Section 1557 of the Affordable Care Act (“ACA”) establishes a broad prohibition on discrimination on the basis of race, color, national origin, sex, age or disability in health programs and activities. After almost 3 years of rulemaking activity, the Department of Health and Human Services(“HHS”) Office for Civil Rights (“OCR”) issued its final rule implementing Section 1557 of the ACA (the “Final Rule”), which will be codified in 45 C.F.R. Part 92. Essentially, the Final Rule prohibits insurers and health care providers from refusing to treat or insure, or otherwise discriminating against, an individual because that individual is a member of a protected class.

The rule contains a number of significant provisions, but providers and issuers will want to be particularly aware of the following new or expanded requirements:

• Sex discrimination, including discrimination against transgender people, is prohibited; the scope of prohibited discrimination is broad, and the interest in enforcement of this prohibition may be high in the current political climate. The Final Rule expressly requires facilities (including bathrooms) to be made available on a non-discriminatory basis.

• Single sex programs (including treatment programs and research projects) receiving Federal dollars must have an “exceedingly persuasive justification” and be “substantially related” to achieving an important health or scientific purpose.

• Entities subject to the Final Rule must provide notice of non-discrimination and information about the accessibility of foreign language assistance and assistance for persons with disabilities.

Except for certain instances where health insurance issuers have been given more time, the provisions of the Final Rule go into effect on July 18, 2016.

Entities Subject to the Final Rule

Pursuant to Section 92.2 of the Final Rule, “every health program or activity, any part of which receives Federal financial assistance or made available by” HHS is subject to the Final Rule. All tax credits and subsidies made available by HHS to individuals purchasing insurance through the exchanges are included in the definition of “Federal financial assistance” in Section 92.3 of the Final Rule. Additionally, for entities principally engaged in providing health services or health insurance, all of those entities’ activities are defined within “health program or activity.”  The effect of these two definitions is that the Final Rule’s provisions apply to all activities of every issuer of plans sold on a state or federally-facilitated exchange, and to all activities of all providers, provider groups, and hospitals that accept Medicare or Medicaid patients.

Substantive Provisions of the Final Rule

The prohibitions on discrimination in the Final Rule build on a well-established body of federal non-discrimination law, but OCR has provided significant guidance regarding the application of Section 1557 and the Final Rule to issuers and health care providers subject to the Final Rule (“Covered Entities”) in a number of areas.

Protections for Insureds

Covered Entities that issue health insurance coverage are prohibited from engaging in any of the following activities on a discriminatory basis (on the basis of race, color, national origin, sex, age, or disability):

• Denying, cancelling, limiting, or refusing to issue health insurance coverage.

• Denying or limiting claims, or imposing additional cost-sharing or other limitations or restrictions on coverage.

• Using discriminatory marketing practices or benefit designs.

Sex Discrimination

• Covered Entities must provide equal access to health programs and activities without discrimination on the basis of sex. Men and women must be treated equally. This includes discrimination on the basis of sex stereotyping, consistent with existing federal law.

• Discrimination on the basis of pregnancy, false pregnancy, termination of pregnancy, or conditions related to pregnancy is prohibited.

• Discrimination on the basis of gender identity, including exclusions or limitations on care for gender transition or the treatment of gender dysphoria or gender identity disorder, is prohibited. Additional cost-sharing or other limitations or restrictions on gender identity-related care are prohibited if they result in discrimination against a transgender person.

• Individuals must be treated consistently with their gender identity, including in access to facilities (e.g., restrooms), but access to treatments ordinarily or exclusively available to persons of one gender may not be denied on the basis that a person seeking such services identifies as another gender.

• Sex-specific programs are permissible only with an “exceedingly persuasive justification.” This means that a program must be substantially related to the achievement of an important health or scientific goal.

• The Final Rule does not explicitly prohibit discrimination on the basis of sexual orientation, but OCR evaluates complaints of sexual orientation discrimination to determine if they involve sex stereotyping and are thus subject to Section 1557.

Access for Individuals with Limited English Proficiency

• Consistent with existing federal law, the Final Rule requires Covered Entities to take reasonable steps to provide meaningful access to individuals with limited English proficiency. Such reasonable steps might include provision of oral language assistance or written translations.

• Covered entities must post a notice and taglines regarding communication assistance for individuals with limited English proficiency in the top 15 languages spoken in the entity’s state. OCR has translated a simple non-discrimination notice and taglines into dozens of languages, and makes those translations available on its website.

• OCR prohibits the use of “low-quality video remote interpreting services” and unqualified staff as interpreters or translators.

• OCR encourages Covered Entities to develop a “language access plan” and takes the development of such a plan into account when enforcing the Final Rule and Section 1557.

Access for and Communications with Individuals with Disabilities

• Covered Entities must ensure that communications with individuals with disabilities are as effective as communications with others.

• Covered Entities must make appropriate communication aids and services, such as alternative document formats and sign language interpreters, available as necessary.

• Generally, electronic communications and services must be accessible to individuals with disabilities (except if such access would impose an undue burden or fundamentally change the nature of the communication or service).

• Marketing activities and benefit designs that discriminate on the basis of disability are prohibited.

Religious and Conscience Objections

The Final Rule does not include or create any new exceptions for religious entities or individuals, or any other rules of conscience that would apply specifically to Covered Entities. However, the Final Rule does not displace or impact existing protections for religious freedom, including provider conscience laws, the Religious Freedom Restoration Act, or ACA provisions and related regulations relating to abortion services.

Implementation Timeline

In general, the Final Rule is effective 60 days after it was published in the Federal Register, which means most provisions are effective on July 18, 2016. However, HHS and OCR recognize that some plan designs and features of insurance coverage, such as covered benefits, exclusions or limitations, and cost-sharing mechanisms, may be difficult to change mid-year.  Accordingly, Covered Entities that are health insurance issuers have until the first day of the first plan year beginning on or after January 1, 2017 to make changes to health insurance plans necessary to comply with the Final Rule.