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Health Care Programs Can't Discriminate Under New Rule

ACA final rule bars health care discrimination, including on the basis of sex and gender identification

The Department of Health and Human Services (HHS) has issued a final rule to prohibit discrimination against individuals receiving health care, along with an accompanying fact sheet. The rule, which implements Section 1557 of the Affordable Care Act (ACA), was published in the Federal Register on May 18. Most of the rule’s requirements go into effect on July 18, 2016, except for provisions affecting health insurance plan design, which take effect the first day of the first plan year beginning on or after Jan. 1, 2017.

Under the “Nondiscrimination in Health Programs and Activities” rule, most health care plans and providers may not discriminate against individuals on the basis of race, color, national origin, age, disability and sex, including discrimination based on pregnancy, gender identity and sex stereotyping. In addition to implementing Section 1557’s prohibition on sex discrimination, the final rule also enhances language assistance for people with limited English proficiency and helps to ensure effective communication for individuals with disabilities.

Section 1557 of the ACA “is the first federal civil rights law to broadly prohibit discrimination on the basis of sex in federally funded health programs,” including gender identity protections, according to the HHS announcement. “Previously, civil rights laws enforced by HHS’s Office for Civil Rights (OCR) broadly barred discrimination based only on race, color, national origin, disability, or age.”

The rule is “sweeping in its coverage and scope,” said Timothy Jost, a professor at the Washington and Lee University School of Law in Lexington, Va., in a post on the blog of the journal Health Affairs.

Gender Identity and Sexual Orientation

The final rule prohibits sex discrimination in health care by:

  • Requiring that professionals treat women equally with men in the health care they receive. Other provisions of the ACA bar certain types of sex discrimination in insurance, for example, by prohibiting providers from charging women more than men for coverage. Under Section 1557, women are protected from discrimination not only in the health coverage they obtain but in the health services they seek from providers.
  • Prohibiting denial of health care or health coverage based on an individual’s sex, including discrimination based on pregnancy, gender identity and sex stereotyping.

Covered entities must treat transgender individuals consistently with their own gender identity, noted Jost. “If a health service is ordinarily and exclusively available to an individual of a particular gender, that service must be provided to an individual with a different gender identity if the service is necessary or appropriate.” For example, “a covered entity cannot deny treatment for ovarian cancer for a transgender male who would benefit from the treatment.”

“This groundbreaking rule makes clear that health care discrimination against LGBT [lesbian, gay, bisexual and transgender] people—particularly transgender and gender nonconforming people—is unlawful under existing federal law,” said a statement from the nonprofit Transgender Law Center. The Oakland, Calif.-based center said it has represented several clients who have faced the kind of discrimination that will be prohibited under the HHS rule.

Gender-Transition Health Services

On the issue of whether health plans subject to the nondiscrimination rule must provide coverage for gender-realignment surgery and related services, including hormonal treatments and counseling, the final rule affirms that explicit categorical exclusions in coverage for health services related to gender transition are facially discriminatory.

Specifically, the rule says that “Historically, covered entities have justified these blanket exclusions [of gender-transition services] by categorizing all transition-related treatment as cosmetic or experimental. However, such across-the-board categorization is now recognized as outdated and not based on current standards of care.”

The final rule clarifies that the Office for Civil Right’s (OCR’s) approach to coverage for specific health services related to gender transition “is the same general approach that OCR will take when evaluating denials or limitations of coverage for other types of health services. In other words, OCR will evaluate whether a covered entity utilized, in a nondiscriminatory manner, a neutral rule or principle when deciding to adopt the design feature or take the challenged action or whether the reason for its coverage decision is a pretext for discrimination.”

For example, if an insuer “denies a claim for coverage for a hysterectomy that a patient’s provider says is medically necessary to treat gender dysphoria, OCR will evaluate the extent of the covered entity’s coverage policy for hysterectomies under other circumstances,” the rule states.

“If a health service is covered for a nontransgender individual when it is medically necessary, it appears problematic to exclude or deny coverage for the service if it is a medically necessary treatment for gender dysphoria,” said John Barlament, a partner with Quarles & Brady in Milwaukee. “An insurer that covers breast removal as a medically necessary treatment for breast cancer may need to cover breast removal as a treatment for gender dysphoria if the breast removal is medically necessary.”

The HHS announcement stated, “While the final rule does not resolve whether discrimination on the basis of an individual’s sexual orientation status alone is a form of sex discrimination under Section 1557, the rule makes clear that OCR will evaluate complaints that allege sex discrimination related to an individual’s sexual orientation to determine if they involve the sorts of stereotyping that can be addressed under 1557.”

Individuals with Disabilities, Limited English

The rule also includes protections for individuals with disabilities and enhances language assistance for people with limited English proficiency by:

  • Requiring 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.
  • Requiring covered entities to take reasonable steps to provide meaningful access to individuals with limited English proficiency. Covered entities are also encouraged to develop language access plans.

The protections in the final rule and Section 1557 apply to health insurers, health plans and hospitals that receive federal funds from HHS. Health insurers that receive premium tax credits or cost-sharing reduction payments for enrollees under ACA marketplace plans would be covered, which would include most health insurance providers that also offer or administer group health plans for employers, Jost noted. “The nondiscrimination provision also applies to employers that receive federal financial assistance to fund their employee health benefit programs,” he added.

Although the rule applies specifically to health insurers and third-party administrators (TPAs) that receive federal funds related to health programs, most insurers and TPAs to some extent fall under these specifications, “which makes the regulations indirectly applicable to employers who sponsor group health plans,” Lisa Campbell and Tammy Killion, both partners in the Washington, D.C., office of Groom Law Group, told SHRM Online when the proposed rule was issued last September

The final rule states that where application of any requirement of the rule would violate applicable federal statutes protecting religious freedom and conscience, such as the federal Religious Freedom Restoration Act, that application of the rule will not be required.

The OCR may sue entities to enforce Section 1557 using the procedures that apply under the Civil Rights Act, and individuals may sue directly under Section 1557 in federal court. The final rule clarifies that compensatory damages are available in 1557 actions.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.

Related SHRM Article:

ACA Final Nondiscrimination Rules: What Employers Should Know, SHRM Online Benefits, October 2016


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