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HHS Finalizes Sweeping Changes to Section 1557 Regulations

08.25.2020

The Department of Health and Human Services (HHS) recently finalized federal regulations narrowing the agency’s previous interpretation of Section 1557 of the Affordable Care Act (ACA). Sec. 1557 prohibits discrimination in certain health care programs and activities on the basis of race, color, national origin, sex, age or disability.

A brief history

Regulations implementing Sec. 1557 originally took effect in July 2016. The regs apply to some retiree medical plans as well as health care programs and activities funded or administered by the HHS. This includes Health Insurance Marketplace (or “exchange”) insurers — even with respect to the plans and services they offer outside a Health Insurance Marketplace or, in some instances, as third-party administrators for employer group health 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. These provisions were eventually vacated in October 2019.

Highlights of final regs

The HHS issued new proposed regulations in May 2019, and the proposals have now been finalized with “minor and primarily technical corrections.” Here are some 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 the HHS (rather than their entire operations, as under the previous regulations). The regulations also don’t apply to employer-sponsored group health plans that don’t receive funding from the HHS and aren’t principally engaged in the business of providing health care.

Scope of civil rights laws. The HHS has repealed significant portions of the regulations that it considers duplicative of, or inconsistent with, regulations implementing Titles VI and IX of the Civil Rights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 previous regs 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 Sec. 1557 will be enforced consistent with federal religious freedom protections and health care conscience protections (for example, the ACA’s protections concerning abortion and assisted suicide).

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. Rather, the new regs require “reasonable steps” to ensure meaningful access for individuals with limited English proficiency.

Supreme Court decision

Advocacy groups that immediately announced plans to challenge the Sec. 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.

Although 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 whether the HHS will take any action in response to the Court’s decision or if the regulations will be the subject of ongoing litigation.

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