In May 2024, the Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) and the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule under Section 1557 of the Affordable Care Act (ACA). This is the part where you ask… “what is Section 1557?” So, to properly add a little background:
Section 1557 of the Affordable Care Act prohibits health programs and activities that receive federal financial assistance as well as state-based health insurance Exchanges and health programs and activities of the Health and Human Services agency (together, covered entities) from discriminating on the basis of race, color, national origin, disability, age, or sex.
After the ACA became law in 2010, HHS was charged with Section 1557 enforcement, and the OCR issued regulations implementing this aspect of the law on May 18, 2016. Fast forward three years to June 14, 2019, where HHS, under the Trump Administration, published a Section 1557 notice of proposed rulemaking (NPRM) looking to rescind and replace large portions of the 2016 rule. The contention was that the 2016 regulations exceeded Section 1557’s legislative authority and/or were unnecessary and duplicative. The revised Final Rule was published in the Federal Register in June of 2020. Under this iteration of the regulations, Section 1557 was narrowed to exclude sex stereotyping, gender expression, and gender identity. It also limited the definition of covered entities to those that received federal financial assistance and were principally engaged in the business of providing healthcare. This effectively meant that carriers and third-party administrators (TPAs) that offered coverage in a state’s marketplace would be subject to Section 1557 regarding their metallic-level plans, but that the same carrier or TPA providing administrative services to a self-funded group health plan would not be.
In August 2022, another NPRM was issued that expanded covered entities to resemble the 2016 Final Rule. These regulations do not expressly include group health plans as covered entities subject to Section 1557, but they treat carriers that (1) sell individual or group policies on a state marketplace or (2) that offer Medicare Advantage plans or Medicare supplement policies as covered entities subject to Section 1557 when providing Administrative Services Organization (ASO) functions.
In July of 2022, the Biden Administration issued a new Notice of Proposed Rulemaking which has led us to this new Final Rule that was issued on May 6th, 2024.
The Final Rule restores Section 1557 protections against discrimination based on sexual orientation, gender identity, and disability, as well as religious objections. It also further expands the reach of the Rule to Part B Medicare providers, private health insurance plans, and the use of AI patient decision-making tools.
It also imposes additional substantive and procedural requirements, including establishing a set of robust notice and related requirements aimed at persons with limited English proficiency (LEP) and individuals with disabilities.
Highlights from the new Final Rule include:
While it appears that the final regulations do not apply to most group health plans, they will apply to most carriers and TPAs. As such, the Final Rule will apply indirectly to most group health plans. Plan sponsors and administrators would be wise to carefully review their plan designs and operations to ensure compliance by the July 5th, 2024, effective date.
Covered entities must comply with the nondiscrimination in health insurance coverage and other health-related coverage (non-benefit design) provisions by the first day of the first plan year beginning on or after January 1, 2025, for health insurance coverage or other health-related coverage that was not subject to nondiscrimination requirements when the rule was published. Additionally, covered entities must comply with the nondiscrimination in health insurance coverage and other health-related coverage (benefit design) provisions by the first day of the first plan year beginning on or after January 1, 2025.
As with most, if not all regulations, it would behoove covered entities to begin to prepare to provide the required notices of nondiscrimination and language assistance in the 15 most common languages spoken in the State in which the entity is located or does business. This is a strict requirement in the Final Rule.
Additionally, the Final Rule requires covered entities with 15 or more employees to designate a “Section 1557 Coordinator” and implement grievance procedures. The Section 1557 Coordinator is required to coordinate the covered entity’s compliance with its responsibilities under Section 1557 in its health programs and activities, including the investigation of any grievances for noncompliance.
The Final Rule indicates OCR will enforce the requirements of the final rule according to the mechanisms provided under Title VI, Title IX, Section 504, and the Age Act. These enforcement mechanisms include:
Again, the Final Rule will be effective July 5, 2024. However, the OCR acknowledged that covered entities may need additional time to come into compliance with the requirements of the Final Rule and thus, provided a delayed applicability date of no later than 300 days following the effective date of the rule.
MZQ Consulting is prepared to answer any questions or concerns you may have.
