The US 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 the scope of civil rights protections for patients.

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 any health 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 the Medicare Part D program). Those subject to the regulations are known as “covered entities.” The primary goal of the Section 1557 regulations is to ensure nondiscriminatory access to healthcare.

In June 2019, the Trump administration rescinded and replaced large portions of the 2016 regulations, saying that they exceeded legislative authority or were redundant and unnecessary. These actions resulted in HHS publishing a revised version of the regulations in June 2020. These new final regulations, which will take effect on July 5, 2024, aim to “advance equity and reduce disparities in health care” and essentially reinstate the 2016 regulations and expand upon them to provide greater protections.

We break down the impact on group health plans and the key modifications and action items related to Section 1557’s final regulations.

Impact on Group Health Plans

Employers themselves are not typically covered entities, but the group health plans that they sponsor may be covered entities if they receive federal financial assistance such as through the receipt of funds through Medicare’s Retiree Drug Subsidy Program.

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

Key Modifications & Action Items

• LGBQTI+ Protections
  • Consistent with the US Supreme Court’s ruling in Bostock v. Clayton County, the final regulations affirm that protections against sex discrimination include protections against discrimination on the basis of sexual orientation and gender identity, including discrimination on the basis of sex stereotypes; sex characteristics, including intersex traits; and pregnancy or related conditions.
  • The final regulations do not, however, require covered entities to cover a particular health service for the treatment of gender dysphoria for any individuals. It does prohibit them from excluding categories of services to LGBQTI+ individuals in a discriminatory manner.
• Nondiscrimination Requirements Apply to Programs and Activities Provided Through Telehealth Services
  • The final regulations clarify that covered entities cannot discriminate in their delivery of health programs and activities provided through telehealth services.
• Annual Notice of Nondiscrimination
  • Covered entities must provide a notice of nondiscrimination annually in a conspicuous location on the entity’s website, if it has one, and in prominent physical locations, in no smaller than 20-point sans serif font, where it can reasonably be expected to be seen and read. HHS has provided model notices that can be used to satisfy the requirement. The first notice is due within 120 days of the effective date of the final regulations, i.e., by November 2, 2024.
• Language & Disability Assistance
  • Covered entities must proactively inform people that language assistance services and auxiliary aids and services are available to patients at no cost.
  • Notices must also ensure effective communication for individuals with disabilities, be prominently displayed physically and on websites, available upon request, and included with specified communications.
  • Programs offered via telehealth must be accessible to individuals with limited English proficiency as well as to individuals with disabilities.
  • Notices of availability of language assistance services are required annually in English and at least the 15 languages most commonly spoken by individuals with limited English proficiency of the state or states in which a covered entity operates. Notices must also be provided at a conspicuous location on the covered entity’s website, and in clear prominent physical locations in no smaller than 20 point sans serif font, where it is reasonable to expect individuals seeking service to be able to reach or hear the notices, as well as in certain specified communications, including the annual nondiscrimination notice, the HIPAA Notice of Privacy Practices, and notices of denial or termination of eligibility, benefits, or services (EOBs, notice of appeal and grievance rights). The first notice is due within one year of the effective date of the final regulations, i.e., by July 5, 2025.
• Use of AI in Healthcare
  • The final regulations provide that all nondiscrimination principles apply to any patient support tools including artificial intelligence (AI).
  • Providers must take proactive steps to identify and mitigate any discrimination in these support tools and AI.
• Conscience Protections
  • The final regulations provide that no application of the regulations will be required if it would violate federal protections for religious freedom and conscience.
• Designation of Section 1557 Coordinator & Adoption of Grievance Procedure
  • Covered entities that employ at least 15 people must designate at least one employee to coordinate Section 1557 responsibilities.
  • Covered entities with 15 or more employees must also implement written grievance procedures and keep confidential the identity of an individual who filed a grievance.
  • Designation of a coordinator and the adoption of a grievance procedure are due within 120 days of the effective date of the final regulations, i.e., by November 2, 2024.
• Policies & Procedures; Staff Training
  • Covered entities must implement policies and procedures to ensure compliance with the updated Section 1557 regulations, including ensuring that staff is trained on the policies and procedures to enhance compliance.
    • Policies and procedures are due within one year of the effective date of the final regulations, i.e., by July 5, 2025.
    • Training must be documented.
    • Training is required following a covered entity’s implementation of the policies and procedures, but no later than one year of the July 5, 2024 effective date of the final regulations.

Action Items for Group Health Plan Sponsors

• Determine whether you are a covered entity subject to the final regulations and, if so, ensure that you take steps to comply by the applicable deadlines set forth in the regulations, which begin as soon as July 5, 2024.
• If not directly subject to Section 1557, consider whether your 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 duty 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.

For questions on Section 1557 and these final regulations, please contact one of the authors of this blog post or another Morgan Lewis contact.