondiscrimination in Health Programs and Activities, 45 CFR Part 92, 81 Fed. Reg. 31375 (May 18, 2016); Section 1557: Frequently Asked Questions (May 2016)
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HHS has finalized regulations implementing health care reform’s Section 1557 which prohibits discrimination in certain “health programs and activities” on the basis of race, color, national origin, sex, age, or disability. Section 1557 applies broadly to a wide variety of federally assisted entities, but these final regulations apply only to health programs and activities funded or administered by HHS. Notably, this draws in federal and state Exchanges (including Small Business Health Option Programs (SHOPs)) and the insurers that participate in them. The final regulations confirm that the rules generally apply to Exchange insurers even with respect to the plans and services they offer outside the Exchanges or, in some instances, as third-party administrators (TPAs) for employer group health plans. The rules also apply to employee health benefits of certain employers that receive federal financial assistance and are principally engaged in health care (e.g., hospitals and nursing homes).
The regulations prohibit Exchange 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. Among other things, the final rules explain that sex discrimination includes discrimination on the basis of gender identity and clarify that Exchange insurers may not deny or limit coverage for health services that are ordinarily or exclusively available to individuals of one gender because an individual’s sex assigned at birth, gender identity, or recorded gender is different than the one to which the services are ordinarily or exclusively available. (For example, a covered insurer that generally provides coverage for pelvic exams may not deny coverage to an individual who identifies as a transgender man or is enrolled in the health plan as a man.) And categorical coverage exclusions or limitations for health services related to gender transition are per se discriminatory. The final regulations also require Exchange insurers to provide individuals with notice of their rights, in “significant publications” and “significant communications” (among other places), with taglines alerting individuals with limited English proficiency to the availability of language-assistance services. Sample notices are available on the HHS website.
The final regulations make clear that an employer does not become covered by the rules just because its self-insured health plan’s TPA is covered. However, recognizing that TPAs generally do not control the design of the self-insured health plans they administer, HHS explains that it will only process a complaint against a TPA where the alleged discrimination is related to the TPA’s own administration of the plan. If the alleged discrimination relates to the benefit design of the plan, HHS will instead proceed against the employer/decisionmaker if it has jurisdiction over the employer (e.g., a hospital that is covered under the rules). Where HHS lacks jurisdiction, it may refer the matter to the EEOC.
EBIA Comment: Although these regulations are generally effective July 18, 2016, additional compliance time is allowed for required design changes to health coverage, for which the applicability date is the first day of the first plan or policy year beginning on or after January 1, 2017. Employers will want to discuss the impact of the regulations with their health insurers and TPAs, as the rules may have a wide-ranging effect on group health plan design and TPA services provided to employers by Exchange insurers. For more information, see EBIA’s Health Care Reform manual at Section XXXIV.A (“Nondiscrimination Protection: Grounds Prohibited Under Federal Laws”); see also EBIA’s Self-Insured Health Plan manual at Section XIII.D (“Benefits Must Not be Discriminatory”) 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.