ACA anti-discrimination regs provide detailed guidance

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New anti-discrimination regulations implementing Section 1557 of the Affordable Care Act directly apply to employer healthcare plans in limited circumstances. However, they could have a significant impact on employers that are not “covered entities” because in cases where the Equal Employment Opportunity Commission or the courts are asked to decide if an employer health insurance plan violates Title VII of the Civil Rights Act, they may choose to align their ruling with these comprehensive new standards.

Section 1557 of the ACA protects individuals from discrimination in healthcare on the basis of race, color, national origin, age disability and sex, including discrimination based on pregnancy, gender identity and sex stereotyping.

“The protections in Section 1557 are critically important because it’s the first time federal law has provided broad non-discrimination for women in healthcare,” says Emily Martin, general counsel and VP for workplace justice at the National Women’s Law Center. “These new protections mean that women can’t be discriminated against as patients and as recipients of insurance coverage.”

Covered entities

Covered entities include organizations providing health programs or activities, any part of which is getting federal financial assistance administered by the Department of Health and Human Services (for example, a hospital that accepts payments under Part A of Medicare); health programs and activities administered by HHS, including federally facilitated marketplaces; plus, health programs and activities administered by entities established under Title 1 of the ACA, including state-based marketplaces.

The new regulations also address when Section 1557 applies to healthcare programs offered by covered entities to their own employees. A covered entity that primarily provides or administers healthcare services like a hospital or health insurance company must comply with the anti-discrimination rules in the healthcare program it provides for its own employees.

However, if a covered entity is not principally engaged in providing or administering health services or health insurance coverage, the anti-discrimination provisions in Section 1557 would only apply to administration of the specific employee health benefit program that receives the subsidy.

So, where an employer participates in the Medicare Part D retiree drug subsidy program, only that plan would be subject to the ACA anti-discrimination rules and not the organization’s other employee health benefit programs that do not receive federal financial assistance.

“When the proposed rules were released there was some concern that if they applied to health insurance companies getting subsidy money from exchanges, that when these groups are acting as third- party administrators there would be some trickle down and that employers would have to comply as well,” says Lesley Laderman, a principal Xerox HR Services’ Knowledge Resource Centre.

However, she notes that the big surprise in the final rules is that employers got what they lobbied for. “The Office for Civil Rights clarified that Section 1557’s coverage of a third-party administrator under the rule does not extend to the coverage of an employer providing a group health plan that is being administered by the third-party administrator.”

Sex discrimination, gender identity

“One of the reasons I think HHS should be commended is that they made clear in implementing regulations that sex discrimination includes discrimination on the basis of pregnancy, childbirth and related conditions, termination of pregnancy, gender identity and sex stereotypes,” says Martin.

One illustration she gives of a practice that would likely be viewed as sex discrimination under the new rules for covered entities is if an employer providing dependant healthcare coverage excluding maternity care other than for employees.

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. However, OCR will evaluate complaints that allege sex discrimination related to an individual’s sexual orientation to determine if they involve the sorts of sex stereotyping that can be addressed under Section 1557.

“In many cases discrimination based on sexual orientation will be covered under the heading of discrimination based on gender stereotypes,” she suggests.

Categorical coverage exclusions or limitations for all healthcare services related to gender transition are also specifically characterized as discrimination. “For example, if women for are covered for hysterectomies, covered entities cannot refuse to pay for the same surgery for a transgendered man who is having the same surgery as part of his transition,” Martin explains.”But the rules do not obligate a covered entity to necessarily add services that were not in their plan before.”

Other protections

The final rules also included protections for individuals with disabilities. Covered entities must ensure effective communication with individuals with disabilities and make reasonable accommodations in policies, practices and procedures where necessary to avoid discrimination on the basis of disability.

They also have to meet certain accessibility standards for their buildings and physical facilities as well as health programs and activities provided through electronic and information technology.

In addition, there are obligations for covered entities to provide a notice to beneficiaries, enrollees, applicants and the public stating among other things that they do not discriminate on the prohibited bases, that services are available to individuals with disabilities or with limited English proficiency and how to file a grievance.

OCR will translate the sample notice into the 15 languages most frequently spoken nationally by individuals with limited English proficiency and make the translations available electronically.

The rules come into effect July 18, 2016 (two months after they were released). Any healthcare plan design changes must be completed on the first day of the first plan year beginning on or after January 1, 2017.

Enforcing the rules

The final rule provides limited coverage of employment discrimination. But the “treatment of employment discrimination under Section 1557 does not change the existing protections under Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act or the other Civil Rights statutes referenced in Section 1557,” Laderman says.

“One reason it would make sense for all employers – and not just covered entities – to review their health insurance plans in light of the standards set out under the new ACA regulations is that HHS’s interpretation is one of the most detailed discussions ever released of what constitutes discrimination in insurance,” Martin says. “If the EEOC and the courts choose to piggyback on their analysis, it could end up having a significant impact even on employers that are not covered entities.”

Complaints can be made to the OCR and people alleging discrimination can also go to court themselves to stop the discrimination and get compensation for any injuries they suffered as a result.

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