Biden Administration Proposes Substantial Revisions to Health Care Nondiscrimination Rules

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On July 25, the Department of Health and Human Services (HHS) released a proposed rule interpreting Section 1557 of the Affordable Care Act (ACA), which prohibits any health program or activity that receives federal financial assistance from discriminating on the basis of race, color, national origin, sex, age or disability. Section 1557 has a lengthy and tangled history of rulemaking, reversals and legal challenges. With this proposed rule, the Biden Administration seeks to reinstate and expand upon Obama-era health care nondiscrimination regulations that were modified or eliminated by the Trump Administration and that have been repeatedly litigated in federal courts.

The expansive proposal is described as part of the Biden Administration’s agenda to advance health equity and civil rights. If finalized as proposed, this wide-ranging proposal would:

  • Broadly apply Section 1557 to all entities receiving federal financial assistance, including the following:
    • If a health insurance issuer is subject to Section 1557 with respect to any of its lines of business, it must comply with Section 1557 as to all lines of business, including any activities as a third-party administrator for employer plans;
    • For the first time, providers that receive payments for outpatient services through Medicare Part B would be subject to Section 1557’s requirements, consistent with HHS’s long-standing approach for providers that receive payments for inpatient or residential services under Medicare Part A;
  • Codify provisions that prohibit discrimination on the basis of sexual orientation and gender identity (consistent with the Biden Administration’s 2021 announcement that it would enforce Section 1557 consistent with the Supreme Court’s decision in Bostock v. Clayton County (140 S. Ct. 1731 (2020)), which held that discrimination “on the basis of sex” includes discrimination on the basis of sexual orientation or gender identity;
  • Clarify that health coverage cannot use discriminatory benefit design, provider networks or marketing, including a categorical coverage exclusion or limitation for all health services related to gender transition or certain benefit designs that give preference to institutional care over home or community living for people with disabilities;
  • Re-establish requirements for Section 1557-covered entities to distribute nondiscrimination notices and notices regarding the availability of language assistance (often referred to as “taglines”);
  • Boost requirements for assistance to limited English proficient (LEP) individuals;
  • Create a formal process through which individuals and entities subject to Section 1557 may seek an exception to the application of Section 1557 based upon federal conscience and religious freedom law;
  • Clarify Section 1557’s application to technological innovations such as telehealth, clinical algorithms and “machine translation” (i.e., language translation performed by an algorithm without human oversight);
  • Require written compliance policies and grievance procedures on Section 1557 rules; and
  • Solicit comment on how Section 1557 might apply to health plans’ provider network decisions and value assessment methodologies.

If finalized as proposed, the revised Section 1557 standards could have significant implications for patients, providers and payers, as well as third parties who contract with providers and payers for products and services like software-based clinical decision supports or translation assistance. Comments on the proposed rule will be due 60 days after the rule is published in the Federal Register, which is scheduled to occur August 4.

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