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Section 1557 of the Affordable Care Act: Hurricane or Summer Shower?

One paragraph embedded in the Affordable Care Act (ACA), Section 1557, may drastically increase the number of discrimination cases brought against health care insurers and providers, assuming, of course, that it or the entire ACA is not repealed by Congress and the supporting regulations are not thrown out via a lawsuit. Prior to Section 1557, prohibitions against discrimination in health care were narrowly construed, resulting in limited litigation.

While Congress only provided one paragraph, a regulatory rule from the Obama era Department of Health and Human Services (HHS) and the HHS Office for Civil Rights (OCR) provided a lengthy expansion of the types of discrimination prohibited by Section 1557, and the methods individuals may use to contest potential discrimination based on race, color, national origin, religion, disability, or sex in the health care context.

The regulations protect people from exclusions from participation in, denial of benefits of, or discrimination by any health program or activity that receives certain federal funds. Those subject to Section 1557 include all health insurance issuers that receive credits or subsidies under the ACA, providers that accept Medicaid or Medicare Part A, but not Part B (meaning that hospitals are covered, but doctors who do not participate in Medicaid are not covered), clinical laboratories and home health agencies, and employers that receive federal financial assistance for their employee health plans.

Sex as a Protected Class
Many other federal laws, such as the Civil Rights Act of 1964, have already been applied in the health care context for decades to prohibit discrimination based on race, color, or national origin, so the regulations do not create any drastic changes in those areas. However, the regulations are the first provision that explicitly prohibits sex discrimination in health care, and the first to provide protections for transgender individuals. For example, the regulations extend the protections of Title IX of the Education Amendments of 1972 beyond educational institutions to health care providers for the first time.

HHS’ position on sex discrimination prohibits the denial of care based on a patient’s pregnancy status, termination of pregnancy, childbirth or related medical conditions, sex stereotyping, described below, and gender identity.

The broad reach of Section 1557 most prominently impacts members of the LGBTQ community. Under previous guidance, HHS described sex stereotyping, which includes assuming that people will identify with a particular gender and an expectation that outward presentation, including appearance and mannerisms, will conform to traditional ideas of masculinity and femininity that correspond with a particular sex.

The regulations also clarify that Section 1557 covers transgender people. This includes allowing people to access health care facilities and programs based on their gender identity, rather than their assigned sex at birth. Providers must address patients by their chosen name and gender pronoun, and cannot deny medically necessary care to transgender patients.

Health insurance issuers and covered self-insured plans must remove categorical exclusions for the treatment of gender identity disorder from their benefit designs. However, Section 1557 regulations do not specify what level of gender identity disorder treatment must be provided.

Also, the regulations do not create any religious exemption to Section 1557. If religious health care providers plan to conscientiously object to complying with any of these provisions, they will have to make their claim under the existing protections in the Federal Religious Freedom Restoration Act (RFRA). This may increase the amount of litigation in this area as some providers attempt to reconcile their religious beliefs with the provisions of the law.

Individuals with Limited English Proficiency
The regulations also clarify covered entities’ responsibilities when ensuring that patients with limited English proficiency have access to services. The regulations emphasize that covered entities must use “qualified” interpreters when providing translation services. While providers have been required to offer some kind of interpretation services for years, many use bilingual staff members or the patient’s family, even minor children, to meet this requirement.

Prior HHS regulations only required interpreters to be “competent”, and though the new regulations do not require the interpreter to meet any specific licensure standards, HHS indicates that professional interpreters should be used unless there is an emergency or the patient requests a family member translator. The interpreter should also be familiar with specialized vocabulary and ethical principles associated with translating in the medical setting.

Covered entities must also provide notice of their adherence to nondiscriminatory practices as well as taglines offering translation services. These taglines must be printed in the top 15 non-English languages most commonly spoken in the state where services are provided, but entities only need to have two non-English translations of less frequently used documents. OCR provides sample notices and taglines on their website that would comply with these requirements.

Health insurance issuers are subject to the tagline and translation requirements for their insured health plans. Health insurance issuers are also subject to the requirements when they act as a Third Party Administrator for a self-insured health plan – even if the health plan itself is not covered by Section 1557 regulations.

Litigation Impact
Perhaps the biggest development from the regulations is HHS’ interpretation that Section 1557 provides a private cause of action for a disparate “impact” claim in the health care context. Prior to the implementation of these regulations, private parties, such as patients or interest groups that litigate to advance a particular cause, did not have the ability to bring this kind of claim.

Individuals were limited to asserting that intentional discrimination occurred, an argument known as a disparate treatment claim. In this type of litigation, a person alleges that he or she was actually treated differently compared to other similarly positioned patients or individ¬uals because of their affiliation with a protected class, such as race, age or gender. In contrast, a disparate impact claim lets litigants challenge a policy or practice that appears to be neutral, but when applied results in a disproportionate impact on members of the classes protected by Section 1557.

Before the regulations, only OCR could bring a disparate impact claim, but its limited resources made this type of litigation rare in the health care setting. The regulations further empower patients by providing for compensatory damages under Section 1557.

The Future of Section 1557
On December 31, 2016, the night before the regulations required full compliance from covered entities, a federal judge in Texas issued a nationwide preliminary injunction preventing HHS from enforcing the most controversial parts of the regulation related to discrimination based on gender identity or termination of pregnancy.

A Catholic hospital system, a Catholic medical group, a Christian medical association and several states brought the case, captioned Franciscan Alliance v. Burwell. The parties allege that enforcement of the regulation would violate their religious beliefs and independent medical judgment.

In his initial ruling, Judge Reed O’Connor determined that HHS had exceeded its regulatory authority by stating that protections against sex discrimination, outlined in Title IX and applied to the health care setting via Section 1557, included gender identity. Further, Judge O’Connor accepted the religious groups’ argument that the regulations could potentially require professionals and entities to provide and cover gender transition services and abortions in violation of RFRA. It should be noted that the regulation contains no language requiring such activities. Still, Judge O’Connor felt the concerns were both valid and pressing enough to merit issuing an injunction.

While President Trump’s administration is still “considering whether further administrative action concerning the Section 1557 regulation that Plaintiffs challenge would be appropriate,” private parties have appealed the injunction to the Fifth Circuit Court of Appeals, which will consider the case in the coming weeks. For now, covered entities can only wait and see how the litigation and the new administration will impact the future of discrimination protections in the health care setting.

A version of this article was published in the May 2017 issue of The Baltimore Barrister, a quarterly health law publication of the Bar Association of Baltimore City.