Summary

On Friday, May 13, 2016, the US Department of Health and Human Services Office for Civil Rights finalized regulations that provide explicit protections from discrimination on the basis of gender identity in health care and insurance under Section 1557 of the Affordable Care Act.  

In Depth

On Friday, May 13, 2016, the US Department of Health and Human Services (HHS) Office for Civil Rights (OCR) finalized regulations that provide explicit protections from discrimination on the basis of gender identity in health care and insurance under Section 1557 of the Affordable Care Act (ACA).  The Nondiscrimination in Health Programs and Activities final rule, effective July 18, 2016, and the first day of the first plan year beginning on or after January 1, 2017, for group health plans, health insurance and individual policies, prohibits health care providers and insurers, including self-funded group health plans and third-party administrators, from denying health care based on gender identity or denying treatment or access to facilities for sex-specific ailments.  There are differing effective dates for activities such as, posting notices of consumer rights and taglines; accessibility standards for buildings not previously covered by the Americans with Disabilities Act; and design changes to health coverage.  The final rule also provides protections for individuals with disabilities and for individuals with limited English proficiency.  OCR stated that its intent in promulgating this rule is to provide consumers and covered entities with a set of standards that will help them understand and comply with the requirements of Section 1557.

Application to Covered Entities and Employee Health Benefit Programs

Section 1557 covered entities may include hospitals, health clinics, health insurance issuers, state Medicaid agencies, community health centers, physician’s practices and home health care agencies.  The rules also apply to employee health benefits of certain employers that receive federal financial assistance and are principally engaged in health care (e.g., nursing homes).  Only the employees who work for these health programs would be covered by the rule.  Covered entities may not discriminate in the operation of their employee health benefit programs.  The nondiscrimination provision applies to all health insurance issuers that are recipients of Federal financial assistance, which includes premium tax credits and cost sharing reductions associated with coverage offered through the Health Insurance Marketplaces or Medicare Parts A, C and D payments. 

Employee Health Benefit Programs

Not all self-insured group health plans are subject to the rule.  Employee health benefit programs also include employer-sponsored wellness programs, health clinics and long-term care coverage.  The nondiscrimination provision extends to employers who as plan sponsors receive federal financial assistance to fund their employee health benefit programs; however, an employer that otherwise receives federal financial assistance does not become subject to the rule simply by offering employee health benefits.  However, an employer does not become subject to the rules just because its self-insured health plan’s third-party administrator is covered.  Therefore, most self-funded private-sector medical plans will not be subject to this rule. 

Third-Party Administrators

There is no per se exclusion for third-party administrators.  There is a distinction between entities that only serve as third-party administrators, and entities that serve both in the role of an insurer and a third-party administrator.  The final rule provides that an issuer that receives federal financial assistance is principally engaged in providing health insurance and also provides third-party administrator services is subject to Section 1557.  The regulators did not agree with Commenters’ assertion that employers of group health plans may have an incentive to contract with a third-party administrator that is operated by an entity that does not receive federal financial assistance.  Third-party administrators are only liable for their own discriminatory actions based on decisions that are within the scope of their authority, such as discriminatory claims denials.  A discriminatory plan design would be the liability of the self-insured group health plan, with OCR reviewing whether the third-party administrator and the self-insured group health plan are legally separate on a case-by-case basis.   

Religious Exemption

The final rule does not include a religious exemption; however, OCR has stated that the final rule does not displace existing protections for religious freedom and conscience.

Gender Identity and Gender Transition

The proposed rule issued in September 2015 prohibited any health insurance company that participates in the Health Insurance Marketplaces from denying individuals health care or coverage based on their gender identity.  The final rule makes clear that transgender individuals must be treated consistent with their gender identity and cannot be denied care otherwise available, even when the care is transition-related care. 

The final rule requires covered entities to provide individuals equal access to its health programs or activities without discrimination on the basis of sex and to treat individuals consistent with their gender identity.  The rule further states that a covered entity may not deny or limit health services that are ordinarily or exclusively available to individuals of one sex to a transgender individual based on the fact that the individual’s sex or gender is different from the one to which such health services are ordinarily or exclusively available.  This means that, for example, a person identifying as male who was assigned ‘female’ at birth cannot be denied treatment or insurance coverage otherwise available for ovarian cancer. 

While the final rule does not require insurers to cover all gender transitioning services, covered entities, including insurers, are prohibited from categorically excluding or limiting all health services related to gender transition.  The rule does not define ‘‘health services related to gender transition.’’  OCR intends to interpret these services broadly on the basis that medical care in this area will continue to evolve.

Other Accessibility Issues Addressed

The final rule requires ACA-covered entities to make electronic information and newly constructed or altered facilities accessible to individuals with disabilities and to provide appropriate auxiliary aids and services for individuals with disabilities.  Additionally, ACA-covered entities are required by the final rule to take reasonable steps to provide meaningful access to individuals with limited English proficiency, and are encouraged to develop language access plans.

Covered entities are required to post notices of nondiscrimination and taglines that alert individuals with limited English proficiency to the availability of language assistance services.  The posting of the notice can be placed on the covered entity’s home page by including a link in a conspicuous location that immediately directs the individual to the content of the notice elsewhere on the website.  Translated sample notices and taglines are available from OCR in 64 languages.  The final rule requires posting in at least the top 15 non-English languages spoken in the state in which the entity is located or does business.  For small-sized significant communications, the final rule requires posting of nondiscrimination statements and taglines in at least the top two non-English languages spoken by individuals with limited English proficiency in the state.  Sample notices are available on the HHS website.

Implementation of Grievance Procedures and Appointment of Compliance Coordinator

The final rule requires covered entities with 15 or more employees to have a grievance procedure and a compliance coordinator with respect to Section 1557 violations, and provides a model grievance procedure.  Entities with fewer than 15 employees are not required to implement grievance procedure or appoint a compliance coordinator.

Conclusion

Compliance with the final rule requires covered entities, including employers offering employee benefit health programs who are subject to the rule, to take immediate action to ensure compliance with Section 1557 and the final rule.  Health and welfare plan documents must be revised to address discriminatory provisions, including blanket exclusions of gender transition services.  Employers are advised to document the implementation of the required grievance procedure and the appointment of a compliance coordinator.  Communications regarding health and welfare benefits subject to the final rule should be revised to include the nondiscrimination statement and required taglines in the appropriate non-English languages.  Enforcement actions for noncompliance can range from OCR reviews and investigations to actions by the Department of Justice and civil actions against covered entities by subjects of violations.