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Home Employers Industry Insights Informed on Reform Health Care Reform NewsHHS Finalizes New Section 1557 Nondiscrimination Rule

Article | 16 June 2020

HHS Publishes Section 1557 Final Rule on Nondiscrimination in Health and Health Education Programs

Update: On Aug. 18, 2020, the U.S. District Court for the Eastern District of New York (EDNY) stayed the Section 1557 final 2020 rule’s repeal of the 2016 definition of discrimination on the basis of sex, posted by the Office for Civil Rights in the Department of Health and Human Services on June 19. The final 2020 rule removes protections for gender identity, sexual orientation and pregnancy status that were previously included in the 2016 rule. The 2020 rule was to become effective Aug 18, 2020, but the District Court decision ensures that the 2016 definitions of “on the basis of sex,” “gender identity,” and “sex stereotyping” will remain in effect pending further court or administrative action. However, these same 2016 definitions were the subject of a separate legal challenge, in which a stay was previously granted, preventing those definitions from taking effect. The EDNY did not address specifically whether the injunction would be national. And, because there are active cases pending in several other U.S. District Courts, further developments are expected.

The EDNY’s ruling focuses exclusively on the definition of “sex” and do not address other aspects of the rule, such as requirements related to physical and meaningful access for individuals with applicable disabilities and limited-English proficiency. Thus, the other requirements in the 2020 rule remain in effect as of Aug. 18, 2020.

On June 12, 2020, the Department of Health and Human Services’ (HHS’) Office for Civil Rights (OCR) published a prepublication version of a final rule on nondiscrimination in health programs and activities under Section 1557 of the Affordable Care Act (ACA). Section 1557 serves 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. Originally proposed in May 2019, this new final rule replaces the original final rule from 2016 and repeals or revises key provisions of that 2016 rule. The rule is effective Aug. 18, 2020, though legal challenges, particularly regarding gender identity and discrimination “on the basis of sex” following recent high court decisions, are expected that could impact when the rule takes effect.

Key provisions and updates from the 2016 rule include:

  • Repeal of prior regulation’s definition of discrimination on the “basis of sex”: The final rule repeals the 2016 rule’s expanded definition of “basis of sex” that included pregnancy termination, sex stereotyping, and gender identity. The new final rule continues to prohibit discrimination on the “basis of sex,” but under the prior interpretation of the word “sex” (i.e., as defined by gender assignment at birth). The final rule also amends regulations issued by the Centers for Medicare & Medicaid Services to ensure nondiscrimination on the “basis of sex” is consistently applied.
    • As it relates to how health benefits coverage may have been changed to comply with the 2016 rule, HHS clarifies that “nothing in this final rule prohibits a healthcare provider from offering or performing sex-reassignment treatments and surgeries, or an insurer from covering such treatments and procedures, either as a general matter or on a case-by-case basis.”
  • Narrowed scope of application: The final rule narrows the scope of application of Section 1557 so it only applies to health programs or activities, any part of which receive federal financial assistance, and any program or activity under Title I of the ACA (i.e., Exchanges) or entities established under that Title. In comparison, the 2016 final rule interpreted the regulation as applying to all operations of the covered entity, even if it is not “principally engaged” in health care.
    • This means that under the new rule, Section 1557 will generally not apply to self-funded group health plans under ERISA or short-term limited duration plans because the entities offering them are typically not principally engaged in the business of providing health care, nor do they receive federal financial assistance.
  • Removal of notice and tagline requirements: The final rule eliminates the notice and tagline provision that required covered entities to distribute nondiscrimination notices and taglines in at least fifteen languages with all “significant communications” to patients and customers.
  • Addition of a “four-factor analysis” for providing limited-English proficiency (LEP) individuals meaningful access: To ensure covered entities offer meaningful access for individuals with LEP, the final rule establishes a new four-factor analysis. The four factors include: 1) the number or proportion of LEP individuals eligible to be served, or likely to be encountered, in the eligible service population; 2) the frequency with which LEP individuals come in contact with the entity's health program, activity, or service; 3) the nature and importance of the entity’s health program, activity, or service; and 4) the resources available to the entity and costs.

For more details on the final rule, review the information at these links:

  • Read the final rule [PDF]
  • Read the HHS fact sheet [PDF]

We encourage you to bookmark Cigna's health care reform website, Informed on Reform, where we continuously update information as it becomes available.

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