The Office of Civil Rights (OCR) in the Department of Health and Human Services (HHS) issued a final rule on May 13, 2016, implementing Section 1557 of the Affordable Care Act (ACA). This section of the ACA applies to protected classes of individuals whose health coverage may not be denied, cancelled, limited or refused on the basis of race, color, national origin, sex, age, or disability and it builds on other federal civil rights laws to do so.
The final rule clarifies existing nondiscrimination requirements and sets forth new standards for implementation of Section 1557, particularly with respect to the prohibition of discrimination on the basis of sex in health programs and activities.
This rule is effective July 18, 2016. All provisions of the rule are effective on that day, with two exceptions. First, provisions that require changes in health insurance or group health benefits design are applicable on the first day of the plan or policy year beginning on or after January 1, 2017. Second, portions of the law that address persons with limited English proficiency are effective beginning on October 16, 2016.
The law is broad and will affect health insurance issuers and employers that receive federal financial assistance from HHS.
Section 1557 applies to health programs and activities, any part of which receives Federal financial assistance provided or made available by HHS, as well as every health program or activity administered by HHS, and any health program or activity administered by a Title I entity.
Expatriate health plans or insurers or employer plan sponsors of expatriate plans, as defined in the Expatriate Health Coverage Clarification Act (EHCCA), Medicare Part B and health programs and activities administered by Departments other than HHS are not included under Section 1557.
This article summarizes some of the more significant sections under the nondiscrimination rule. UnitedHealthcare continues to analyze the nuances of the law and will provide periodic updates. Coverage changes will apply to fully insured clients insured by covered entities. Self-funded clients should consult their own counsel to determine what is required or what changes they may wish to make beyond those required under Section 1557.
Expanded benefit design protection
Covered entities are prohibited from employing benefit design or program administration practices that operate in a discriminatory manner. While the final rule does not provide specific examples of benefit designs that would be discriminatory, HHS points to benefit designs that are potentially discriminatory, such as:
- Placing most or all prescription medications used to treat a specific condition on the highest cost formulary tiers;
- Applying age limits to services found clinically effective at all ages; and
- Requiring prior authorization or step therapy for most or all medications in drug classes such as anti-HIV protease inhibitors, and/or immune suppressants regardless of medical evidence.
Covered entities are allowed to apply neutral, nondiscriminatory medical management techniques and coverage / treatment determination guidelines. The Office of Civil Rights will perform a fact-specific inquiry to alleged benefit design discrimination.
Expanded protection for transgender individuals
Covered entities are not required to cover any specific item or service for transgender individuals. Categorical coverage exclusions or limitations for all health services related to gender transition are not allowed. Individuals may not be excluded from health programs and activities for which they are otherwise eligible based on their gender identity.
Covered entities may use nondiscriminatory limitations or restrictions on coverage. The same neutral, nondiscriminatory criteria used for other coverage determinations must be used when addressing gender transition. If certain elective procedures beyond those considered medically necessary are covered, then the same standards must apply to coverage of comparable procedures for gender transition.
The Office of Civil Rights will not second-guess a covered entity’s neutral nondiscriminatory application of evidence-based criteria used to make medical necessity or coverage determinations. But it cautions that covered entities must use a nondiscriminatory process to determine whether a particular health service is medically necessary or otherwise meets applicable coverage requirements.
Some procedures are only appropriate for individuals of one sex and, therefore, coverage is not required for individuals for whom the procedure isn’t applicable. Coverage for health services must be appropriately provided to individuals regardless of their sex assigned at birth, gender identity or recorded gender.
Meaningful access and assistance for individuals with limited English proficiency
Covered entities must provide meaningful access to individuals. Appropriate language assistance services must be accurate, timely, free of charge, and protect the privacy and independence of the individual.
Support for individuals with vision or hearing disabilities
Covered entities must take appropriate steps to ensure that communications with individuals with disabilities are as effective as communications with others in health programs and activities. Depending on the situation, support services should include qualified interpreters, information in alternate formats, and other aids to ensure equal opportunity to participate in the health program or activity. In addition, electronic and information technology, including, but not limited to websites, must comply with requirements of Title II of the ADA and be accessible to individuals with disabilities.
Section 1557 and self-funded employers
Self-funded employers’ obligations under Section 1557 are determined independent of the status of the Third Party Administrator (TPA) as a covered entity. The final rule acknowledges that TPAs are not responsible for the benefit design for the self-funded plans they administer. As such, each self-funded employer will need to evaluate their status as a covered entity under Section 1557 and other relevant laws such as Title VII of the Civil Rights Act.
Insurers covered under Section 1557 must comply with the new transgender benefit requirements.
HHS has established a website with links to fact sheets and FAQs on Nondiscrimination Section 1557.
Russell F. Caforio & Assoc., Inc.
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