HHS Issues Final Rule on Section 1557: Implications for Health Plans | Morgan Lewis – ML Benefits

The U.S. Department of Health and Human Services (HHS) recently issued final regulations implementing Section 1557 of the Patient Protection and Affordable Care Act, which will restore and expand patient civil rights protections.

As background, Section 1557 protections were added by regulations promulgated by HHS during the Obama Administration in 2016. Section 1557 prohibits discrimination on the basis of race, color, national origin, age, disability, or sex and applies to all health care programs and activities, that receive federal financial assistance (including Medicare Part B payments), state-based health insurance exchanges (and all plans offered by issuers that participate in such marketplaces that receive federal financial assistance), and HHS health programs and activities (such as Medicare Part D). Entities subject to the regulations are known as “covered entities.” The primary purpose of Section 1557 is to ensure nondiscriminatory access to health care.

In June 2019, the Trump administration repealed and replaced much of the 2016 regulations, saying they exceeded legislative authority or were unnecessary and redundant. This action led to HHS publishing a revised version of the regulations in June 2020. These new final regulations, which will take effect July 5, 2024, are intended to “advance equity and reduce health care disparities” and essentially reinstate the 2016 regulations and expand them to provide greater protections.

We outline the impact on group health plans and the key modifications and actions related to the Section 1557 final regulations.

Impact on group health plans

Employers themselves are generally not covered entities, but the group health plans they sponsor may include covered entities for federal financial assistance, for example by receiving funds under the Medicare Retiree Drug Subsidy Program.

Many clients who sponsor self-funded plans do not receive any direct federal financial assistance and therefore will not be directly subject to Section 1557 or these final regulations. However, these self-funded plans may be indirectly affected if a third-party administrator (TPA) or insurer that provides services to the plan is determined to be a covered entity under Section 1557.

Key modifications and action items

• LGBTQTI+ protection
  • Pursuant to a 2011 United States Supreme Court ruling Bostock v. Clayton CountyThe Final Regulations state that protection against discrimination on the basis of sex includes protection against discrimination on the basis of sexual orientation and gender identity, including discrimination based on sex stereotypes; sex characteristics, including intersex characteristics; and pregnancy or related medical conditions.
  • However, the final regulations do not require covered entities to cover a specific health service for the treatment of gender dysphoria in any individuals. They prohibit them from excluding categories of services for LGBQTI+ people in a discriminatory manner.
• Nondiscrimination requirements apply to programs and activities provided through telehealth services
  • The final regulations clarify that covered entities may not discriminate in the implementation of health programs and activities delivered through telemedicine services.
• Annual Notice of Nondiscrimination
  • Covered entities must annually post the notice of nondiscrimination in a conspicuous place on the entity’s website, if any, and in conspicuous physical locations, in no smaller than 20-point sans serif font where it can reasonably be expected to be visible and read. HHS has provided notice templates that can be used to meet this requirement. The first notification must be submitted within 120 days from the date of entry into force of the final regulations, i.e. by November 2, 2024.
• Language and disability assistance
  • Covered entities must actively inform citizens that patients have access to free language assistance services and additional aids and services.
  • Notices must also ensure effective communication with people with disabilities, be prominently displayed and on websites, be available upon request and be included with specific communications.
  • Programs offered via telehealth must be accessible to people with limited English proficiency as well as to people with disabilities.
  • Notifications of the availability of language assistance services are required annually in English and at least the 15 languages ​​most commonly used by persons with limited English proficiency in the state or states in which the covered entity operates. Notices must also be provided conspicuously on the covered entity’s website and in conspicuously visible physical locations in a font size of not less than 20 point sans serif where persons seeking the service can reasonably be expected to be able to see or hear the notices, and in certain specified communications, including the Annual Notice of Nondiscrimination, HIPAA Notice of Privacy Practices, and Notices of Denial or Termination of Eligibility, Benefits or Services (EOB, Notice of Appeal and Complaint Rights). The first notification must be submitted within one year from the date of entry into force of the final regulations, i.e. by July 5, 2025.
• The use of AI in healthcare
  • The final regulations provide that all nondiscrimination principles apply to all patient support tools, including artificial intelligence (AI).
  • Providers must take proactive steps to identify and mitigate any instances of discrimination in support and AI tools.
• Conscience protection
  • The final rule provides that their application will not be necessary if it would violate federal protections of religious freedom and conscience.
• Appointment of Section 1557 Coordinator and Adoption of Grievance Procedure
  • Covered entities that employ 15 or more persons must designate at least one employee to coordinate the responsibilities of Section 1557.
  • Covered entities with 15 or more employees must also implement written complaint procedures and maintain the confidentiality of the identity of the person who filed the complaint.
  • The coordinator will be appointed and the complaints procedure will be adopted within 120 days from the date of entry into force of the final provisions, i.e. by 2 November 2024.
• Policies and Procedures; Staff Training
  • Covered entities must implement policies and procedures to ensure compliance with the updated regulations in Section 1557, including ensuring that personnel are trained on the policies and procedures designed to improve compliance.
    • The policies and procedures must be submitted within one year of the effective date of the final rule, i.e. by July 5, 2025.
    • Training must be documented.
    • Training is required after a covered entity has implemented policies and procedures, but no later than one year after the effective date of the final regulations on July 5, 2024.

Action Items for Group Health Plan Sponsors

• Determine whether you are a covered entity and, if so, ensure you are taking action to meet the applicable deadlines set forth in the regulations, which begin as early as July 5, 2024.
• If you are not directly subject to Section 1557, consider whether any third-party administrators are subject to Section 1557 and will impose any requirements or restrictions on the administration of your group health plan as a result of their obligation to comply.
• Plan sponsors should also consider reviewing their health plans for any discriminatory provisions that may violate other federal laws, such as Title VII of the Civil Rights Act, the Americans with Disabilities Act of 1990 and the Mental Health Parity Act.

If you have any questions regarding Section 1557 or these final regulations, please contact one of the authors of this blog post or another Morgan Lewis contact.