Third Time’s a Charm? Biden Administration Publishes New Notice of Proposed Rulemaking Under Section 1557 of the ACA

• August 12, 2022

• Drew Stevens , Caiola & Rose LLC
• Toby K.L. Morgan , Emory Healthcare Inc.

The Biden administration on July 25, 2022 announced a much-anticipated Notice of Proposed Rulemaking under Section 1557 of the Affordable Care Act (ACA).[1] This new proposed rule marks the third attempt to implement Section 1557, following the Obama administration’s original regulation issued in 2016 and the Trump administration’s substantially revised version issued in 2020. While largely restoring the 2016 regulation, the latest proposed rule, in several respects, goes further to protect individuals from discrimination in health care.

The new proposed rule was officially published in the Federal Register on August 4.[2] Comments are due on October 3.

Significance of the New Proposed Rule

In announcing the proposed rule, the Department of Health and Human Services (HHS) emphasized that “[s]trengthening this rule is part of the Biden-Harris Administration’s commitment to advancing gender and health equity and civil rights.”[3] According to HHS Secretary Xavier Becerra:

This proposed rule ensures that people nationwide can access health care free from discrimination. Standing with communities in need is critical, particularly given increased attacks on women, trans youth, and health care providers. Health care should be a right not dependent on looks, location, love, language, or the type of care someone needs.[4]

Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure similarly noted the proposed rule is intended to promote equity in the nation’s Medicare and Medicaid programs:

Strengthening Section 1557 supports our ongoing efforts to provide high-quality, affordable health care and to drive health equity for all people served by our programs. This work will help eliminate avoidable differences in health outcomes experienced by those who are underserved and provide the care and support that people need to thrive.[5]

These statements not only provide helpful context to the proposed rule, but they also signal an increased emphasis by the federal government on the role of civil rights protections in health care. Covered entities would therefore be well-advised to prepare for increased federal oversight and enforcement under the new Section 1557 regulation when finalized.

Summary of the New Proposed Rule

In describing the proposed rule, HHS highlighted provisions it said are intended to “address gaps identified in prior regulations.”[6] As summarized by HHS, the new proposed rule:

• Reinstates the scope of Section 1557 to cover HHS’ health programs and activities.
• Clarifies the application of Section 1557 nondiscrimination requirements to health insurance issuers that receive federal financial assistance.
• Aligns regulatory requirements with Federal court opinions to prohibit discrimination on the basis of sex including sexual orientation and gender identity.
• Makes clear that discrimination on the basis of sex includes discrimination on the basis of pregnancy or related conditions, including “pregnancy termination.”
• Ensures requirements to prevent and combat discrimination are operationalized by entities receiving federal funding by requiring civil rights policies and procedures.
• Requires entities to give staff training on the provision of language assistance services for individuals with limited English proficiency (LEP), and effective communication and reasonable modifications to policies and procedures for people with disabilities.
• Requires covered entities to provide a notice of nondiscrimination along with a notice of the availability of language assistance services and auxiliary aids and services.
• Explicitly prohibits discrimination in the use of clinical algorithms to support decision-making in covered health programs and activities.
• Clarifies that nondiscrimination requirements applicable to health programs and activities include those services offered via telehealth, which must be accessible to LEP individuals and individuals with disabilities.
• Interprets Medicare Part B as federal financial assistance.
• Refines and strengthens the process for raising conscience and religious freedom objections.[7]

HHS also issued a fact sheet[8] that elaborates on these bullet points, which are discussed further below.

Scope of Covered Entities

In 2020, the Trump administration’s revisions to the 2016 final rule substantially limited the scope of a “covered entity” under Section 1557 to health programs or activities receiving federal funds from HHS, programs administered under Title I of the ACA, and health insurance marketplace participants. In the new proposed rule, HHS restores the expansive definition of “covered entities” under the 2016 regulation so that it once again applies broadly to health programs and activities, including state and local health agencies, hospitals, health clinics, health insurance issuers, physician practices, community-based health care providers, nursing facilities, and residential or community-based treatment facilities. The new proposed rule also expands the definition of “covered entities” to include all of the health programs and activities administered by HHS. Importantly, the proposed rule again makes clear that Section 1557’s protections apply to “all of the operations of any entity principally engaged in the provision or administration of health projects, enterprises, ventures, or undertakings.”

Definition of Discrimination on the Basis of Sex

Consistent with the U.S. Supreme Court’s holding in Bostock v. Clayton County[9] and HHS’ 2021 enforcement notice,[10] the new proposed rule would codify protections against discrimination on the basis of sexual orientation and gender identity in health care. The proposed rule also clarifies that sex discrimination includes discrimination on the basis of sex stereotypes; sex characteristics, including intersex traits; and pregnancy or related conditions including pregnancy termination.

Operationalization of Compliance

The proposed rule also reinstates the Obama-era requirements that effectively required covered entities with more than 15 employees to operationalize nondiscrimination throughout their systems. The Biden administration’s proposed rule again requires the adoption of nondiscrimination policies and grievance procedures, the designation of a Section 1557 Coordinator, and the provision of notices of availability of language assistance services for LEP individuals. As did the 2016 regulation, the proposed rule requires these notices be provided in at least the 15 most common languages spoken by LEP persons in the relevant state. While the 2016 rule required these notices to be placed in all “significant publications,” the proposed rule requires that the notices be provided on an annual basis and upon request at any time. The notices must also be posted in prominent physical locations and in a conspicuous location on the entity’s website.

Training Related to Language Assistance Services for LEP Individuals

Of note, the proposed rule, for the first time, requires covered entities to give staff clear guidance on the provision of language assistance services for LEP individuals, and effective communication and reasonable modifications to policies and procedures for people with disabilities. Covered entities will also be required to train relevant staff on these policies and procedures. In HHS’ view, these requirements will help improve compliance and reduce the need for enforcement.

In the proposed rule, HHS reiterates that “reasonable modifications” should be interpreted in a manner consistent with the regulation implementing Title II of the Americans with Disabilities Act. As a result, covered entities must continue to give “primary consideration” to the requests of individuals with disabilities when determining what types of auxiliary aids and services are necessary to provide equal access to health care.

Clinical Algorithms and Telehealth

In recognition of the increased importance of telehealth and clinical algorithms since the 2016 regulation, the proposed rule includes specific language directed at these two areas.

The proposed rule makes clear that covered entities have a duty to prevent discrimination in their delivery of services through telehealth, including ensuring that such services are accessible to individuals with disabilities and providing meaningful program access to LEP individuals. This duty extends to communications about the availability of telehealth services, the process for scheduling telehealth appointments (including the process for accessing on-demand unscheduled telehealth calls), and the telehealth appointment itself.

The proposed rule also seeks to put covered entities on notice that they must not discriminate against any individual on the basis of race, color, national origin, sex, age, or disability through the use of clinical algorithms in their decision making. As explained by HHS, while covered entities would not be liable for clinical algorithms that they did not develop, “they may be held liable under [Section 1557] for their decisions made in reliance on clinical algorithms.”

New Position on Medicare Part B

Another significant change, if finalized, would reverse a long-standing HHS position that resulted in recipients of Medicare Part B not being subject to federal civil rights laws barring discrimination in federal programs. Under the proposed rule, HHS’ position is now that Medicare Part B funds meet the definition of federal financial assistance. Civil rights advocates have long sought this reversal, arguing the exclusion of Medicare Part B funds from the definition of federal financial assistance leaves a significant portion of private physicians free to disregard federal civil rights law and Section 1557’s protections in health care.[11]

Process for Raising Religious Freedom Objections

For the first time, the proposed rule also provides a clear process for covered entities to notify the Office for Civil Rights (OCR) of their belief that the application of a specific provision or provisions of Section 1557 would violate their rights under federal conscience or religious freedom laws.

The proposed rule clarifies that when OCR receives such a notification, it will promptly consider those views in responding to any complaints regarding compliance with the relevant provisions of the regulation. Any ongoing relevant investigation or other enforcement action will also be held “in abeyance” until a determination is made whether a provider is exempt or entitled to a modification. Additionally, the proposed rule provides that, if there is a sufficient basis for doing so, OCR may make a determination at any time regarding whether a provider is wholly exempt or should receive an exemption or modification from certain provisions.

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• Patient Care Liability and Litigation